The government is to crack down on bogus visas where people come to Australia from abroad on student visas but then go into jobs instead of study.
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The new legislation will also attempt to regulate agents in Australia and abroad who facilitate these fake entry applications.
Under the new rules, the minister for education is to be given the power to set ceilings on numbers. These limits will depend partly on the needs of the economy and what skills are deemed necessary.
The minister would set the ceiling after consulting with the minister for skills and training.
The government intends to work with colleges and universities "to limit the number of international students that can be enrolled over a particular period of time".
If universities want to enroll more international students than the limit allows, they would have to set up more purpose-built student accommodation.
The second strand of the legislation will attempt to regulate the visa agents, many of whom are based in Australia.
There have been reports of all kinds of scams where ambitious students in other countries pay a lot of money for an education visa which turns out to be bogus.
There have also been reports of people abroad paying for student visas and then going straight into work when they arrive.
A report last year in Victoria concluded migration linked to vocational education should be immediately reviewed. It was misused and the system should be transformed.
At the moment, the government believes there is little regulation of what is a lucrative business.
Education Minister Jason Clare said: "Our international education sector is incredibly important to our country.
"International students are back but so are the shonks seeking to take advantage of them.
"These reforms are designed to ensure the integrity, quality and ongoing sustainability of this vitally important sector. "