ERROL PARKER | Editor-at-large | Contact
Prime Minister Anthony Albanese has today defended his government’s decision to increase international student intake despite Australia’s deepening housing crisis, warning that the country’s fragile economic ecosystem depends on maintaining the delicate balance between overcrowded share houses, massively overpriced degrees and unsustainable rent yields.
Speaking at a property industry lunch in Betoota Heights, the Prime Minister said that any move to slow the intake of international students could have “devastating consequences” for two of the nation’s three core economic pillars, the property speculation market and the tertiary education industry.
Under the current arrangement, universities act as unregulated migration funnels, generating billions in revenue by offering substandard degrees to desperate foreign students, many of whom view study as a pathway to permanent residency. The institutions use this revenue to hire more marketing staff and build more architecturally-offensive glass towers, in order to attract more students, whose fees pay for the next round of hiring more staff on tenuous rolling contracts and needless construction.
With limited government funding and no cap on enrolments, universities have become reliant on this exponential growth model. Economists have long described the system as a textbook Ponzi scheme, a cycle that must continually and ruthlessly expand to remain solvent, with each new intake propping up the last. Any disruption in flow causes immediate structural collapse.
At the same time, each new arrival injects additional pressure into the rental market, driving up prices and lowering vacancy rates, an arrangement welcomed by investors who rely on negative gearing, tax offsets, and rising rents to justify their sixth mortgage. And good on them, they’re only playing the game the government lets them.
With commodity prices plateauing and household consumption falling, the government is again turning to its reliable national business model. Dig up rocks, flip houses to each other, and sell $150,000 master’s degrees to the children of Asia’s emerging middle class.
Analysts warn any attempt to fix the system could break it.
More to come.
