Canberra’s dormant proposal to cap international enrolments will be revived, most likely through a rewriting of the widely reviled “ministerial direction 107” (MD107), a credit ratings agency has predicted.

Assessment agency S&P Global Ratings says the Australian government will sidestep parliament to limit overseas student numbers after its attempt to legislate caps was thwarted by the opposition.

“We expect the government will introduce new measures or tweak existing measures to curb the flow of international students into Australia,” S&P says, in a report by analyst Frank Dunne. “This could include invoking powers under the Migration Act to limit the number of student visas…or a new ministerial directive to limit student numbers more equitably across the sector.

“To meet its ambitious migration targets, the government will need to cut the intake of international students, one way or another.”

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Educational insiders have been expecting an announcement of new measures to cap foreign student commencements while undoing some of the damage inflicted by MD107.

The most likely mechanism appears to be a rewriting of MD107 to apply the indicative caps that universities and colleges were advised of in August and September. If an institution had been told that it would be limited to 1,000 overseas student commencements, for example, staff would be instructed not to issue more than 1,000 visas to non-exempt students enrolled with that institution.

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The new directive would also require staff to prioritise visas for many of the institutions most disadvantaged by the past year’s arrangements, including regional and outer metropolitan universities and public vocational training institutions.

Other students would be processed in order of the migration risk ratings of their intended institutions, as occurs now.

Consultant and former regulator Claire Field raised this approach as an option for the government after the opposition said it would block the bill to legislate the caps.

Ms Field said that while she did not consider the approach “good policy”, it would achieve the government’s objectives of cutting short-term migrant numbers while limiting the damage to struggling public institutions.

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“That’s quite easy to do,” she told a webinar in late November. “Change a ministerial direction. It doesn’t require legislation; doesn’t require argument and negotiation.”

Ms Field said the government should take the opportunity to correct some of its proposal’s most glaring “flaws”, such as the generous indicative caps allocated to over a dozen colleges that are currently appealing their deregistration for serious alleged breaches of training rules.

She said that if those colleges’ places were reallocated and other methodological shortcomings in the caps proposal were fixed, most universities, most private training colleges and all private higher education providers would receive more favourable quotas, while the overall number of new students would be reduced.

Times Higher Education understands that most universities have kept their international student recruitment in low gear, in anticipation of a revival of the caps proposal.

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The management of caps through MD107 reduces the risk of institutions exceeding their quotas, and the nightmare scenario of legitimately enrolled students being turned away at the university gate or the border.

The S&P report says MD107 has been “particularly tough” on regional universities, whose new overseas student commencements have fallen by about 40 per cent this year. The directive has also hampered efforts to diversify source markets by boosting China’s dominance, the report says.

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john.ross@timeshighereducation.com