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States warn the Commonwealth’s international student crackdown could harm Australia’s reputation.Credit:Fiona Bianchinotti

“An excessive reduction in student numbers will have significant negative consequences for the economy,including job losses,labour shortages,constrained business environment,reduced tourism activity and research output,” NSW Trade Minister Anoulack Chanthivong and Tertiary Education Minister Steve Whan wrote to federal ministers in May.

They said a peak in international student numbers,and an 18.1 per cent reduction in student visa grants for March compared to March 2019,suggested an “over-correction” in response to last year’s surge of arrivals.

“State government officials in overseas markets are reporting reputational damage to Australia,noting that the discussion on visas is affecting Australia’s broader standing as a place to do business,” their letter said,urging caution by considering long-term economic needs.

In a submission to a parliamentary inquiry into the proposed student caps,the South Australian government warned that Canada,since imposing caps,had slipped in rankings as a destination of choice,and cautioned against the breadth of ministerial discretion over the clampdown.

The state said that if the powers came into force,“there is a risk the current strengths of the sector … are traded away for a short-term requirement to reduce the number of international students onshore due to an exceptional recovery from the COVID-19 pandemic.”

In its submission to the Senate committee scrutinising the bill,the Department of Home Affairs said new resources would be needed to give effect to the policy.

“The Department notes that successful implementation will also be dependent on the interagency sharing of data across core systems,which is likely to require significant development for both the Department and Department of Education,” the submission reads.

“The Department notes that additional processing systems changes will be required to give full effect to these amendments.”

Universities Australia chief executive Luke Sheehy,who is campaigning against what he calls the scapegoating of international students amid a debate in federal parliament over the volume of migration,seized on the department’s submission to label the caps “rushed policy and legislative responses to political problems”.

“We have called on the government to defer implementation out to 2026,with appropriate transitional arrangements to support our universities during this period of change,and we’ll continue to advocate for this,” Sheehy said.

“International education contributed $48 billion to the economy and drove half of Australia’s GDP growth last year. Our sector needs good policy,not politics,to continue delivering for the nation.”

Labor and the Coalition arefacing off over migration before the next federal election as both link the post-pandemic international student surge to Australia’s housing shortage.

A spokesperson for Home Affairs Minister Clare O’Neil said changes to departmental systems “is a completely routine part of legislative change”.

Home Affairs Minister Clare O’Neil has pledged to overhaul Australia’s migration system.Credit:Alex Ellinghausen

O’Neil has previously warned the tertiary sector “change is difficult” as part of the government’s mission to overhaul Australia’s migration program to stop people using student visas as a back door to gain work,and to halve net overseas migration to 260,000 by next July.

“We will help providers work through these changes,but we will not shy away from making them,” she has said.

International Education Association of Australia head Phil Honeywood said successive governments had been warned for years the two key departments’ IT systems “don’t talk to one another”.

“This has led to a large number of integrity failures with student enrolment systems,and we would urge the current government to be more transparent as to the full implications of these system failures,” he said.

There were nearly 674,000 student visa holders at the end of May,up from more than 671,000 two months before. In the year to May,about one in five prospective students’ visa applications were refused.

In its submission,Home Affairs said the legislation,which also imposes sanctions on universities and colleges who exceed their caps,was a “balanced response to the complex issue of managing international student growth”.

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