VET Providers Face Extinction as Major Parties Wage Populist War on Foreign Students Despite Critical Skills Shortages
By CAQA Education Correspondents
As Australia grapples with its most severe skills crisis in decades, with a staggering 83,000 trade workers needed to meet housing targets, both major political parties have paradoxically launched unprecedented attacks on the very international education sector that could help solve the problem. With the federal election approaching and housing affordability dominating the campaign, international students have become convenient scapegoats in a cynical battle for votes that threatens to decimate Australia's $51 billion education export industry and exacerbate the nation's crippling skills shortage.
THE $51 BILLION POLITICAL FOOTBALL: VET SECTOR CAUGHT IN THE CROSSFIRE
The Vocational Education and Training (VET) sector, which trained 415,240 apprentices and trainees in 2022, 58% in critical trade occupations, now finds itself at the centre of a destructive political bidding war. International students, who contributed an astonishing $36.4 billion to the Australian economy in 2023 alone, have been recast as villains rather than vital economic contributors by both Labor and Coalition policies.
Labor has already implemented the world's highest student visa fees—a staggering 125% increase to AUD$1,600 in 2024—and announced plans to cap new international student commencements at 270,000 for 2025, with just 95,000 allocated to the desperate VET sector. Not to be outdone in this race to restrict education exports, the Coalition has proposed even more draconian measures: capping international student commencements at 240,000 annually—30,000 below Labor's already damaging threshold—while imposing punitive visa fees of $5,000 for prestigious Group of Eight universities and $2,500 for all other institutions, including VET providers.
Industry leaders warn these policies represent nothing less than a "death knell" for many education providers. Private VET colleges, which have few domestic students due to decades of chronic underfunding, face imminent closure. Labor's cap alone could slash VET enrolments by 60,000 compared to 2023 figures, while the Coalition's deeper cuts promise even more catastrophic consequences, all at a time when Australia desperately needs skilled workers.
THE GREAT HOUSING MYTH: SCAPEGOATING STUDENTS FOR POLITICAL GAIN
Both parties have justified their severe restrictions by claiming international students drive Australia's housing crisis, despite overwhelming evidence to the contrary. The Australian Bureau of Statistics shows international students occupy less than 6% of the national rental stock, with 40% living in purpose-built student accommodation. Department of Education data reveals that even in inner-city areas, only 7% of renters are students, with the highest concentrations in Sydney CBD (42%) and Melbourne City (18%).
The Reserve Bank of Australia has identified the real culprit: insufficient housing supply. Their research demonstrates that a modest 1% increase in housing stock reduces rents by 2.5%, highlighting that supply constraints—not students—drive unaffordability. A University of South Australia study directly investigated the supposed link between international student numbers and rising rents, finding no causal relationship whatsoever.
"This is classic scapegoating," explains Professor Jane Wilkinson from the Mitchell Institute. "Both parties know that international students make easy targets because they don't vote. Meanwhile, they avoid addressing the real issues—inadequate housing supply, tax policies favouring investors, and stagnant wage growth—that would require confronting powerful donor interests like property investors."
ECONOMIC SUICIDE: THE REAL COST OF POLITICAL POSTURING
The economic consequences of these policies extend far beyond the education sector itself. International education stands as Australia's fourth-largest export, generating $8.6 billion in university revenue alone in 2022. The Group of Eight universities warn that the proposed caps could cause catastrophic losses exceeding $500 million annually, forcing job cuts and course closures that would affect domestic students as well.
Even more alarming are the implications for Australia's critical skills shortages. International students fill crucial gaps in healthcare, information technology, and construction sectors facing workforce deficits projected to exceed 500,000 by 2030. The construction industry alone needs 83,000 additional trade workers to meet Australia's ambitious target of building 1.2 million new homes over five years.
"It's economic self-sabotage," states Timothy Dowd, CEO of English Australia. "The student visa fee hikes have already caused applications to plummet by 50% in the English language teaching sector. Coalition plans for $2,500 visa fees would send an unmistakable message: Australia does not welcome students. This jeopardises 250,000 jobs in education and related sectors at precisely the wrong moment."
SYSTEMIC NEGLECT: THE INTEGRITY CRISIS BOTH PARTIES IGNORE
While focusing on headline-grabbing caps and fee increases, both major parties have neglected the VET sector's deeper systemic issues. A 2023 Senate inquiry revealed alarming problems with "ghost colleges" and unethical providers exploiting students for visa access rather than delivering quality education. More than 200 providers have visa refusal rates exceeding 50%, and recent investigations uncovered 17,000 concurrent enrolments in 2023 used to facilitate work rather than legitimate study.
The enquiry recommended a 12-month pause on accrediting new VET providers for international students and increased oversight by the Australian Skills Quality Authority (ASQA). Yet political attention remains fixated on migration numbers rather than quality reforms. Nearly 80 private colleges have been deregistered in the past two years, leaving 20,000 students with worthless diplomas and tarnishing Australia's global reputation as an education destination.
