A plan by the Australian government to cap international student numbers in higher education could cost 14,000 jobs and billions of dollars, the peak body for universities has said.

Universities Australia Chief Executive Luke Sheehy told a senate inquiry on Tuesday that the government is unfairly blaming international students for the nation’s housing crisis.

He described the proposed legislation to limit the number of international students that can be enrolled at universities and private training colleges from January 2025 as ministerial overreach to an unprecedented extent.

The Australian Financial Review reported on Monday that universities and colleges will be allowed to enroll a maximum of 40 percent of their students from overseas for two years under the government plan.

Sheehy told the inquiry that approval rates for higher education student visas have fallen 23 percent last year, the equivalent of 59,410 university students, costing the economy 4.3 billion Australian dollars (2.7 billion U.S. dollars) and putting 14,000 university jobs at risk.

“The impact of having some 60,000 fewer international students arrive on our shores is significant,” he said.

“International students accounted for more than half of Australia’s gross domestic product (GDP) growth last year, almost single-handedly saving the nation from recession,” he said.

Ministerial Direction 107 issued in December 2023 ordered the Department of Home Affairs to prioritize the visa applications of international students enrolling in the country’s most reputable educational institutions.

Sheehy said that the direction has undermined the efforts of the higher education sector to diversify the international student base and created significant financial anxiety and pain for universities.

In a separate submission to the inquiry, Independent Higher Education Australia Chief Executive Peter Hendy said that international student caps would be a catastrophic event for the sector and cause many businesses to close down immediately.