Tony Burke orders his department to process student visas on a priority basis

The Albanese Government is imposing a de facto cap on international students by slowing down visa processing despite Peter Dutton blocking legislation to formally limit the numbers coming to Australia.

Home Affairs Minister Tony Burke has issued a new direction to his department ordering it to process student visas on a priority basis until they reach 80 per cent of the threshold for a particular university or vocational provider.

Visa applications would continue to be processed once the threshold was reached but at a slower pace.

Mr Burke, Education Minister Jason Clare and Training Minister Andrew Giles insisted this arrangement was not a cap but said it let the Government better manage student numbers.

A spike in international students returning to Australia after the pandemic border closures lifted has contributed to record-high net overseas migration.

The Opposition has repeatedly linked this to the housing affordability crisis – but university students largely live in different types of accommodation to that sought by families – and said it would cut the number of students coming to Australia.

But Mr Dutton backflipped at the last minute to oppose legislation imposing caps on how many international students universities and vocational providers could accept.

He claimed the caps would help the biggest universities at the expense of regional institutions. The sector’s reaction indicated the opposite was true.

Mr Clare said the new approach would better support regional providers while managing the flow of international students.

“Peter Dutton’s reckless arrogance killed the student cap and in the process, he killed his credibility,” he said.

“It shouldn’t just be the big inner-city unis that benefit from international education. TAFEs, regional and suburban unis should benefit too, and this new approach will help us do that.”

Mr Burke said the cap the coalition voted down would have been “the best option … but this option will still allow us to use one of the biggest levers in our migration system”.

The peak body for universities said the previous ministerial direction, which was revoked under the new arrangements, had wreaked havoc and stripped billions of dollars from the economy and providers.

“This is the commonsense decision that was desperately needed to deliver some of the certainty and stability our universities have been seeking,” Universities Australia chief executive Luke Sheehy said.

But the union representing academics and university staff feared any limiting on student numbers could threaten jobs.

Curtin University vice-chancellor Harlene Hayne said the new arrangements ended “weeks of uncertainty for the international education sector” and noted her institution had carefully managed its growth.

“MD111 offers greater clarity on how visa processing will operate and will give our international students more certainty about enrolment,” Professor Hayne said.

“International students come from more than 120 countries and make a valuable cultural contribution to our campuses and their fees allow Curtin to provide a high level of academic support to all of our students, both domestic and international.”

International students make up less than 20 per cent of Curtin’s onshore cohort, and no one country accounts for more than 15 per cent of those enrolments.

The mid-year budget update added another 80,000 people to the forecast net migration for the current financial year, but Treasury still thinks it will drop back to a more usual level of about 255,000 the next year.

It also revealed arrivals were back at expected levels but the number of people leaving the country remained lower than anticipated.