Jason Clare wrong on net migration and student caps

Despite the Federal Education Minister's recent assertion that student caps will reduce immigration levels, data reveals how the caps would shatter Treasury's 2024-25 forecast, writes Dr Abul Rizvi.

IN A SPEECH at the Australian Education International (AEI) Conference, Education Minister Jason Clare is reported to have told the audience that student caps will help with ‘the Government’s ambitions to get immigration levels back to pre-pandemic levels, including international student numbers’.

The latest Treasury forecast of net migration in 2024-25 at 260,000, to the extent we can rely on those, is broadly consistent with Clare’s statement. In the three years prior to the pandemic (2016-17, 2017-18 and 2018-19), net migration averaged around 246,000 per annum with the net student contribution to that rising from 104,000 in 2016-17 to 112,710 in 2018-19.

In 2018-19, the net student contribution to net migration had increased to 47%, the highest absolute and proportionate student contribution to net migration in our history (until that record was broken in 2022-23).

Government rationale for student visa caps revealed

The recent announcement of student visa cap numbers highlights the power play between the Education and Immigration departments.

The net student contribution to net migration boomed after international borders were re-opened in 2022 as the Coalition Government had stomped on the student visa accelerator. After peaking in 2022-23 at over 520,000, with the net student contribution to that at around 264,000 (51%), net migration is now falling.

In 2023-24, net migration is likely to have fallen to around 460,000 against an upwardly revised Treasury forecast of 395,000 — an underestimate of around 70,000. With the range of student visa policy tightening that took place in 2023 and in the first half of 2024, the net student contribution to net migration in 2023-24 may well have fallen to the Treasury forecast of 185,000.

For 2024-25, Treasury is forecasting net migration will fall to 260,000 (a decline of around 200,000, or over 42% compared to the likely outcome in 2023-24) with a net student contribution of 130,000. But can we trust the Treasury forecast given its poor net migration forecasting record in recent years?

Student contribution to net migration in 2024-25

Treasury’s current forecasts for the student contribution to net migration are in Table 1.

(Source: Treasury evidence to Senate Hearings on 2 October 2024)

Student caps for 2025 have been set at this stage at 270,000 for just higher education and vocational education and training (VET) students.

That does not include students in other long-term stay student visa streams such as:

school students (8,253 primary offshore visa grants in 2023-24);
post-graduate research students (5,565 primary offshore visa grants in 2023-24);
government-sponsored students (3,452 primary offshore visa grants in 2023-24); and
others (such as students from Pacific Island nations).

When the above cap exempt categories are added, new long-term students in 2025 would be close to 290,000 primary visa holders.

The student caps also exempt non-award students (17,426 primary offshore visa grants in 2023-24) and English Language Intensive Courses for Overseas Students(ELICOS) students (29,007 primary offshore visa grants in 2023-24) who may enter initially on a short-term visa and then extend stay. These would mostly be within the caps for higher education and VET.

As the student caps relate only to primary applicants, secondary applicants who receive a visa are also in addition to the cap. On average, secondary visa holders add another 10% to 15% to the number of primary applicants granted a student visa. The student contribution to net migration, as with all visa types, includes both primary and secondary applicants.

Why offshore student visa grants in 2025 must rise to hit student caps

The recently announced student visa caps have not only caused hysteria in the media but proven to be a poor policy instrument for the Government.

There are then questions around behaviour including:

What portion of capped students (higher education and VET) will remain long-term? It is highly likely this may be around 90% or higher as providers seek to maximise revenue from their capped places.
Will education providers try to hit their caps as quickly as possible in 2025? This would help to put increased pressure on the Education Department to increase caps in 2025 and in 2026.
Will education providers become increasingly creative in finding ways to avoid the caps (for example, converting masters by coursework programs to masters by research programs) and create disincentives for overseas students who want to leave providers early?

Overall, if the student caps (plus long-stay exempt categories) are delivered, it is highly likely net migration student arrivals in 2024-25 would rise significantly, possibly to between 275,000 to 300,000 rather than fall to 195,000 as Treasury has forecast.

If we accept the Treasury forecast for student departures contributing to net migration rising to 70,000 in 2024-25 (there is no detail on how Treasury came to this forecast), the student contribution to net migration in 2024-25 would be well over 200,000 rather than the forecast of 130,000.

If student caps at current levels are to be made the dominant driver of student visa processing, the student contribution to net migration would remain well above pre-pandemic levels and well above Treasury forecasts for 2024-25. Students would be a major driver of net migration in 2024-25 which is likely to come in at around 350,000 to 375,000.

That will be completely contrary to Jason Clare’s recent assertion. Treasury is likely to confirm that when it updates its net migration forecast later this year and again ahead of the 2025 Election.

Dr Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration. You can follow Abul on Twitter @RizviAbul.