overseas students are driving australia's net overseas migration … · 2020. 2. 13. ·...

TheAustralianPopulationResearchInstitute,ResearchReport,April2019

OverseasstudentsaredrivingAustralia’sNetOverseasMigrationtide

BobBirrell

TheAustralianPopulationResearchInstitute<tapri.org.au>POBox12500MiddleCamberwellVictoriaAustralia3124

Reportauthor

BobBirrell(mobile0413021126)istheHeadoftheAustralianPopulationResearchInstitute(TAPRI),anindependent,non-profitresearchorganisation.HewouldliketothankKatherineBetts,DonandTriciaEdgarandBobKinnairdfortheireditorialsuggestions.HewouldalsoliketothankVirginiaRapsonforeditorialassistanceandlayoutofthereport.ArticlespublishedbytheAustralianPopulationResearchInstitutemayberepublishedprovidedtheinstituteanditswritersareappropriatelycredited,andalinkismadetoourwebsite<tapri.org.au>.

Anyarticlesreproducedcannotbeeditedoranymaterialsoldseparately.

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BobBirrellExecutivesummary...............................................................................................................................v

Introduction..................................................................................................................................1

TheoverseasstudentcontributiontoNOM.......................................................................................1

Maybeit‘sjustatemporaryimbalancebetweenarrivalsanddepartures.....................................4

Thesignificanceoftheofficialstockfigures...................................................................................5

Theliberalisationofstudentvisastandards......................................................................................6

Reformbacktrack...........................................................................................................................7

ThewateringdownoffinancialcapacityandEnglishlanguagestandards....................................7

Accesstoapermanentresidence(PR)visa.....................................................................................8

Theuniversityandoverseasstudentresponsetoliberalisation.......................................................9

Theuniversityresponse–twodistinctmarkets..............................................................................9

HowmanyoverseasstudentsgetPR?..............................................................................................10

ContributionofstudentstoNOMviaprolongingtheirstayinAustralia.........................................12

Prolongingtheprocess..................................................................................................................13

Implications.......................................................................................................................................14

Australia’smigrantintakeislowskilled........................................................................................14

Theurbancongestionissue...........................................................................................................15

Theriseandfallofthehigh-riseapartmentindustry....................................................................16

Wantshouldbedone?......................................................................................................................18

References.........................................................................................................................................20

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BobBirrell

TheAustralianPopulationResearchInstitute

ExecutiveSummary

ThereiswidespreadawarenessthatoverseasstudentsarealargeandgrowingpresenceinAustralia.

Butfewobserverswouldknowthatby2017-18overseasstudentswerethelargestcontributortoAustralia’sveryhighlevelofNetOverseasMigration(NOM).AccordingtoAustralianBureauofStatistics(ABS)estimates,overseasstudentscomprised104,987oftheoveralllevelofNOMof236,733in2017-18(Table1).That’s44percentoftotalNOM.

OverseasstudentsholdinghighereducationvisaswerethedominantsourceofthiscontributiontoNOM.(SeedefinitionofNOMonpp.1-2.)

Norwouldmanyobserversbeawarethat,overthesixyearsfrom2011-12to2017-18,overseasstudentswerebyfarthelargestgrowthpointinAustralia’sNOM.Theircontributionincreasedfrom25,700in2011-12to104,987in2017-18(Table2).

Intheabsenceoftheincreasingcontributionofoverseasstudents,Australia’sNOMwouldhavedeclinedtoaround150,000.ReductionsinNOMovertheseyearsfromNewZealandersandthoseontemporaryworkvisas(amongothers–seeTable2)wereswampedbytherisingtideofoverseasstudents.

ThestudentshareofNOMin2017-18of104,987wasfargreaterthanthatattributabletomovementsofthoseholdingpermanentresidencevisas–whichwas66,548in2017-18(seeTable1).

YetalmostalltherecentdebateaboutthesizeofNOMandtheCoalitiongovernment’sproposalstodealwiththescaleofNOMhasfocussedonthepermanentresidentcomponent.TheCoalitionplanstoreducetheimpactonSydneyandMelbournebydivertingsomewhoobtainpermanentvisastoregionalareas.

Thefarmoreimportantsizeoftheoverseasstudentcomponenthasbarelyratedamentioninthisdebate,eitherbytheAustraliangovernmentorcommentatorsonthemigrationissue.NoraremanycommentatorsawarethatoverseasstudentsarebyfarthelargestcontributorstopopulationgrowthininnerSydneyandMelbourne(p.16).

Partofthereasonforthisneglectisthatmostobserversthinkthatwiththepermanententrymigrationprogramsetat190,000overrecentyears,itmustbethemainsourceofthegrowthinAustralia’smigrationpopulation.Itisnot.Nearhalfofthosereceivingapermanententryvisain2016-17werealreadyresidinginAustraliawhengrantedthevisa.AsaconsequencetheyarenotincludedinthecountofNOMarrivalswhoarepermanentresidentvisaholders.

Thisleadstothecentralpointofthispaper.Mostpeopleareconcernedaboutthescaleofmigration.Itisnotabigissuewhethertheformalmigrationprogramispushedupordownabit.NOMisthebestindicatorofthisscare.Onthismetric,overseasstudentsarefarmoreimportantcontributorstoAustralia’spopulationgrowththanthenetinflowofpermanententryvisaholders.

ThisreportexaminestheconsequencesofgrowthintheoverseasstudentpresenceforthelabourmarketsandforthecongestionissuesnowafflictingSydneyandMelbourne.ItalsohasmuchtosayaboutthedeclineinteachingstandardsinAustralia’suniversities.Theseuniversitieshavehadto

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accommodateahugeincreaseinthenumberofoverseasstudents.Between2012and2017,theshareofcommencingoverseasstudentsofallcommencingstudentsinAustralia’suniversitiesgrewfrom21.8percentto28.9percentandtoaround40percentinGroupofEight(Go8)universities.

Howdidexplosioninenrolmentscomeabout?ItwasadirectconsequenceofAustraliangovernmentpolicy.

Overtheyears2009-2011,theLaborgovernmenttightenedtherulesonEnglishlanguageandfinancialrequirementsaswellasaccesstoonshorepermanentresidence(PR)visasforoverseasstudents.ThiswasinresponsetoasurgeinthenumberofoverseasstudentswhoweremanagingtousetheirstudentvisaasanentrypointintoAustralia’slabourmarketandforobtainingapermanententryvisa.

Asaresultofthesereforms,thenumberofhighereducationoverseasstudentvisasissued,whichhadpeakedat133,859in2008-09,droppedto113,160in2011-12.

Followingprotestsfromtheoverseasstudentindustry,theLaborgovernmentcommissionedaninquiry(theKnightReview)publishedin2011.Thisreportrecommendedthereversalofthe2009-11reforms.

TheLaborgovernmentsubsequentlywatereddowntherulesonEnglishlanguageandfinancialrequirementsforoverseasstudentsandlargelydevolvedtheirimplementationtotheuniversitiesthemselves(seepp.6-8).Again,followingKnight,theuniversitieswereofferedfurtherenrolmentinducements.Themostimportantwasthecreationofanewpost-studyworkvisa(485).ThisgavealloverseasstudentswhohadcompletedanyhighereducationdegreeinAustraliatherighttostayonforatleasttwoyearswithfullworkrights.

ThesemeasuresalloweduniversitiestorecruitoverseasstudentswithverylimitedacademicpreparationandEnglishproficiencyandwithoutsufficientfundstofinancetheirlivingexpensesandfeesoverthedurationoftheircourse.

InregardtoEnglishlanguageskillstheAustraliangovernmentnowpermitsuniversitiestomaketheirownjudgementsastoEnglishlanguagerequirements.Theycansettheseatbelowthelevelneededtocopewithuniversitylevelinstruction,iftheychoseto.Manydo,includingtheregionaluniversitieswhohavesetup‘shopfront’campusesinSydneyandMelbourne.Theyonlyrequirelevel6.0ontheIELTStest,whichisfarshortofwhatisrequiredforuniversitycourses(p.10).

