International students are being treated as "cannon fodder" in political battles over migration, university peak bodies say, as the government looks to cap numbers.
Universities Australia chief executive Luke Sheehy criticised the proposal during a parliamentary hearing into the education changes, saying they were being rushed through for political gain on immigration ahead of the next election.
Under the proposed laws, the federal government would be able to set caps on the number of international students able to enrol in a course, which could be increased if extra accommodation is built.
While the government said the changes were needed to crack down on international student exploitation by providers, Mr Sheehy said it would not address the issue within universities.
"International students only make up four per cent of the total private rental market. Using students as cannon fodder in a poll-driven battle over migration and housing simply doesn't add up," he told the inquiry on Tuesday.
"We believe the bill, as drafted, is more a political smokescreen than an instrument for good policy."
The home affairs department previously said there had been a growth in "non-genuine students and unscrupulous providers" using the sector as a backdoor to enter Australia.
Chief executive of the Group of Eight Vicki Thomson, which represents some of Australia's most prestigious universities, said the archetypes of unscrupulous tertiary providers were not present in universities.
"Migration is shaping up as a key battlefront in the lead up to the federal election, and the university sector is shaping up to be the fall guy, unfairly and unjustifiably so," she said.
"(The proposed laws) are draconian, interventionist and amount to economic vandalism."
Business groups have also lashed out at the proposed changes, with the Australian Chamber of Commerce and Industry saying a crackdown on providers was tarnishing legitimate operators.
The chamber's skills director said there were fears dodgy providers would continue to operate.
"We're concerned that the rhetoric surrounding this bill is too loose, that it implies a natural association between being privately owned and being shonky and unscrupulous," she told the committee.
"This bill, as currently drafted, appears to build from these false assumptions, and therefore risks penalising these legitimate providers, stifling new entrants into the market."
Business Council of Australia executive director Wendy Black said a student cap would limit investment in domestic students at universities.
"International student revenue is essential for the overall operation and opportunities for domestic students," she said.
"Operating costs have increased by around 25 per cent over the past decade, and universities have had to fill that gap."
Mr Sheehy said the imposition of a cap on enrolment numbers from overseas lead to 60,000 fewer international students studying at Australian universities.
"It would represent a $4.3 billion hit to the economy and could cost the university sector alone over 14,000 jobs, not to mention the flow-on effect for small businesses, which heavily rely on international students."
While Mr Sheehy said he supported part of the reforms to crack down on dodgy providers, caps on international students was not the way to do it
"Many universities have the capacity to grow and continue to grow to deliver for their local communities," he told reporters in Canberra.
Universities, business groups, unions, legal experts and the department will later on Tuesday give evidence to the parliamentary committee scrutinising the bill.
The committee will report by August 15.
