RBA sounds warning on international student cap

Australia's central bank has warned a looming cap on international students could affect economic growth, as a parliamentary report examining the proposal was delayed.

Under a federal government proposal, 53,000 fewer students from overseas would be allowed to enrol in Australian universities as part of plans to impose a cap of 270,000.

The cap was introduced as part of a bid to slash migration and relieve pressure on housing.

But the latest meeting minutes from the Reserve Bank, released publicly on Tuesday, said the cap could "weigh on services exports".

"Lower numbers of international student arrivals would be likely to reduce aggregate demand ... but also lower growth in population and therefore the economy's supply capacity," the minutes said.

A Senate inquiry report on the international student cap was expected to be handed down on Tuesday but was delayed due to parliamentary debate on the Middle East and the anniversary of the Hamas-led attack on Israel on October 7, 2023.

The report, which will outline whether parts of the measures need to be changed, will be released on Wednesday.

The coalition has indicated that it was supportive of a cap on international students, but there was concern about how the caps were applied.

At a party room meeting on Tuesday, coalition MPs said potential issues centred on the baseline for the cap being set from 2022/23 levels, rather than those before the COVID-19 pandemic.

The 270,000 cap would be split between 145,000 in public universities, 95,000 for VET providers and 30,000 in private universities.

Universities would be able to add more international students to its allocated quota if they build more accommodation.

Peak bodies for the sector have previously slammed the proposed cap, with Universities Australia saying the measure would make students "cannon fodder" in a broader debate about housing.

The Group of Eight, which represents the largest Australian universities, said the cap would not ease housing pressure, but rather exacerbate it.

The federal government had wanted to cut back on the number of international students after the figure peaked at 500,000 in 2022/23.

Education Minister Jason Clare said there had been roughly 10 per cent more international students in universities than there were before the COVID-19 pandemic in 2020, with 50 per cent more in privately run centres.

As part of the university overhaul, laws would also crack down on unscrupulous tertiary education providers.