Astothefundssituation,manythousandsofoverseasstudentsarebeingenrolledwhodonotholdthefundsneededtofinancetheirstayinAustraliaformorethanashortperiod.Theyhavetorelyonobtainingemploymenthere.Theyhavecreatedanunderclassofworkerswithlittlechoicebuttoacceptwhatevertermsemployersarepreparedtooffer(p.7).

Australia’suniversitieshaverampeduptheirrecruitmentefforts.Twodistinctmarketshaveemerged.OneistheChinesemarket,whichhasbeendominatedbytheGo8universities.Theychargeveryhighfees($40,000plusayear).Mostofthesestudentsreturnhomeaftercompletingtheircourses.

TheothermainmarketisthatfromtheIndiansubcontinent.Non-Go8universitiesaremainlocusofthesestudents.Theseuniversitieschargeabitover$20,000ayear.TheirmainattractiontosubcontinentstudentsappearstobetheaccesstheygaintotheAustralianlabourmarketandtothepossibilityofobtainingapermanentresidencevisa.

Overseasstudentenrolmentsinbothmarketshavegrownrapidlysince2012.

ThereportthentraceshowthisincreasedoverseasstudentpresencehastranslatedintothehugegrowthinNOMattributabletooverseasstudentsdescribedabove(pp.10-13).

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Thishasoccurred,inpart,asaresultofthesuccessofoverseasstudentsinobtainingaPRvisawhileinAustralia.AsshowninTable4,some23,602managedtodosoin2016-17.Thismeansthataround20percentofrecentoverseasstudenthighereducationcompletionsobtainedaPRvisainthatyear.

AmoreimportantcontributiontothisoverseasstudentcontributiontoNOMisthehighpropensityofoverseasstudents(especiallythosefromthesub-continentofIndia)toseekandobtainanothertemporaryvisaeachyear.Table5providesanindicationofthesenumbers.Themostimportantofthesepathwaysisthe485visa.In2017-18,46,711overseasstudentsweregranteda485visa(Table5).

AnimportantindicatorofthedeterminationofmanyoverseasstudentstostayoninAustraliaistheirhighpropensitytoappealanydecisionbytheDepartmentofImmigrationtodenythemanadditionalvisa.ThisenablesthemtostayinAustraliawhiletheirappealisheardbytheAdministrativeAppealsTribunal(p.14).

Implications

ForAustralia’suniversities,therehasbeenanerosionofteachingstandardsandaresultingmountingthreattotheirreputation.Thisflowsfromthecreationofoverseasstudentenclavesinthefieldsthesestudentsfocuson,mostlyinbusiness,administrationandtoalesserextentinformationtechnology.UniversitieshavehadtoadjusttheircurriculumandteachingstandardstoaccommodatethelimitedacademicpreparationandoftenpoorEnglishskillsofthestudentsinquestion.

ForthewiderAustraliansociety,thefloodofoverseasstudentshashadmajorimpactsonthelabourmarketandqualityoflifeinAustralia’smajormetropolises,particularlySydneyandMelbourne.

Astothelabourmarket,migrationadvocatesliketoclaimthattheinfluxofmigrantsisaugmentingAustralia’sskilledworkforce.Thisisnotthecasefortheoverseasstudentcomponent.

AnylinkbetweenAustralia‘sskillneedsandtheoverseasstudentworkforceisfortuitous.Thereisnoskillfiltergoverningtheentryandstayofoverseasstudents,excepttoalimiteddegreeforthosewhoobtainatemporaryworkvisa(6,098in2017-18accordingtoTable5)orapermanententryskillvisa.

MostofthoseholdinganoverseasstudentvisadonotpossessprofessionalortradequalificationsacceptedinAustralia.And,becausetheyholdtemporaryvisas,employersareusuallyonlywillingtorecruitthemonacasualorpart-timebasis.Theyenterlow-skilledlabourmarkets(notablyinhospitality,retailandotherserviceindustries).Thecostsarebornebythemanyyoungdomesticworkerswhodonotpossesspost-schoolqualificationsandwhoarealsoseekingworkintheseoccupations.Thesedomesticjobseekersfaceferociouscompetitionfromoverseasstudentsandothertemporarymigrants.Thishaserodedwagesandconditions.

Regardingqualityoflifeissues,themainimpactistheexacerbationofcongestionissues,again,mainlyinSydneyMelbourne.Asnoted,overseasstudentsarethemainsourceofpopulationgrowthininnercitySydneyandMelbourne.Theyarelocatingintheeyeofthestormofthesecongestionproblems.Intheabsenceofoverseasstudents,theneedtotransformtheselocationsforhigh-riseapartmentblocks,torebuildinnercityinfrastructureandincurthemassivefuturepublicdebtresulting,wouldbefarless.

Whattodo?

Theoverseasstudentindustryneedsanothereraofreformthatwillreversetheliberalisationmeasuresimplementedsince2011.Thismaynothappensoonbecauseoftheiconicstatusoftheoverseasstudentindustry,particularlyitssuccessasageneratorofexportincome.

However,cracksareappearinginthisfaçade,especiallywiththegrowingawarenessofthedeteriorationoftheuniversities’educationalstandards.

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Itishopedthattheinformationinthispaperwillcontributetogreaterpublicawarenessoftheneedforareviewoftheoverseasstudentindustry.In2016theProductivityCommissionwarnedthattheindirectcostsoftheoverseasstudentindustry‘couldpotentiallyoffsetthenetbenefitstothecommunity’(p.1).Theevidencegatheredinthisreportsuggeststhatthiswarningisnolongersomethingthatcould‘potentially’happen.Itisalreadyevident.

ThereisanobviousneedtoreducetheburdensofAustralia’smigrationinflux.Actionshouldstartwithreformsoftheoverseasstudentcomponent–ratherthanfiddlingwiththepermanententryvisaprogram.

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OverseasstudentsaredrivingAustralia‘sNetOverseasMigrationtide

Introduction

In2016theProductivityCommissionwarnedthattheindirectcostsoftheoverseasstudentindustry‘couldpotentiallyoffsetthenetbenefitstothecommunity’.1Thisreportarguesthattheseindirectcostshaveincreasedsignificantlyinrecentyears,mainlyasaresultofchangesimplementedfollowingthe2011KnightReviewoftheoverseasstudentindustry.2

Thesechangesmadeitmucheasierforforeignnationalstoobtainastudentvisa.ThisisinlargepartbecausetheAustraliangovernmentabdicatedthevettingofoverseasstudentsintermsofacademicstandards,languageabilityandfinancialviabilitytotheuniversities.

ThechangeshavealsomadeiteasierforoverseasstudentstostayandworkinAustraliaaftercompletingtheirstudies.

Overseasstudentshave,since2011-12,becomethelargestsourceofgrowthofAustralia’sNetOverseasMigration(NOM).TheconsequencesincludenegativeimpactsonthejobmarketforAustralianresidentsandthewell-documentedgrowthinexploitationofoverseasstudentsandgraduatesinthejobmarket.

Inaddition,overseasstudentshavebecomethechiefsourceofpopulationgrowthininnerSydneyandMelbourneandthusmajorcontributorstoeachcity’scongestioncrisis.

Butthat’snotall.

TheyareaffectingthequalityofhighereducationthroughlowerentrystandardsandpoorqualityEnglishlanguagelevels.Inordertoattractevermoreoverseasstudents,Australia’suniversitieshavehadtocreatelearningenclaves,mainlyinbusinessandadministrationcourses.IntheseenclavesthestandardsforEnglishlanguageskills,academicpreparationandlearningoutcomeshaveallhadtobeadjusteddownwardsinordertoattractandcopewithoverseasstudents.3

ThispapersetsouttheevidenceforthesecoststotheAustraliancommunityandarguesthatpoliciesimplementedbysuccessivegovernmentssincethe2011KnightReviewmustbereversed.

