Treasury Department Finds International Student Cap Does Not Significantly Affect Economy

A Treasury deputy secretary has stated that the new international student cap imposed by the government will not have a significant impact on the Australian economy.

This assertion comes despite concerns raised by education providers regarding potential job losses and bankruptcies.

In August, the government introduced an international student cap of 270,000 for the 2025 calendar year following the passage of the Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024.

The aim of this new measure is to reduce the influx of students into the country and alleviate pressure on the rental market.

Nevertheless, this decision has faced strong opposition from universities and higher education institutions nationwide.

During a recent Senate inquiry hearing, Greens Senator Mehreen Faruqi questioned Treasury Department representatives about the economic, labor, and social implications of the cap.

“We have heard from the University of Sydney. They’ve done some modeling and suggest a $4.1 billion (US$2.8 billion) loss to the Australian economy,” she stated.

“Shouldn’t there be government modeling and analysis of the impacts of such significant bills?”

In response, Sam Reinhardt, the deputy secretary of the Fiscal Group at the Treasury Department, mentioned that her department did not project any significant impact.

“The national planning level numbers of 270,000 align with the student net overseas migration figures in the budget, indicating consistency in economic forecasts,” she explained.

“Therefore, we do not foresee any substantial impact due to these changes.”

Faruqi then inquired whether the department had considered the evidence provided by education providers regarding potential job losses.

“Universities have reported tens of thousands of job losses, and private providers are already shutting down,” she pointed out.

“Isn’t it the Treasury’s responsibility to examine these real-life impacts?”

Reinhardt responded that the department did not observe any impacts of the recent education legislation from a macroeconomic perspective.

“We anticipate no job losses as a result of this bill,” she assured.

Adam Cagliarni, a first assistant secretary at the Treasury Department, reiterated Reinhardt’s statements, noting that there were numerous assumptions in the University of Sydney’s modeling.

Education Providers’ Account of Job Losses and Shutdown

Johan Pienaar, the CEO of Flight Training Adelaide, shared his company’s challenges due to the international student cap during a Senate Committee session.

“The new cap imposed on us will reduce our international school revenue from $40 million a year to $15.8 million in 2025, resulting in an estimated loss of $10.1 million. We won’t be able to sustain this,” he expressed.

Flight Training Adelaide trains approximately 300 international students annually and employs 400 staff members, as per Pienaar’s explanation.

He also highlighted that the cap would negatively impact Australia’s reputation as a pilot training destination.

Pienaar emphasized that Australia’s flight training programs were expensive but known for delivering high-quality training.

He expressed concern that if news about the student cap spread, international students might opt for other training markets like the U.S., creating challenges for the Australian market to recover in the short term.

“We won’t see those international students for the next three to five years,” he speculated.

“This will devastate the international flight training industry if we follow this path.”

Timothy Eckenfels, the CEO of IH Sydney Training Services, also painted a grim picture of his company’s situation.

“Enrollments are decreasing nearly 10 percent per month. Visa rejections have risen from 6 percent to 19 percent this year, and we’ll have to refund over $12 million in student tuition,” he shared.

“Finances are strained, and bank and loan agreements will soon be breached.”

Eckenfels also mentioned that the company had recently closed a campus in regional New South Wales and was reevaluating operations at other locations.

“We are reassessing our needs, and up to 35 percent of our staff face potential job cuts,” he disclosed.