Former Labor higher education minister Kim Carr says the government’s push to cap the number of international students is bad policy, with the Reserve Bank of Australia warning it could push down exports significantly.
Economists say the RBA’s concerns are well-founded, with analysts suggesting it could cause education exports to “plunge by around two-fifths”, slashing 0.7 percentage points off growth next year.
Education Minister Jason Clare will introduce legislation this week to limit the number of overseas enrolments at colleges and universities, with the government pushing to lower the number of migrants, which has hit record levels after the pandemic and is putting pressure on housing costs.
*The Australian Financial Review* reported on Tuesday that a steep decline in new international students – after some rules were tightened earlier this year – has done little to dent the number of temporary migrants in the country, which have spiked by 100,000 in a year.
Opposition Leader Peter Dutton says the high number of migrants – there are now 2.74 million, according to official figures – has come without proper planning, leading to a lack of housing and higher living costs.
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In the minutes of its last board meeting published on Tuesday, the RBA said it was assessing the implications of the proposed caps on higher education enrolments, adding it was “expected to weigh on services exports”.
“The implications of lower student arrivals for the balance between aggregate demand and supply, and hence for the inflation outlook, were less clear,” the minutes of the meeting, held in September, read. They are the first substantive comments about the proposal from the central bank.
“Lower numbers of international student arrivals would be likely to reduce aggregate demand (including for housing), but also lower growth in population and therefore the economy’s supply capacity.”
Under the plan, the government will abandon rules put in place to prioritise students who are the least likely to quit studying, and instead reduce the overall number by 30 per cent. Each college and university will get its own specific cap, a decision that has led to a scramble for enrolments before the end of the year. Those enrolments are not part of the cap that start next year.
Abhijit Surya, of Capital Economics, said the RBA had “well-founded” concerns about the impact of the caps on the economy.
“We calculate that the proposed cap on international student commencements will cause education exports to plunge by around two-fifths, shaving off 0.7 percentage points off growth in 2025,” he said. “While the RBA argued the implications for capacity pressures were less clear, our own analysis finds that student arrivals are, on balance, inflationary.”
# ‘Thousands of jobs at risk’
Mr Carr, a Labor powerbroker who was variously higher education, innovation, science and research minister under the last Labor government, said the proposed caps were migration policies dressed up as integrity measures, and potentially very damaging to the economy.
“There’s a strong case to say that universities are now too big and there is a legitimate case to be argued in regard of quality assurance,” he told *The Australian Financial Review*. “But caps are bad policy and ignore the Faustian deal that when the universities were not properly funded, they turned to international education as a way of securing the revenue they needed.
But Mr Clare said the government had been clear that the limits were intended to bring migration back to pre-pandemic levels.
However, he noted that there were several integrity measures in the legislation he was about to introduce to parliament, including requiring new providers to demonstrate a track record of quality education delivery to local students before they were allowed to recruit from international markets. “Treasury have said publicly that they don’t expect a material impact on growth,” Mr Clare said on Tuesday.
A Senate report into the student caps is due to be published this week. Over four days, a committee chaired by Labor senator Tony Sheldon has heard from dozens of witnesses, almost all of whom said the caps were unfair, poorly designed and would challenge the financial viability of the sector.
National Australia Bank estimated that international student accounted for more than half of the country’s economic growth last year. The bank’s economists said education exports, which captures spending by international students, was equivalent to 0.8 percentage points of annual GDP growth, or more than half the 1.5 per cent rate in December.
Universities Australia has previously estimated about $4.3 billion has been lost from the economy in the six months to July as a result of other policies designed to crack down on student numbers. It says 14,000 university jobs could be at risk.
BeLakorHawk on
Well the Unis had their fun and took it too far.
Bullshit cookie-cutter degrees to create leviathan organisations and keep otherwise unemployable people in jobs as tutors, lecturers, professors and administrators.
I couldn’t care less what Carr says.
best4bond on
> Kim is currently a Vice Chancellor’s Professorial Fellow at Monash University
Yeah, no shit he’d say this. Monash and Melbourne (at least here in Victoria) are the ones set to lose the most with international student caps.