ThepaperbeginsbydocumentingthescaleoftheoverseasstudentcontributiontoNOManditsremarkableincreasesince2012.

Itthenexplorethefactorsthathavecontributedtothisoutcome.ChiefamongstthesehavebeenthedeliberategovernmentpolicychangessincetheKnightReviewdesignedtopromotetheoverseasstudentindustry.

Thefinalsectionofthereportelaboratesontheindirectcostsofthegrowthinoverseasstudentnumbersflaggedabove.

TheoverseasstudentcontributiontoNOM

OverseasstudentsarecurrentlythemaindriversofthemigrantcomponentofAustralia’spopulationgrowth.In2017-18NetOverseasMigration(NOM)was236,733.Thisisequivalentto0.9percentofAustralia‘spopulation.NOMwasthemainsourceofAustralia’sveryhighpopulationgrowthratein2017-18(1.6percent).ThisgrowthrateiswellabovethatofallotherWesterncountries.

NOM,asdefinedbytheAustralianBureauofStatistics,isthedifferencebetweenNOMarrivalsandNOMdepartures.Allmovers,whethermigrantsorresidentsareincluded.Tobeclassifiedasanarrivala

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movermuststayinAustraliaforatleast12monthsofthe16monthsafterarrival,andtobeclassifiedasadepartureapersonmustbeoutsideAustraliaforatleast12monthsofthe16monthsfollowingthedeparture.4

TheAustralianBureauofStatistics(ABS)providesestimatesforthemajorvisasubclassesmakingupthetotalofNOMarrivalsanddepartures.Theseestimates,detailedinTables1and2,arebasedonthevisasubclasswhichthemoverholdsatthetimeofarrivalordeparture.Ifanarriverchangeshis/hervisawhileinAustralia,thedepartureisrecordedasthevisawhenthepersonleaves,notthevisaheldwhenthepersonarrived.Thispointmustbekeptinmind(aswewillremindreaders)wheninterpretingthetables.

ThisprocedurewillhelpexplainthepuzzlethataccordingtoTable1therewasonly87,775permanentvisaholderarrivalsin2017-18.Yettherewere162,417permanentresident(PR)visasissuedunderthemigrationprogramfor2017-18andthousandsmoreunderthehumanitarianprogram.Whytheshortfall?TheansweristhataroundhalfthesevisaswereissuedtomigrantsalreadyinAustraliawhowereholdingatemporaryvisaandthusarenotclassifiedasNOMpermanentarrivals.Manyofthese,aswewillsee,wereholdinganoverseasstudentvisa.

Here‘sthedemographicevidenceofAustralia’sveryhighNOManditsconstituentsaccordingtotheABSclassification.

Table1showsthatby2017-18overseasstudentsmadeup104,987or44.3percentofAustralia’sNOM.Thestudentsharewasfargreaterthanthatattributabletonetpermanentmigrationof66,584inTable1.

Table1:NetOverseasMigration(NOM),arrivals,departuresandnetbymajorvisatypes,2017-18 Arrivals Departures NetTemporaryvisas

Studentvisas VET*sectorTsector

18,503 14,659 3,844Highereducationsector 105,485 31,000 74,485Otherstudents 35,448 8,790 26,658Studenttotal 159,436 54,449 104,987Temporaryworkskilled 26,541 15,200 11,341Visitor 78,020 20,628 57,392WorkingHolidayMaker 49,286 22,415 26,871Othertemporaryvisas 14,067 28,494 -14,427

Totaltemporaryvisas 327,350 141,186 186,166Permanentvisas

Skilled** 43,014 8,150 34,864Family 26,516 5,700 20,816Otherpermanentvisas*** 18,245 7,378 10,867

Totalpermanentvisas 87,775 21,227 66,548Othervisas

NewZealandcitizens 30,236 23,543 6,693Australiancitizens 76,338 90,742 -14,404Other 4,000 12,269 -8,269

TotalNOM 525,698 288,965 236,733Source:ABSAustralianDemographicStatistics,cat.no.3101.0,June2018,p.21Note:AccordingtotheABS,anydiscrepanciesbetweenthetotalsandsumofthecomponentsareduetoroundingofsomecomponents.*VETstandsforVocationalEducationandTraining**Includespartners,childrenanddependentrelatives***Includeshumanitarianvisas

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YetalmostalltherecentdebateaboutthesizeofNOMandhowitmightbereducedhasbeenonthenetpermanentmigrationcomponent.

Thisleadstothecentralpointofthispaper.Mostpeople’sconcernsaboutmigrationstemfromthescaleandpaceofgrowthofmigration.Giventheseconcernsitisnotabigissuewhethertheformalmigrationprogramispushedupordownabit.It’stheoverallnumberofmigrantsthatmatter.Forthis,NOMisthebestindicator.And,overrecentyears,thecontributionofoverseasstudentstoNOMhasbeenmuchmoreimportantthanthatderivingfrompermanentmigration.

ItfollowsthatifthereistobeanyabatementtoAustralia’sverylargeNOM,overseasstudentshavetoamajorpartofthediscussionandthesolution.

Withinthestudentsector,highereducationwasthemainsource.ThetotalstudentcontributiontoNOMin2017-18was104,987andofthese,highereducationwasresponsiblefor74,485.

Table2showsthatboththesizeoftheoverseasstudentcomponentanditsshareofNOMhasgrownrapidlysince2011-12.TheoverseasstudentshareofNOMwasjust11.1percentin2011-12(comparedwith44.3percentin2017-18).

Again,thehighereducationsectorwasthemajorcontributortotheoverallgrowthinstudentNOMbetween2011-12and2017-18.Itcomprised63,005outoftotaloverseasstudentNOMgrowthof79,287.

Thisiswhyourmainfocusisonthehighereducationsector.

Table2:NetOverseasMigration(NOM)byvisacategory,2011-12and2017-18 2011-12 2017-18 ChangeTemporaryvisas

Studentvisas VET*sector 1,130 3,844 2,714

Highereducationsector 11,480 74,485 63,005Otherstudents 13,090 26,658 13,568Studenttotal 25,700 104,987 79,287Temporaryworkskilled 34,520 11,341 -23,179Visitor 28,850 57,392 28,542WorkingHolidayMaker 38,900 26,871 -12,029Othertemporary -11,960 -14,427 -2,467

Totaltemporaryvisas 116,010 186,166 70,156Permanentvisas

Skilled** 33,260 34,864 1,604Family 29,180 20,816 -8,364Otherpermanentvisas*** 6,410 10,867 4,457

Totalpermanentvisas 68,850 66,548 -2,302Othervisas

NewZealandcitizens 44,690 6,693 -37,997Australiancitizens -6,860 -14,404 -7,544Other 9,260 -8,269 -17,529

TotalNOM 231,950 236,733 4,784Source:ABSMigration,Australia,cat.no.3412.0,2016-17;ABSAustralianDemographicStatistics,cat.no.3101.0,June2018,p.21Note:AccordingtotheABS,anydiscrepanciesbetweenthetotalsandsumofthecomponentsareduetoroundingofsomecomponents.*VETstandsforVocationalEducationandTraining**Includespartners,childrenanddependentrelatives***Includeshumanitarianvisas

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Table2alsoshowsthatovertheyears2011-12to2017-18therehavebeensubstantialdropsinNOMderivingfromtemporaryskilledworkersandfromresidentsofNewZealand.Theformerisduetotheresetinthetemporary457workvisaintroducedin2017.This,asisdetailedlater,madeaccesstothisvisasubclass,andtosubsequentpermanentresidence,muchmoredifficult.ThelatterreflectsbetteremploymentprospectsintheNewZealandeconomy.