"Neither party is addressing the fundamental issue," argues a consultant from the Independent Tertiary Education Council Australia. "We need to focus on quality over quantity, stronger regulation of providers, and proper funding for the sector. Instead, we're getting a race to the bottom on student numbers while leaving critical integrity issues unaddressed."
THE HUMAN COST: STUDENTS RECONSIDERING AUSTRALIA AS A DESTINATION
The human impact of Australia's increasingly hostile policies extends beyond economic statistics. International students, once eager to contribute to Australian society and its economy, are reconsidering their options. Jenny Liu, a prospective student from China's Anhui province, explains: "Australia was my dream destination, but now the message seems clear—we're not wanted. With visa fees increasing and so much negative rhetoric, I'm looking at Canada instead."
She's not alone. Recent surveys show 27% of prospective international students now prefer Canada over Australia (25%), a concerning trend for a sector already under pressure. The president of a university's International Students' Department notes growing resentment among current students whose contributions are overlooked while post-graduate work opportunities diminish.
"We pay three to four times what domestic students pay, effectively subsidising their education," Agrawal explains. "We contribute billions to the economy, support thousands of jobs, and many of us want to stay and fill critical skills gaps. Yet the political rhetoric treats us as a problem to be solved rather than an asset to be valued."
A CRISIS OF CONTRADICTION: HOUSING TARGETS VS. SKILLS CAPACITY
The political war on international students creates a fundamental contradiction in Australia's economic planning. The Housing Industry Association's analysis reveals the country needs an additional 22,000 carpenters, 17,000 electricians, 12,000 plumbers, 5,000 bricklayers, and 3,000 concreters to meet its housing targets. Yet both major parties are simultaneously implementing policies that will severely restrict the flow of potential skilled workers.
Labor's Advanced Entry Trades Training program, aimed at fast-tracking qualifications for 6,000 tradies through recognition of prior learning, acknowledges the urgent need for qualified construction workers. The Coalition's $260 million plan for 12 Australian technical colleges similarly recognises the skills crisis. Yet these initiatives will be undermined by policies that cut off a vital pathway for skilled migration through international education.
"The hypocrisy is staggering," notes a Professor, an expert in migration economics. "Both parties highlight the construction skills crisis while implementing policies that will exacerbate it. International students who complete VET qualifications in construction trades represent one of our most efficient pathways to addressing these shortages. Many international VET students want to stay and work in exactly the sectors where we face critical deficits."
POLITICAL EXPEDIENCY OVER ECONOMIC RATIONALITY
The contradictory approaches reveal a prioritisation of short-term electoral gains over long-term economic prosperity. Labor's "go slow" visa processing and fee hikes appeal to voters concerned about migration impacts, while the Coalition's hardline caps target housing affordability anxieties. Neither addresses the VET sector's reliance on international fees due to decades of underfunding, as highlighted by the Albanese government's Universities Accord.
The Business Council of Australia and Universities Australia warn that these restrictive policies could significantly reduce GDP growth, with international education contributing nearly a quarter of Australia's economic growth in March 2024. The Reserve Bank of Australia notes that while caps may lower aggregate demand, they also reduce economic capacity, casting doubt on their effectiveness against inflation.
"This is classic political short-termism," explains an adviser. "Both parties are playing to voter anxieties about housing and immigration with simplistic solutions that ignore the complex reality. The economic damage will far outweigh any marginal benefits to housing affordability, and the skills pipeline we desperately need will be severely compromised."
THE PATH FORWARD: QUALITY OVER QUANTITY
As the election approaches, experts argue Australia needs a fundamental reset in its approach to international education and the VET sector. Rather than arbitrary caps and punitive fees, a bipartisan commitment to quality over quantity would better serve national interests. This includes diversifying student markets, strengthening ASQA's oversight of providers, and investing in purpose-built student housing, as Labor has proposed for 2026, albeit too late for many providers facing immediate financial pressure.
"International students aren't the problem—they're part of the solution to our skills crisis," says Professor Chen. "The construction sector alone is projected to need 500,000 new workers over the next five years. We should be facilitating pathways for qualified international graduates to fill these roles, not creating barriers."
With 315,000 new international students commencing in 2023, the proposed caps represent a drastic rollback that threatens jobs, growth, and Australia's reputation. As other countries like Canada, the UK, and the US develop more sophisticated and welcoming approaches to international education, Australia risks permanently damaging its position as a global education leader.
The ultimate irony, experts note, is that by undermining international education in the name of housing affordability, both parties may actually worsen the housing crisis by restricting the supply of skilled construction workers. As HIA managing director Jocelyn Martin warned: "Put simply, if we don't have the tradies coming through, the 1.2 million homes target will be a pipe dream." Australia's political leaders would do well to remember this warning before further damaging a sector that could help solve, rather than exacerbate, the nation's most pressing challenges.
