Will Australia’s proposed cap on international students do more harm than good?

Given the dependence of many Australian universities on international student fees, a significant drop in enrolments with no corresponding increase in government funding will likely yield a decline in the quality of teaching and research, a reduction in academic staff, and a precipitous tumble down the world university rankings. 

This would do considerable damage to Australia's fourth largest "export". If the forecasts are accurate, why would the federal government embark on legislation that amounts to an act of national self-harm?