Withoutthegrowthintheoverseasstudentcontribution,Australia’sNOMwouldhavefallentoamoremanageablelevelofaround150,000by2017-18.Instead,Australia’shighNOMhasbeensustainedbytheincomingtideofoverseasstudents.

Maybeit‘sjustatemporaryimbalancebetweenarrivalsanddepartures

Oneresponsemaybethattherethatthereisnoreasontopanic.Inaperiodwhenoverseasstudentenrolmentshavegrownrapidly,wewouldexpectagaptoopenupbetweenoverseasstudentNOMarrivalsanddepartures.PerhapstheoverseasstudentcontributiontoNOMwillsubsideshouldnewoverseasstudentenrolmentsstabilise.Ifso,thenumberofdepartureswillgraduallycatchupandthecontributionofoverseasstudentstoNOMwillfall.

Theuniversitiesandtheirindustryrepresentatives,implythatthiswillbecase.TheyarguethatoverseasstudentscometoAustraliatoconsumeAustralia’shighqualityeducationalofferings.Whentheyfinishtheyleave.AccordingtotheChiefExecutiveofUniversitiesAustralia(UA),CatrionaJackson,morethan85percentofinternationalstudentsreturnhomeaftertheirstudies.5

Thevalidityofthis85percentestimateisexaminedshortly.Butthisisnotthemainpoint.UAignorestheincreasingtendencyforoverseasstudentstostayoninAustraliaaftercompletingthecourseinwhichtheyfirstenrolled.SomedomanagetoobtainaPRvisaandsomestayonbyobtaininganothertemporaryentryvisa.WhenthelatterleaveAustraliatheywillbecountedasNOMdeparturesunderthevisasubclasstheyheldatthetimeofdeparture.InthemeantimetheyaccumulateinAustraliathuscontributingtothegulfinNOMstudentarrivalsanddeparturesshowninTable1.

ThemainreasonoverseasstudentsareextendingtheirstayinAustraliaisinordertoparticipateintheAustralianlabourmarketonatemporaryorlongtermbasis(viaobtaininganothertemporaryresidencevisaoraPRvisa).

Overseasstudentscandothisbecause,asnoted,since2012,successiveAustraliangovernmentshaveliberalisedtherulesallowingsuchextendedstays,withthegoalofpromotingtheoverseasstudentsindustry.

TherulechangesresultinghavefuelledaremarkableriseinthenumberofoverseasstudentscomingfromtheIndiansubcontinent(India,Nepal,PakistanandSri-Lanka).Thenumberofoffshorestudentvisasissuedtosuchstudentsincreasedfrom14,110in2012-13to51,305in2017-18.OffshorestudentsarethosewhoweregrantedavisawhenapplyingoutsideAustralia.OnshorestudentsarethosewhoobtainedastudentvisawhileinAustralia.

AustraliaisanattractivedestinationtoyoungpeoplefromtheIndiansubcontinentbecauseitofferstheprospectofextendedstayswiththeopportunitytoaccumulatehardcurrency.Asshownlater,theyhaveprovedtobetenaciousstayers,avidlytakingupavailableopportunitiestochurnthroughadditionalvisasandtopursueapermanentresidenceoutcome.

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TheothermajorgrowthsourcehasbeenfromChina.ThenumberofoffshorestudentvisasissuedtoChinesenationalsincreasedfrom22,638in2012-13to47,794in2017-18.MostofthisenrolmentgrowthhasoccurredinGo8universities.

ThereisakeydifferencebetweentheChineseandtheIndiansubcontinentmarkets.Forreasonsexploredlater,theformerhaveamuchlowerpropensitytostayoninAustraliathanthelatter.

Thesubsequentfocusisonthesetwodistinctivemarkets.Together,theydominatethehighereducationsector,constitutingaround75percentofallhighereducationoverseasstudentenrolments.

Thesignificanceoftheofficialstockfigures

OnemorepieceofstatisticaldatasetoutinTable3willhelpsetthescenefortheanalysis.

ThesearetheofficialstockorsnapshotfiguresforthegrowthinthenumberofoverseasstudentsactuallyinAustraliaoverrecentyears.TheAustraliangovernmentknowshowmanymigrantsareinAustralia,byvisasubclass.ItknowsthisbecauseitholdsauniqueelectronicidentifieronallpersonsenteringorleavingAustralia.ThesnapshotfiguresarenotdirectlycomparablewiththeNOMfiguresshowninTables1and2because,asdetailedabove,tobedefinedasaNOMarrivalordeparturerequiresaspecifiedlengthofstayordeparturefromAustralia.Bycontrast,thestockdatabyvisasubclassrefertothoseactuallyinAustraliaregardlessofhowlongtheyhavebeenhere.

Wehaveincludedthenumbersholdinga485visainthetable.TherighttoobtainthisvisawasgreatlyextendedfollowingtheKnightReview.Allhighereducationoverseasstudentswhoenrolledfortheirfirsteducationvisaonorafter5November2011wereeligibleforapost-studyworkvisaiftheycompletedaqualificationatthedegreelevelorabove.Thispost-studyworkvisaallowseligiblerecipientstostayinAustraliaforatleasttwoyearswithfullworkrights,providedthattheyapplyforthevisawithinsixmonthsofcompletingtheirqualification.

So,toappreciatethescaleoftheoverseasstudentpresenceinAustralia,thoseholdinganoverseasstudentvisaandthoseholdinga485visamustbeincluded–sincethebigmajorityof485visaholdersareformeroverseasstudentswhohavebeengrantedapost-studyworkvisa.

Thesheerscaleofthesestockfiguresisarresting.Therewere558,091personsholdinganoverseasstudentvisaora485visainAustraliaasofmid-2018.That’sequivalentto2.2percentofAustralia’spopulation.

Nonetheless,wewouldexpectanapproximatematchwiththeNOMdata.InTable1,thenetgrowthinNOMattributabletothedifferencebetweenNOMstudentarrivalsanddeparturesfor2017-18was104,987.

Thisishigherthantheincreaseofoverseasstudentvisaholdersand485visaholdersinAustraliabetween30June2017and30June2018showninTable3–whichwas60,711.

Table3:SnapshotofthenumberofpersonsinAustraliaonastudentvisaora485visa*

Asof30JuneStudentvisa

holders485visaholders Total

Increaseonpreviousyear

2013 304,248 36,224 340,472 -2014 339,761 25,198 364,959 24,4872015 374,564 25,079 399,643 34,6842016 401,423 37,717 439,140 39,4972017 443,798 53,582 497,380 58,240

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2018 486,934 71,157 558,091 60,711Source:AustralianGovernment,studentand485visastockfigures,pivottables*Includesbothprimaryandsecondary(partnersandchildren)visaholders

MuchoftherestofthisgapstemsfromthepropensityofoverseasstudentstostayoninAustraliabytakingoutanothertemporaryvisaandbytheirsuccessinobtainingaPRvisa.Thesizeofthesetwostreamsisexploredbelow.

TounderstandthescaleofthesecontributionstothegapbetweenoverseasstudentNOMarrivalsanddeparturesrequiresananalysisoftheAustraliangovernment‘srulesontheallocationofoverseasstudentvisasandtheextenttowhichtheserulesallowsuchstudentstostayoninAustraliabyobtainingsomeothertemporaryvisa,orPRvisa.

Istartwiththeserulechanges,thenexplorethepropensityofoverseasstudentstotakeuptheopportunitiesresultingandofAustralianuniversitieswillingnesstorecruitmoreoverseasstudentsandtoadjusttheirteachingprogramstoaccommodatethesestudents.

Theliberalisationofstudentvisastandards

Bythelate2000s,Australiahadinplacefarmoregenerousopportunitiesforoverseasstudentstostayonthanwasthecaseforthemaincompetitorcountries,theUKandtheUSA.TheseprivilegesextendedtoVocationalEducationandTechnology(VET)studiesaswellasuniversitylevelcourses.