3 Comments
Former Labor higher education minister Kim Carr says the government’s push to cap the number of international students is bad policy, with the Reserve Bank of Australia warning it could push down exports significantly.
Economists say the RBA’s concerns are well-founded, with analysts suggesting it could cause education exports to “plunge by around two-fifths”, slashing 0.7 percentage points off growth next year.
Education Minister Jason Clare will introduce legislation this week to limit the number of overseas enrolments at colleges and universities, with the government pushing to lower the number of migrants, which has hit record levels after the pandemic and is putting pressure on housing costs.
*The Australian Financial Review* reported on Tuesday that a steep decline in new international students – after some rules were tightened earlier this year – has done little to dent the number of temporary migrants in the country, which have spiked by 100,000 in a year.
Opposition Leader Peter Dutton says the high number of migrants – there are now 2.74 million, according to official figures – has come without proper planning, leading to a lack of housing and higher living costs.
Advertisement
In the minutes of its last board meeting published on Tuesday, the RBA said it was assessing the implications of the proposed caps on higher education enrolments, adding it was “expected to weigh on services exports”.
“The implications of lower student arrivals for the balance between aggregate demand and supply, and hence for the inflation outlook, were less clear,” the minutes of the meeting, held in September, read. They are the first substantive comments about the proposal from the central bank.
“Lower numbers of international student arrivals would be likely to reduce aggregate demand (including for housing), but also lower growth in population and therefore the economy’s supply capacity.”
Under the plan, the government will abandon rules put in place to prioritise students who are the least likely to quit studying, and instead reduce the overall number by 30 per cent. Each college and university will get its own specific cap, a decision that has led to a scramble for enrolments before the end of the year. Those enrolments are not part of the cap that start next year.
Abhijit Surya, of Capital Economics, said the RBA had “well-founded” concerns about the impact of the caps on the economy.
“We calculate that the proposed cap on international student commencements will cause education exports to plunge by around two-fifths, shaving off 0.7 percentage points off growth in 2025,” he said. “While the RBA argued the implications for capacity pressures were less clear, our own analysis finds that student arrivals are, on balance, inflationary.”
# ‘Thousands of jobs at risk’
Mr Carr, a Labor powerbroker who was variously higher education, innovation, science and research minister under the last Labor government, said the proposed caps were migration policies dressed up as integrity measures, and potentially very damaging to the economy.
“There’s a strong case to say that universities are now too big and there is a legitimate case to be argued in regard of quality assurance,” he told *The Australian Financial Review*. “But caps are bad policy and ignore the Faustian deal that when the universities were not properly funded, they turned to international education as a way of securing the revenue they needed.
But Mr Clare said the government had been clear that the limits were intended to bring migration back to pre-pandemic levels.
However, he noted that there were several integrity measures in the legislation he was about to introduce to parliament, including requiring new providers to demonstrate a track record of quality education delivery to local students before they were allowed to recruit from international markets. “Treasury have said publicly that they don’t expect a material impact on growth,” Mr Clare said on Tuesday.
A Senate report into the student caps is due to be published this week. Over four days, a committee chaired by Labor senator Tony Sheldon has heard from dozens of witnesses, almost all of whom said the caps were unfair, poorly designed and would challenge the financial viability of the sector.
National Australia Bank estimated that international student accounted for more than half of the country’s economic growth last year. The bank’s economists said education exports, which captures spending by international students, was equivalent to 0.8 percentage points of annual GDP growth, or more than half the 1.5 per cent rate in December.
Universities Australia has previously estimated about $4.3 billion has been lost from the economy in the six months to July as a result of other policies designed to crack down on student numbers. It says 14,000 university jobs could be at risk.
Well the Unis had their fun and took it too far.
Bullshit cookie-cutter degrees to create leviathan organisations and keep otherwise unemployable people in jobs as tutors, lecturers, professors and administrators.
I couldn’t care less what Carr says.
> Kim is currently a Vice Chancellor’s Professorial Fellow at Monash University
Yeah, no shit he’d say this. Monash and Melbourne (at least here in Victoria) are the ones set to lose the most with international student caps.