Australia’s caps on overseas students will replace the much reviled “ministerial direction 107”, which is “throttling” the country’s international education system, according to federal education minister Jason Clare.

Mr Clare told a Sydney forum that the proposed enrolment limits would be “a better way to manage international education” than the directive imposed last December by then home affairs minister Clare O’Neil. It required immigration authorities to give low priority to the processing of visas for students enrolled with institutions rated as immigration risks.

Mr Clare said direction 107 was benefiting some institutions while damaging others. “A lot of universities have come to me over the course of this year and said the impact of that is hurting our universities,” he told the Australian Financial Review Higher Education Summit. “This [imposition of caps] is designed to replace that because it’s a better mechanism. It’ll be fairer and provide a better foundation for [international education] to grow sustainably over time.”

Representative group Universities Australia (UA) said the government should immediately revoke the directive. “Ministerial direction 107 has undermined our efforts as a sector to diversify our international student base and is creating significant financial anxiety and pain for universities, particularly those in regional Australia and outer suburban areas,” said chief executive Luke Sheehy.

“The government should…stem the financial impact it continues to cause and allow universities to operate in a more stable and certain environment that offers equity and diversity of international students among universities.”

Expectations that Mr Clare would announce indicative caps at the conference proved unfounded, with the minister promising more detail in the “coming week”. Shadow education minister Sarah Henderson said she understood that Mr Clare had been planning to announce the “overarching international student cap” but had relented because the government was “still working out what to do”.

“It’s fair to say that I as the shadow minister am struggling with the government’s reform agenda as much as you are,” she told the conference, adding that some small and regional universities were at risk of collapsing over the next few years. “There is enormous uncertainty, and I really do feel very much for [the] position you’re in. This is a wild ride.”

Asked what cap she would be announcing if she were in government, Ms Henderson said “we don’t have a number”. Asked how her Liberal Party could achieve its migration reforms “without cutting overseas student numbers very significantly”, given its commitment to a long-term net migration target of 160,000 per annum compared with the Labor government’s 235,000, she said “we will have more to say about that in the lead-up to the election”.

Migration expert Abul Rizvi said the debate about Australia’s student caps had been mischaracterised as cutting the “stock” of overseas students in Australia. “What the government is doing is slowing the growth rate of the stock,” he told the conference.

“We need to stop talking about slashing student numbers, because student numbers aren’t being slashed.”

Dr Rizvi said overall student numbers remained buoyant despite the government’s migration target. He said there had been a “marked increase” in the student visa approval rate in June, while July had been a “huge” month for student arrivals.

“The stock of students continues to grow [albeit] more slowly. How it’s spread across different sectors and different universities – that’s probably the more interesting question.”

john.ross@timeshighereducation.com