Theoutcomesweredisastrous.

Throughthe2000stheseopportunitiescreatedaspaceforentrepreneurialeducationproviderstoenterthemarket.Theydidsoinastoundingnumbers,particularlyattheVETlevelandparticularlyincookingandhairdressingcourses.Theattractionofthesecourseswasthatalevel3CertificatequalificationintheoccupationsconcernedwasallthatwasrequiredforaPRskillvisa.Bythelate2000sthereweremoreformeroverseasstudentsgainingPRskilledvisaswithcookingcredentialsthanforanyotheroccupation.MostofthesestudentscamefromtheIndiansubcontinent.

Between2009and2011,aspublicattentionwasdrawntothegamingofthesystem,theLaborgovernmentimplementedmajorreforms.FromJanuary2010,prospectivestudentshadtodemonstratethattheyhadaccessto$18,000ayeartofundtheirlivingcostswhileinAustralia,upfromtheprevious$12.000ayear.ThetaskofassessingwhetherthefundswereactuallyavailablewasleftwiththeDepartmentofImmigration.6

Anothercrucialchangewasthatcookingandhairdressingwereremovedfromthelistofeligibleoccupationsforapoints-testedskillvisa.Overseasstudentenrolmentsinthesecoursesthenplummeted.

TheVETsectoroftheoverseasstudentindustryhasrecoveredsomewhatbutisnowherenearthelevelsitreachedinthe2000s,largelybecauseitnolongerfunctionsasanavenuetoaPRvisa.

Thehighereducationsectorinitiallytookahitasaconsequenceofthesereforms.TheyincludedtighterrulesontheleveloffundswhichstudentshadtoshowthattheycouldaccessinordertofinancetheirstudiesinAustralia.HigherminimumEnglishlanguagestandardswerealsointroduced.TheminimumEnglishlevelrequiredforstudentsfromthemajorAsiancountries,includingIndiaandChina,wassetat6.0ontheInternationalEnglishLanguageTestingSystem(IELTS).Asexplainedlater,thislevelwasnotadequateforuniversitylevelstudies.Nonethelessitwassoontobewatereddown.

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Thoughhighereducationgraduatesremainedeligibleforpoints-testedskilledvisaswhentheyhadcompletedtheirstudies,therangeofeligibleoccupationswasrestrictedtothosethattheCommonwealthDepartmentofEmploymentassessedasbeinginnationalshortage.

Thenumberofhighereducationoverseasstudentvisasissued,whichhadpeakedat133,859in2008-09,droppedto113,160in2011-12.

Reformbacktrack

Thesenew,tougherrulesdidnotlastlong.Asaresultofuniversityconcerns,theLaborgovernmentcommissionedaninquirywhichreportedin2011(theKnightReview).Thereviewmadenobonesaboutitsmotivation.Itsrecommendationswereexplicitlyaimedatrevivingthehighereducationoverseasstudentindustry.7

TheLaborgovernmentacceptedalltherecommendationsintheKnightReview.Ministerschosetohighlighttworecommendationsinparticular:immediatelyreducingthefinancialrequirementsforsomestudentvisas‘...withstudentsnowneedingaround$36000lessinthebankwhenapplyingforavisa‘;andthecreationofanewtwo-tofour-yearpost-studyworkvisa’.8

Thelatterinnovation(the485visadiscussedabove)wasparticularlyimportant.ItwasputinplacealongwithanexistingGraduateworkvisathatwasfarmorerestrictive.Thenewpost-studyworkvisagaveajuicyinducementtoanyoverseasstudentcontemplatingstayingoninAustralia.ItwasmadeavailabletoallhighereducationoverseasstudentswhoenrolledfromNovember2013andwhocompletedanydegreelevelcourse(regardlessofthefieldofstudy).ItguaranteedthateligiblestudentscouldtostayoninAustraliaforatleasttwoyearswithfullworkrights.

AscanbeseenfromTable3,thisvisahasprovedtobeverypopular.ItgaveuniversitiessomethingtoselltoprospectivestudentsthatwasfarmoregenerousthananythingthatappliedintheUKandtheUSatthetime.

ThewateringdownoffinancialcapacityandEnglishlanguagestandards

Allthatisleftofthetoughpre-Knight‘financialcapacity’rulesisthatstudentsmust‘demonstrateordeclarethattheyhavesufficientfundstocoverthecostoflivingandtomeettheirtuitionandtravelcostswhilestudyinginAustralia’,9butforgenerallyshorterperiodsthanappliedpre-Knight(12-36months).Applicantsfromdesignatedlow-riskcountriesgenerallyneedonly‘declare’theyhaveaccesstotherequiredfundsfor12monthswhileallothersneedto‘demonstrate’thisviaformalevidencetotheeducationinstitutionortotheDepartmentofImmigrationtheyhaveaccesstothesefunds.

Wheredocumentaryevidenceoffinancialcapacityisrequired,thetwomainoptionsarethe‘12monthsfund’optionorthe‘annualincome’option.Thefirstrequiresthattheoverseasstudentcancovertuitionfeesforayearonly,pluslivingcostsofAUD20,290fortheprimarystudentvisaholderandadditionalfundsforpartnerandanychild(AUD7,100andAUD3,040respectively).TheannualincomeoptionrequiresstudentstoprovideevidenceofpersonalannualincomeofatleastAUD60,000.ForstudentsaccompaniedbyfamilymemberstheamountisAUD70,000.Theserequirementsarepro-ratedforcoursesoflessthanafullyear.10

Inmostcases,thetaskofassessingastudent’scapacitytofinancehisorherfeesandlivingexpenseshasbeentakenfromtheDepartmentofImmigrationanddevolvedtotheuniversitiesthemselves.

ThiswateringdownofthefundsrequiredtoobtainastudentvisameansthatstudentvisasarenowbeinggrantedtoanunderclassofforeignnationalswhohavetoworkinAustraliajusttosurvive.Forexample,the2016reportbytheFairWorkOmbudsman(FWO)intothe7-Elevenfranchisenetwork

8

foundthat‘notwithstandingadeclarationthatinternationalstudentsmakewhenenteringAustralia,ourevidencesuggestsmanydoneedtoworktopayforfoodandaccommodation’.11

TheformerDepartmentofImmigrationandBorderProtection(DIBP,nowsubsumedintotheDepartmentofHomeAffairs)websiteusedtostipulateexplicitlythatinternationalstudentsshouldnotrelyonworktopayfortheirstudyandlivingexpenses,butthatcautionhasgonebythewayside.

AsimilardevolutionstrategywasimplementedwithEnglishlanguagestandards.Undernew‘streamlinedassessmentprocedures’introducedin2012theuniversitieswerelefttomaketheirownjudgementastotheEnglishstandardsstudentsneededfortheirproposedcourse.

Theuniversitiesweregivenextraordinaryleeway.Thepreviousminimumstandardof6.0ontheIELTStestwasabandoned.Universitiescouldapprovestudentswhoscoredaminimumof5.5ontheIELTStestor5ontheIELTStestifthestudentagreedtotakeaten-weekEnglishLanguageIntensiveCourseforOverseasStudents(ELICOS)oreven4.5withanaccompanying20-weekELICOScommitment.

The5.5leveliswaybelowwhatisneededforastudenttocopewithuniversitylevelinstructionandperformancestandards.Level7.0isrequiredforthis.ThisisbecauseitisonlywhenstudentsreachthisstandardaretheyareabletothinkinEnglish–andthusdon‘thavetotranslatetoandfromtheirfirstlanguageintoEnglishinordertocomprehendalectureortext.12Thatiswhymostoftheprofessionalaccreditingagencies,includingCPAAustralia(oneoftheagenciesresponsibleforaccreditingaccountingdegrees),currentlyrequireaminimumof7.0whentheydeterminewhetheraprospectivemigrantfromaNon-English-Speaking-Background(NESB)countrymeetstheEnglishlanguagestandardsneededforapoints-testedpermanentskillvisaintheirrespectiveoccupations.

