Australia’s economy stalls after ‘crackdown’ on overseas students

Australian universities have called on the federal government to abandon its “crackdown on international students” after new figures revealed that national economic growth was almost at a standstill.

Universities Australia (UA) said Canberra’s efforts to suppress overseas enrolments were contributing to the country’s economic slowdown. “Today’s national accounts [are] yet another wake-up call for the government,” said chief executive Luke Sheehy.

“International students accounted for around half of all GDP [gross domestic product] growth last year. We need to be growing industries that drive economic growth rather than adding more strain.”

The national accounts, released on 4 September, show that the Australian economy grew by just 1.5 per cent over the year to 30 June. This represented the weakest annual growth in more than three decades, aside from economic contractions during the Covid-19 pandemic.

The data showed that quarterly growth in GDP had languished at 0.2 per cent since late 2023 – a period coinciding with the international education crackdown, which began with a reprioritising of student visa processing under “ministerial direction 107”.

Separate figures released a day earlier showed that international education had reaped a record A$50.5 billion (£25.8 billion) for Australia in 2023-24. However, the sector’s earnings declined through the year, from A$13.6 billion in the September quarter to A$11.9 billion between March and June.

The Australian Bureau of Statistics had also downgraded its assessment of international education earnings between January and March, from A$13.3 billion to A$12.7 billion.

UA wants the government to revoke ministerial direction 107 as soon as possible. It said the number of visas issued for degree-level study in the June quarter had been 27 per cent lower than the equivalent period of 2023, equating to a loss of almost 18,000 overseas students.

“The government has used ministerial direction 107 to slow visa processing to a trickle and drive up visa cancellations in response to political pressure over migration and housing,” Mr Sheehy said. “International student fees help drive Australia’s economy and support universities to operate, making up a shortfall in government funding for research, teaching and campus infrastructure.

“It’s time for the government to…give our sector and the economy the certainty, stability and growth it has long promised.”

The government has confirmed its intention to replace ministerial direction 107, but only if parliament passes legislation to cap international student numbers. Regional universities, the only institutions likely to be allowed to increase their international enrolments under the proposed caps, believe this latitude will mean nothing without a “speedier” revocation of the ministerial direction.

Meanwhile, some commentators believe that a separate government intervention into student visa processing arrangements – ministerial direction 106, which requires staff to consider whether applicants satisfy a “genuine student” test – bears most responsibility for the recent surge in visa rejections.

Under ministerial direction 106, immigration staff must determine whether applicants’ “economic circumstances” present a “significant incentive” for them to masquerade as students when they are really attracted to Australia by work opportunities.

The Senate committee considering the legislation is due to report on 6 September. This now appears unlikely, because the committee has scheduled a third public hearing on that day.

john.ross@timeshighereducation.com