BOB BIRRELL. Overseas Students. A labour market program?

As readers of Pearls and Irritations will be aware, Net Overseas Migration to Australia (NOM) in 2017-18 was 236,731. This is equivalent to 0.9 per cent of Australia’s population. NOM was the main source of Australia’s overall 1.6 per cent growth in 2017-18.

Abul Rizvi, in his 27 March blog provided a table on the sources of NOM in 2017-18. It showed that 44 per cent of the 236,731 was attributable to overseas students. https://johnmenadue.com/abul-rizvi-migration-confusion-again-part-2/

Further analysis of the Australian Bureau of Statistics (ABS) source for these NOM estimates shows that overseas students were by far the most rapidly growing component of NOM over the years 2011-12 to 2017-18 (Table 1).

Table 1: Net Overseas Migration (NOM) by visa category, 2011-12 and 2017-18
2011-12 2017-18 Change
Temporary visas
Student visas
VET* sector 1,130 3,844 2,714
Higher education sector 11,480 74,485 63,005
Other students 13,090 26,658 13,568
Student total 25,700 104,987 79,287
Temporary work skilled 34,520 11,341 -23,179
Visitor 28,850 57,392 28,542
Working Holiday Maker 38,900 26,871 -12,029
Other temporary -11,960 -14,427 -2,467
Total temporary visas 116,010 186,166 70,156
Permanent visas
Skilled** 33,260 34,864 1,604
Family 29,180 20,816 -8,364
Other permanent visas*** 6,410 10,867 4,457
Total permanent visas 68,850 66,548 -2,302
Other visas
New Zealand citizens 44,690 6,693 -37,997
Australian citizens -6,860 -14,404 -7,544
Other 9,260 -8,269 -17,529
Total NOM 231,950 236,733 4,784
Source: ABS Migration, Australia, cat. no. 3412.0, 2016-17; ABS Australian Demographic Statistics, cat. no. 3101.0, June 2018, p. 21

Note: According to the ABS, any discrepancies between the totals and sum of the components are due to rounding of some components.

*VET stands for Vocational Education and Training **Includes partners, children and dependent relatives ***Includes humanitarian visas

 

In the absence of this surge in the overseas student contribution, NOM would have fallen to around 150,000. The decline in the contribution of NZ citizens and some temporary visa subclasses was offset by the rising tide of overseas students.

Yet, recent public debate about the NOM issue has been dominated by reference to the skilled permanent migration numbers – including proposals to direct more of these migrants to regional areas.

This debate is a red herring. As Table 1 shows, NOM attributable to skilled permanent visa holders is tiny compared to that of overseas students.

This may surprise since there were 111,009 skilled PR visas issued in 2017-18. The explanation is that NOM is defined as the difference between those arriving in Australia and those departing for each visa subclass. In the case of skilled PR visa holders the majority are being issued to temporary migrants already in Australia (many as we will see, are overseas students). They are not counted as NOM arrivals.

It follows that if there is to be a reduction in NOM one focus must be on the main source of growth – that is, overseas students.

Abul Rizvi comments that any such reduction would be like shooting ourselves in the foot, given the large export revenue they generate.

An alternative view is that if Australia does not reduce the overseas student influx it will be like shooting ourselves in the other foot.

As I show in the report from which this blog is drawn, most overseas students locate in the inner city areas of Sydney and Melbourne. They are the main source of the rapid population growth in these areas. They are the eye in the storm of the congestion and shortages of public services in these locations. They are the main driver of the huge infrastructure bill public authorities have had to incur in order to deal with these problems.

That’s not all. The reason why overseas student numbers have increased so rapidly in recent years is largely attributable to Australian government initiatives to promote the overseas student industry.

There was a brief period between 2009 and 2011 when there was a tightening of the English language and financial requirements students had to meet, as well as the rules governing access to PR or to other temporary visas. The result was that overseas student arrival numbers dropped sharply.

However, following pressure from the overseas student industry these rules were softened and their enforcement devolved to the universities. Access to permanent visas was opened up and a new Work-study temporary visa (485) established. This granted all overseas students who enrolled from November 2011 the right to stay on in Australia for at least two years with full work rights, if they completed a university degree in any field.

The result has been an extraordinary increase in Australian universities reliance on overseas students. Between 2012 and 2017 the share of commencing overseas students of all commencing students in Australia’s universities grew from 21.8 per cent to 28.9 per cent.  In the Group of 8 universities the level has reached around 40 per cent (including 43 per cent at Sydney University).

However, this has fuelled an increase in the number of overseas students without the English language skills needed for university level instruction.  It has also produced an underclass of overseas students who are unable to pay for their fees and living expenses and thus have had to accept the wages and  working conditions employers are prepared to offer them – often well below award levels. This has been to the great detriment of the young domestic workers who are seeking to enter these labour markets.

For evidence of the low English language standards resulting you only have to examine the websites of universities seeking overseas student enrolments. For example, Australia’s regional universities, many of whom have set up shopfront campuses in Sydney and Melbourne, openly state that they only require an IELTS English language standard of 6.0. This is way below the level needed for university courses.

What to do?

The main explanation for the widening gap between overseas student NOM arrivals in departures is that large numbers of overseas students are staying on in Australia after completing their initial courses.

My analysis – based on unpublished Department of Home Affairs data – shows that in 2017-18 19,898 persons who held a higher education overseas student visa at the time or had held such a visa over the previous decade, received a PR visa. Another 14,247 held or had held some other overseas student visa, mainly for a VET course. The total, of 34,145, is equivalent to 21 per cent of all 162,417 visas issued under the migration program in 2017-18. (The program includes skill and family visas, but not humanitarian visas).

The other major avenue facilitating prolonged stay in Australia is the number of former overseas students who obtain another student visa, a temporary work visa or a Work-study visa (485). In 2017-18, 46,711 overseas students were granted a 485 visa.

I think there is a strong case for another bout of reform to the student visa rules that would reinstate English language standards appropriate for university level, tighten the financial rules and would curb overseas student access to additional visas that prolong their stay in Australia.

The overseas student industry should be about quality education and not selling access to Australia’s labour market. True, it would lead to a contraction in overseas student numbers, but in the process it would help save the industry’s reputation and thus help make it more sustainable. These measures would have to be accompanied by more government financial support for the sector.

 

Bob Birrell is the head of the Australian Population Research Institute. This article is drawn from Bob Birrell, Overseas students are driving Australia’s Net Overseas Migration tide, The Australian Population Research Institute, April 2019, https://tapri.org.au/wp-content/uploads/2019/04/Overseas-students-are-driving-NOM-final-18-April-2019.pdf

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1 Response to BOB BIRRELL. Overseas Students. A labour market program?

  1. Peter Job says:

    An excellent article clarifying the mystery behind NOM and the student visas. As can be seen from the data, many view these visas as routes to Permanent Residence. VET and “Other Students” are easy avenues to further residence often well exploited, especially through private “colleges”. While the Students do contribute to the economy and those receiving permanent residence keep down the age profile in Australia, graduates are competing directly with Australian graduates. The Australian graduates have high levels of unemployment and underemployment. Clearly home countries are also deprived of the injection of these newly acquired skills and knowledge from their students who do not return home. The current program and the signficant number moving to stay in Australia puts into question the integrity of the student programs as a whole. And when they are not successful in staying in Australia, there is widespread exploitation of the slow visa processing arrangements and appeal processes to stay longer, earn more money to repatriate home. A major review of the student programs is required to reinstate the integrity of the program and reduce the exploitation.

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