Inpractice,mostAustralianuniversities,includingtheGo8,requireaminimumIELTSscoreof6.5forundergraduatecourses.Thoughnotadequate,aswewillsee,someAustralianuniversitiesonlyrequireatestscoreof6.0.Theycandosofreefromanyconcernthatagovernmentauthoritywillintervene.

Thesearrangementsforuniversitieswererestatedwithminormodificationsin2016.AllthattheImmigrationDepartmentrequiresbeforeissuinganoverseasstudentvisaisthattheapplicantprovidesaConfirmationofEnrolmentbytheuniversity.IfthisisforthcomingtheDepartmentassumesthattheapplicanthasmetthefinancialandEnglishlanguagestandardsthattheproviderthinksareappropriatefortheproposedcourse.

Thisprocedureappliesforbothoffshoreandonshorestudentvisaapplicants.However,inthecaseoflatter,theprovidermaynothavetoaskforanyevidenceregardingEnglishlanguagestandardsforstudentsfromNESBcountries.ThisapplieswheretheapplicanthascompletedtwoyearsofstudyinAustraliaattheSeniorSecondaryCertificateleveloraspartofapost-schoolqualificationwhileholdingastudentvisa.ThismeansthatanoverseasstudentwhohasstruggledtomanagesuchacourseonaccountoflowEnglishcapacitycantransferontoanotheruniversityorVETcoursewithoutanyfurtherEnglishlanguagetest.

ThereisanominalprovisionthattheDepartmentofEducationisresponsibleforensuringthatprospectivestudents’qualificationsandEnglishlanguageskillsareappropriatetotheircourseofstudy.ButthereisnoevidencethattheDepartmentactuallyintervenestoensurethatthisisthecase.

AstotheacademicpreparednessofoverseasstudentstocopewithAustralianuniversitystandards,thereisnogovernmentguidanceatall.Itislefttotheproviderstomakethisjudgement.Allthatisrequiredforenrollinginanundergraduatelevelcourse(exceptforthoseenrollinginmedicine)isaseniorhighschoolcredential(fromanycountry).InthecaseofenrollingforaMastersbyCourseworkinthemainfieldsofbusinessandmanagementandIT,allthatisrequiredisevidencethatthecandidatehascompletedanundergraduatedegree(againfromanyuniversityinanycountryandinanyfield).

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Accesstoapermanentresidence(PR)visa

TheAustraliangovernmentalsoweakenedtherelativelystrictrequirementsthatoverseasstudentswhohadobtainedtheiruniversitycredentialsinAustraliahadtomeetinordertobeeligibleforapoints-testedPRskillvisa.Therequirementthatthesegraduateshadtohavethecredentialsrelevanttooccupationsinshortsupplywasditched.Asdocumentedelsewhere,thisprovisionhasbeendeemednottoapplyforthemajorfieldsofstudythatmostoverseasstudentscompleteatAustralianuniversities,whichincludeaccounting,ITandengineering.13

Finally,since2012theAustraliangovernmenthasopenedupanewpathwaytoPRbygreatlyincreasingthenumberofvisasallocatedforemployersponsorship.Overseasstudentshavebeenabletoaccessthesevisasbyfirstobtaininganemployersponsorshiptoatemporarywork(457visa)thenasubsequentpermanententryemployersponsorshipvisa.TheCoalitiongovernment’s457Reset,initiatedin2017,(discussedlater)reversedsomeoftheseconcessions.

Theuniversityandoverseasstudentresponsetoliberalisation

Allofthesechangesputuniversitiesinastrongpositiontorecruitmoreoverseasstudents,shouldtheywishtodoso.ForstudentsinterestedinstayingoninAustraliaandultimatelyobtainingaPRvisa,theUniversitiesweregiventheopportunitytoofferaplacementontermsthatwerehighlyfavourablerelativetooverseascompetitors.

Inaddition,theirmaindomesticcompetitor,theVETsector,wasineffectscratched.Asnoted,therightofaccesstothenewtwoyearpost-studyworkvisawaslimitedtothosewhocompletedadegreelevelqualification.

Overseasstudentscouldnowenrolinbusiness,managementandITcoursescustomisedtoaccommodatethosewithlimitedEnglishskillsandacademicpreparation.ThesecourseswerestructuredtoprovidetheminimumcourseworkcurriculumneededforemploymentinthebusinessandITprofessions,asleastasjudgedbytherespectiveaccreditingauthorities.

Theuniversityresponse–twodistinctmarkets

Asnoted,thedemandforuniversityplaceshasfocussedaroundtwodistinctmarkets.ThefirstofthesewastheChinesemarket,whichconstitutesaroundonethirdofhighereducationenrolments.

ThoughmanyChinesestudentsinthe2000swereinterestedinstayingoninAustralia,thishasbeenmuchlessthecasesince2012.TheChinesemarkethassincebeendominatedbyGo8universitieswhocharge$40,000plusayearforbusinessandcommercecourses,mostlyattheMastersbyCourseworklevel.Thesestudentsappeartobeattractedbytheprospectofgainingaprestigiouscredentialfromauniversitythathadachievedaplaceinthetop100oftheworld’sresearchorienteduniversities.MostGo8universitieshaveachievedsucharanking.

GraduatescouldreturntoChinawiththeexpectationthattheirprestigiouscredential,alongwithforeignexperienceinanEnglish-languagecountry,wouldprovideapathwaytoemploymentwithfarbetterprospectsthanwouldhavebeenavailableiftheyhadstayedinAustralia.Mosthavereturned,andrelativelyfewhavetakenuptheoptionofthepost-studyworkvisa.14

AllthatwasrequiredoftheGo8universitieswasthecreationofcoursesthataccommodatedthelimitedEnglishandacademicskillspossessedbyChinesestudents.

EnrolmentsofChinesestudentshaveincreasedstronglysince2012,mainlyinGo8universities.

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ThestoryisquitedifferentfortheIndiansubcontinentmarket.ThishascateredforstudentswithaninterestinusingentrytoAustraliaviaahighereducationcourseasapathwaytostayingoninAustralia’slabourmarketandultimatelygainingaPRvisa.Mostofthesestudentsenrolinundergraduatecourses.

Universityenrolmentsfromthesecountrieshavegrownsharplyasaresultoftherecruitmentincentivesimplementedsince2012.Asindicatedabove,thenumberofoffshorehighereducationstudentvisasissuedtoIndiansubcontinentcitizens(fromIndia,Nepal,SriLankaandPakistan)increasedfrom14,110in2012-13to51,314in2017-18orby264percent.

AlmostallofthesestudentshaveenrolledinAustralia‘snon-Go8universities.TheseuniversitieschargearoundhalfthecoursefeessetbytheGo8forsimilarbusinessandcommerceandITcourses,butprovidethesameaccesstoapost-studyworkvisaandthepotentialofobtainingaPRvisa.

Atellingsignofthekeennessofuniversitiesinthissecondmarketsectortoexploitthenewenrolmentopportunitiesistheemergenceofanew‘forprofit’privateuniversitysector.Growthinthissectorismuchfasterthanforthepublicuniversitysector,thoughoffalowbase.15Anotheristhere-emergenceofAustralia‘sregionaluniversitiesasmajorplayersviatheestablishmentofshop-frontcampusesinSydneyandMelbourne,customisedfortheIndiansubcontinentmarket.

TorrensUniversity,whosemaincampusislocatedinAdelaide,isthelargestwithinthe‘forprofit’sector.IthasrecentlybeenestablishedasabranchofthegiantprivateLaureateInternationalUniversities.Injustafewyearsithasreachedmorethan5,000overseasstudenthighereducationenrolments.

