Albanese government to lift cap on international student places in major u-turn on migration despite warnings over housing
The government will now increase the international student intake by 25,000 to 295,000 for 2026.
The major policy change, which was not announced to voters before the election, will see tens-of-thousands more international students hit Australian shores every year.
While acknowledging the increase, the government said in a statement that it was still eight per cent below the "immediate post-COVID peak".
After record migration levels - hitting 555,000 in the 12 months to September 2023 - Prime Minister Anthony Albanese insisted last year that his government would cut net migration back closer to pre-Covid levels.
The government forecast net migration would hit 260,000 in the 2025-26 financial year and then drop again to 225,000.
In the last term of parliament, Labor even tried to adopt a Coalition policy and legislate a cap on international enrolments to 270,000 before it was blocked in the Senate by the Greens and the Coalition.
Less than 12 months later, the government has taken an extraordinary U-turn and announced it would increase the number of international student visas.
Education Minister Jason Clare defended the policy, insisting the growth of the sector must remain sustainable.
'International education is an incredibly important export industry for Australia, but we need to manage its growth so it's sustainable,' he said.
'International education doesn't just make us money; it makes us friends. This is about ensuring international education grows in a way that supports students, universities, and the national interest.'
The announcement comes on the back of mounting pressure over migration numbers, which have surged post-pandemic and are now being directly linked to Australia's worsening housing crisis.
Cities like Sydney, Melbourne, Perth and Brisbane are bearing the brunt of the influx, with rental vacancies at historic lows and property prices continuing to climb.
A recent report from the Reserve Bank warned the student visa surge is further intensifying pressure on an already-stretched rental market.
'The number of international students onshore is still near record highs, and student visa arrivals have exceeded departures in recent months, suggesting the number of students onshore is growing,' the report noted.
'In theory, in the face of a relatively fixed supply of housing in the short term, we would expect an increase in international students to put upward pressure on rental demand and rents.
'Capacity constraints, high costs in the construction sector and low levels of building approvals relative to the population may mean the housing supply response could be slower to materialise.'
Despite these concerns, the government says it is working with universities to expand accommodation options.
'We are making sure student visa processing supports genuine education outcomes and our strategic priorities - including increasing provision of student accommodation,' Home Affairs Minister Tony Burke said in a statement.
But critics argue the system is being gamed.
A survey cited by former Treasury economist Leith Van Onselen revealed that 68.4 per cent of international students intend to remain in Australia long-term.
'Students from South Asia and Africa choose a study destination based on their capacity to gain job rights, a low-cost course, and permanent residency,' Mr Van Onselen told the Daily Mail.
'With the exception of students from China and Europe, all source nations placed a high value on the potential to work while studying and post-study employment opportunities.'
Former government adviser and Australian Population Research Institute President Dr Bob Birrell was scathing of the federal government's handling of the issue.
He told the Daily Mail Labor had neglected migration since returning to government in 2022.
He also pointed to a broader failure of the skilled migration system to ease pressure in the construction sector, claiming it is not adding to the supply of important trades.
The bulk of international enrolments continues to come from China, with 167,147 students recorded in the past year.
But India and Nepal have rapidly climbed to second and third spots, with 123,456 and 57,048 students, respectively.
Assistant Minister for International Education Julian Hill said the government remained committed to growing the sector, particularly with students from Southeast Asia, as long as it aligns with infrastructure planning.
'This government remains committed to sensibly managing the size and shape of the onshore student market and supporting sustainable growth, especially to welcome more students from Southeast Asia and where accompanied by new housing.'
The migration debate has reignited broader concerns around national infrastructure, cost of living, and community services already at capacity.
One Nation leader Pauline Hanson also called for a hard cap on migration, arguing that the system is no longer serving everyday Australians.
'This isn't extreme. It's common sense,' she said. 'Mass migration must stop. The system is broken. Let's fix it and give our people the chance to thrive.'
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