Pearls and Irritations

At over 40 percent of net migration, Australia’s overseas student program was growing unsustainably before the pandemic. The border closures hid many of the problems and led the Coalition Government to make policy changes that made the situation much worse when borders re-opened (unrestricted work rights, fee-free visa applications, covid visa).

The Albanese Government significantly delayed acting on the problems and is now playing catch-up using a mixture of sensible changes (e.g. removing many of the demand boosting policies the Coalition Government put in place) as well as cranking up refusal rates using highly subjective criteria. The latter is unsustainable. A long-term solution is desperately needed as international education lobbyists and university vice-chancellors make a bee-line to the doors of relevant ministers complaining Government’s actions are hurting their revenues.

Overseas student policy needs to manage three key issues.

First, undermining of education standards and visa rorts in an environment where education providers seek to maximise revenue. Allegations of ‘visa factories’ have been around for over 20 years that education quality regulators have patently failed to address. Those problems are not just confined to the private Vocational Education and Training (VET) sector but also afflict higher education providers.The Albanese Government has increased funding and powers of the two main regulators. Time will tell if that is enough to clean up the Industry but I doubt it.

Second, there is the risk of a growing cohort of students who are unable to acquire a high quality and relevant qualification that will get them a skilled and well playing job either back home or one that provides a pathway to permanent residence in Australia. Australia needs overseas students to fill critical long-term skill shortages (eg in health, education, IT and construction trades). That should be the primary objective of the overseas student program with revenue generation secondary.

At the same time, we must avoid leaving students in ‘immigration limbo’ – unable to secure permanent residence and unwilling to go home. The Albanese Government has increased the size of the permanent migration program that will accommodate more overseas students but that will be insufficient to deal with the problem of students being left in ‘immigration limbo’.

Finally, there are infrastructure, housing, service delivery limits to how rapidly government can allow net migration to grow. Prior to the pandemic, overseas students represented over 40 percent of net migration and growing strongly. Both net migration and the contribution of students to that grew even more quickly after borders re-opened.

At over 500,000, net migration in 2022-23 was unsustainable and both the Government and Opposition know this. The Government got itself into this situation partly because it deliberately excluded the issue of immigration levels from the terms of reference of the Parkinson Review and partly because it was determined (as was the Coalition Government before it) not to introduce a long-term target for net migration (ie a de facto population policy) and a policy framework to manage to that. If it had done so, it would have recognised that net migration was blowing out to unsustainable levels by late 2022 and taken action much earlier that could have avoided the current high refusal rate strategy.

Historically it has been unnecessary to set net migration targets because a target for the number of permanent migration visas issued was sufficient. A target for permanent migration has been insufficient for at least a decade due to the size of long-term temporary migration, particularly overseas students.

The Government has belatedly set a de facto net migration target of 235,000 per annum without calling it a target and without introducing a policy framework to manage to that target. It needs to start by being more open with the Australian public about that, including that the net inflow of overseas students is now too high to be consistent with long term net migration of 235,000. The net long-term inflow of overseas students will have to shrink in the next year or two at least.

The Government has announced measures to further tighten student visa policy including a higher English language requirement (which could be increased further if we are to focus on students with a high probability of success) and less generous post-study work rights. But these measures will not be sufficient to get net migration down to 235,000 per annum.

There are suggestions the Government may introduce a provider levy on overseas students to fund regional universities or increase non-refundable student visa application fees to an unprecedented $2,500 per application to fund an increase in Commonwealth Rental Assistance. Both would be poor public policy as these measures are blunt and indiscriminate. They do nothing to target high performing students doing courses consistent with Australia’s long-term skill needs.

A better approach would be to look carefully at the recommendation of the University Accord to better target the courses overseas students are offered to Australia’s long-term skill needs. It requires re-thinking objectives of the overseas student program as the market will not do this on its own. Education providers will always want to offer courses that generate the biggest profit margins not the courses that overseas students need to do to secure skilled, well-paying jobs.

The Government must also ensure through student visa regulations that education providers can only recruit students who meet minimum marks in overseas university entrance exams for entry to university in Australia (a different approach would be needed for VET sector courses). This would not only ensure we target high performing students but would also provide an objective means of adjusting student visa criteria consistent with whatever long-term net migration target Government eventually decides upon.

It would also avoid the situation the UK now finds itself where there are accusations universities are permitting entry of overseas students at lower standards than required for domestic students.

Pearls & Irritations recommends:

A night with the Vice Chancellors – the export of education services. A repost from June 19, 2015

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