Astotheregionaluniversities,themostprominentisCharlesSturtUniversity(CSU).ItsmainbaseisinAlbury-Wodonga.IthasestablishedstudycentresinMelbourne,SydneyandBrisbane,alllocatedinofficeblockswithintherespectiveCBDs.ThenumberofcommencingoverseasstudentsatCSUincreasedfrom1,262in2012to3,679in2016.ItisattractinglargenumbersofIndianstudents.By2016thereweremoreIndiancommencementsatCSU(1,864)thaninanyotherAustralianuniversity.16CentralQueenslandUniversity,abigplayerinthe2000s,isalsobackinthemarket.Itestablishedanewcampusin2015intheMelbourneCBD,justoppositetheSouthernCrossrailwaystation.

Thecompetitivepitchoftheseuniversitiesisnotjusttheirrelativelylowfeestructure(around$20,000ayear).AllthreeofthosejustcitedonlyrequireaminimumEnglishlevelof6.0ontheIELTSsystem.Asnoted,Englishatthisleveliswaybelowthatrequiredforprofessionallevelcourses.ThisinvitestheconclusionthattheyareprimarilysellingnoteducationbutaccesstotheAustralianlabourmarket.

Wenowturntoexaminingthedemographicimplicationsoftheseresponsestoliberalisation.TowhatextentareoverseasstudentstakingupthenewopportunitiestoenrolandsubsequentlystayoninAustralia?Let’sstartwiththePRoutcomes.

HowmanyoverseasstudentsgetPR?

Theanswertothisquestionhasbecomeapoliticalhotpotato.UniversitiesAustralia(UA)assertsthatmostoverseasstudentsareattractedtoAustralianuniversitiesbecauseofthequalityoftheeducationoffered.Theyprofitfromthisandthenreturnhome.ThustheUAclaim,notedearlier,that85percentofstudentsleaveAustraliaaftercompletingtheircourses.

UAsourcesthisclaimtothecombinedTreasuryandDepartmentofHomeAffairsstudyreleasedin2018entitledShapingaNation:Populationgrowthandimmigrationovertime.

Thisreport‘sfindingsarebasedonaDepartmentofImmigrationanalysisofallthosewhoheldastudentvisaovertheyears2000-01to2013-14.Thisanalysisconcludesthat16percentobtainedaPRvisa.17Themeritofthisstudyisthatittrackedallthepossiblepathwaysbywhichstudentsmighthaveended

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upwithaPRvisa,suchasthosewhomovedfromastudentvisa,thentosomeothertemporaryvisathentoaPRvisa.

However,theTreasuryreportprovidesnoinformationontheannualshareofoverseasstudentswhofinishtheircoursesinAustraliaandwhosubsequentlyobtainaPRvisawhileinAustralia.ToassessthislevelrequiresacomparisonofthenumbersgainingaPRvisaasashareoftheannualnumberofoverseasstudentcompletions—andthedatamustbelimitedtothosegainingaPRvisawhilestillinAustralia.Wecanthrowsomelightonthematter.Atourrequest,theDIBPinterrogateditsdatatocalculatetheannualtotalofthenumberofthosewhohaveatsomepointheldastudentvisawhileinAustraliaandwhosucceededinobtainingaPRvisaineachoftheyears2011-12to2016-17.TheoutcomeswerelimitedtothosewhoobtainedthisvisawhilestillinAustralia.

ThereasonforthisspecificationwasthatwewantedtheresultstoberelevanttounderstandingthegulfinthenumberofoverseasstudentNOMarrivalsanddeparturesshowninTable1.ThosewhoreceiveaPRvisawhileinAustralia,andthusareunlikelytoleaveAustraliaonalongtermbasis,helpexplainsomeofthisgap.

Theresults,showninTable4,arepublishedhereforthefirsttime.Thenumbershaveincreasedsince2012-13,asmightbeexpectedgiventhegrowingoverseasstudentpresenceinAustraliaandtheincentivesprovidedtothesestudentstostayoninAustralia.Thegrowthinthestockof485visaholdersisparticularlyimportantinthiscontextbecomeitallowsformeroverseasstudentsmoretimetoaccumulatetheworkexperienceandEnglishlanguageskillsneededforaPRvisa.18

Table4:Permanentvisasissuedtostudentvisaholders*onshore,2012-13to2016-17Visastream 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17Family 9,872 10,080 10,102 9,234 8,426 9,185Skill 9,299 7,743 9,807 11,348 12,392 14,383Other 55 100 26 16 24 34Total 19,226 17,923 19,935 20,598 20,842 23,602Source:DIBPwhichwasrecentlysubsumedwithintheDepartmentofHomelandAffairs,unpublished*Includesallwhoatanytimeheldastudentvisa(includingthoseholdinganothertemporaryvisaatthetimetheyobtainedapermanentresidencevisa).Note:Allfiguresaresubjecttovariationandtherecanberevisionsanddelaysintransmission.

WeconcludethatthenumbersgainingPRwhileinAustraliadohelpexplainsomeofthegulfbetweenoverseasstudentNOMarrivalsandNOMdeparturesshowninTable1,sinceonaveragearound20,000overseasstudentsorformerstudentsaregainingaPRvisaeachyearwhileinAustralia.

ButwhatdothesenumberstellusabouttheshareofoverseasstudentswhocompletetheircoursesandthensubsequentlyobtainaPRvisa?Nopreciseanswerispossible,giventhevariedpathwaysandthevariedtimewhichoverseasstudentstaketoachievethisoutcome.

However,aroughestimateispossible.ForthisweneedtocomparetheannualnumberofhighereducationstudentcompletionstotheannualnumberofPRvisasgrantedtoformerstudents.In2015,thereweresome113,486overseasstudenthighereducationcompletions.Thisisnotthefullpotentialdenominator,ofcourse,sincetheremanyotheroverseasstudentswhofinishedanEnglishlanguageorVETcoursein2015.However,fewofthese,forreasonsexplainedabove,wouldhavebeeneligibleforaPRvisa.

AssumingthatthegreatmajorityofthesePRrecipientswerehighereducationgraduates,andthattheyobtainedaPRvisawithinayearorsoofgraduation,itappearsthatin2016-17near20percentoftheoverseasstudenthighereducationcompletersin2015(thatis,23,602ofthe113,486completionsin

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2015)obtainedaPRvisa.Asacknowledged,thisisatentativejudgement,giventhatthepathwaysformeroverseasstudentshavetofollowbeforeobtainingaPRvisavary,asdoesthetimetheytaketoachievethisoutcome.

Coincidently,a2014Go8reportcitesaDepartmentofImmigrationstudy(notreferenced)totheeffectthatoneinfiveinternationalstudentswillgainpermanentresidenceeachyear.19

The20percentestimateisnotmuchlargerthantheUAassertionthatonly15percentstayoninAustralia.DoesthisendorsetheUAimplicationthatstudentscometoAustraliatostudyandthen,inthegreatmajorityofcases,leave?

Itdoesnot,becauseUAignorestheincreasingpropensityofoverseasstudentstostayoninAustraliaonanothertemporaryvisa.

Forsomestudentsandformerstudents,anextrafewextrayearsinAustraliaallowstimetoaccumulatehardcurrencybeforereturninghome.ForthoseattractedtotheprospectofobtainingPR,theaspirationtostayoninordertoachievethisoutcomeisnotawilddream.Theydonotknowthepreciseodds,butwitharoundoneineveryfiveamongstthoseobtainingadegree-levelqualificationeachyearobtainingaPRvisa,theirfriendsandmigrationagentscanciteplentyofexamplesofstudentswhohavemadeit.

Theproblemisthatithasrecentlygotalotharder,becauseofrecenttighteningofaccesstoPRvisas.

Asnoted,theCoalitiongovernmenthasreducedthenumberofpermanententrymigrationprogramvisasfrom190,000toaround160,000,makingcompetitiontougherforapplicantswhetherlocatedoffshoreoronshore.IthasalsoimpededsomeofthepathwaystoobtainingsuchvisasforoverseasstudentsinAustralia.Inparticular,the457ResetannouncedinMay2017sharplyreducedthenumbersofstudentswhocanaccessa457/482visaimmediatelyaftergraduationandthen,afterseveralyearsofemployment,gettheemployertoinitiateapermanententryEmployersSponsorshipvisa.20

TheseinitiativeshavemadeitharderforoverseasstudentstoprocureaPRvisa.TheyhavegiventheoverseasstudentsaffectedanadditionalincentivetofindotherwaysofstayingoninAustralia.

ContributionofstudentstoNOMviaprolongingtheirstayinAustralia

Thenumberofoverseasstudentswhoshifttoanothertemporaryvisaisverylarge,some192,905in2017-18.ThesedataderivefromthedestinationstatisticsthattheDIBPpublisheseachyearonthenumberofpersonsholdingastudentvisawhoobtainanothervisa,byvisasubclass.TheyareshowninTable5for2017-18.(Destinationherereferstothenewvisathatapersononanexistingstudentvisaobtains.)

Table5:Numberofvisagrantstooverseasstudentsand485visaholderswhoweregrantedanothervisain2017-18byvisasubclass*Destinationvisa Overseasstudents 485visaholders

Overseasstudent 73,797 6,661

485visa 46,711 -

Visitor 44,310 1,870

Family(PR) 6,194 784

Skill(PR) 7,942 11,513

Temporarywork 6,098 1,359

WorkingHolidayMakerandworkandholiday

3,081 229

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Total 192,905 22,536Source:DIBP,BR007StudentandTemporaryGraduateProgramreport,30Jun2018.*Includesaccompanyingfamilyandbothoffshoreandonshoreapplicants.

Thedatahastobeusedcautiouslybecauseitincludesvisasgrantedtoformerstudents(includingspousesanddependents)whowerelocatedbothoffshoreandinAustraliaatthetimeoftheapplication.AnalysisofthissplitindicatesthatmostofthosereceivinganotherstudentvisawerelocatedinAustraliaatthetimeofapplication.However,alargeshareofthoseobtainingavisitorvisacomprisedformeroverseasstudentswhowerelocatedoffshoreatthetimeofapplication.

Table5alsoincludesthedestinationvisaforthoseformerstudentswhoheldapost-studyworkvisa(485)andwhowerealsograntedanothervisain2017-18.ThisisthefirstyearthatDIBPhaspublisheddestinationdataforthe485visasub-class.Thedataconfirmthesignificanceofthe485visaasapathwaytopermanentresidence,since11,513ofthosevisaholdersachievedthisoutcomein2017-18.Remarkably,some6,661stayedonbyprocuringanotherstudentvisa–athemewenowdevelop.

Thetableunderestimatesthedestinationnumbers,becauseitdoesnotincludeoverseasstudentvisaholdersonabridgingvisa(grantedwhiletheDepartmentofImmigrationconsiderstheirrequestforthisvisaorwhiletheyawaitanAATappealiftheirrequesthasbeenturneddown).TheDepartmentwasnotwillingtoprovideinformationonthenumberofoverseasstudentsholdingbridgingvisas.

Themainpathwayforoverseasstudentsistoanotherstudentvisa:73,797in2017-18.Unfortunately,theDepartmentofImmigrationonlyprovideslimitedinformationontheeducationalsectorthatthoseholdingastudentvisamoveto.Asyouwouldexpect,thisshowsthatmanydomovetoanothersector,including14,798ELICOSstudentswhomovedtoaVETcoursein2017-18andanother1,263toahighereducationvisa.Some4,343movedfromaVETvisatoahighereducationvisa.21

Butthisleavesmostofthe73,797unaccountedfor,implyingthatmostofthesenewstudentvisaswereissuedtoVETvisaholderswhoobtainedanotherVETvisaortohighereducationvisaholderswhoobtainedanotherhighereducationvisa.

Thereisnodoubtthatthepathwayfromahighereducationvisatothe485visaisverypopularandthatthenumberstakingitareincreasingrapidly.Asnoted,mostofthosereceivingthisvisahavecompletedahighereducationdegree.22AccordingtoTable5,46,711overseasstudentsreceiveda485visain2017-18,doublethelevelofjustafewyearsago.23

ThepropensityofthosefromtheIndiansubcontinenttotakeupthisvisaoptionisfargreaterthanthatoftheChinese.In2017-18some23,417studentsfromthesubcontinent(India,Nepal,PakistanandSriLanka)receiveda485visa,comparedwithjust11,987Chinese,despiteasimilarnumberofstudentsineachgroupinghavingcompletedtheirhighereducationcourse.

Thisfragmentaryinformationimpliesthatoverhalfofthesome118,014overseasstudentswhocompletedauniversitycoursein2017arelikelytohavestayedoninAustralia.Theyincludethegreatmajorityofthe46,711whogota485visa(Table5).Manymoreappeartohaveobtainedanotherhighereducationstudentvisa.Inaddition,theTable5showsthatthousandsmoregotsomeothertemporaryworkvisa.Thisisontopoftheover20,000whoreceivedaPRvisa,mostofwhomwouldhaveheldahighereducationoverseasstudentvisapriortogainingtheirPRvisa.

TheVETsectorseemstobeplayinganincreasinglyimportantroleinthisprocess.Asnoted,thissectorenduredtoughtimesintheaftermathofthe2009-2011reforms.However,therehassincebeenarevival.ThenumberofstudentvisasgrantedintheVETsectorincreasedfrom60,648in2013-14to90,689in2017-18.Two-thirdsofthisgrowthcamefromvisasissuedonshore.By2017-18,therewere27,216visasfortheVETsectorissuedoffshorecomparedwith63,473issuedonshore.

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Prolongingtheprocess

Astherulesstandatpresent,theDIBPcanrefuseanoverseasstudentapplicationforanothervisa,includinganotherstudentvisaifthecaseofficerthinksthattheapplicantisnotabona-fidestudent.Caseofficersdosometimesrefusesuchavisaiftheyseethattheapplicanthasarecordofmultiplestudentvisas,includingthoseofferingcheapcoursefees.

AtthispointthestudentcanutiliseAustralia’slegalprotectionstoextendtheirstay.Australia’smigrationmanagementsystem,withitsmanyvisa-specificcodifiedrequirementsandconditionsandproceduralfairnesschecksandbalances,wasnotsetuptohandlethesituationwheresomanyareusingstudentvisaprogramasawayofmaintainingresidenceinthecountry.

Bylodgingin2017or2018withtheoverloadedAdministrativeAppealTribunal(AAT)anapplicationforreviewofarefusalbythedepartment,astudent,whomighthavealreadyspentuptoadecadeinthecountryonseveralstudentvisas,earnsanextrayearoreighteenmonthsonaBridgingvisa,usuallywithworkrights.AppealslodgedinMelbournein2019forjudicialreviewofdecisionsbytheAATtoaffirmthedepartment’srefusalarebeinglistedforhearingin2021.Appealingadversedecisionsthusearnstheseapplicantsanextrathreeandahalfyearsmoreinthecountry,withworkrights.

SuchcasesareamajorsourceoftheAAT‘sincreasingcaseload.TheAATdoesnotpublishdataonthevisastatusofthoseapplyingforreview.However,thenumberswereleakedtoTheAustralian.AsofMay2018,outstandingstudentvisarefusalcasesreached8,603,anincreaseof95percentinalittleunderayear.24

Implications

FewpeopledoubtthatthemigrationinfluxtoSydneyandMelbourneisanimportantcontributortothesecities’congestionproblems.Atthetimeofwriting(21March2019)theCoalitiongovernmenthadjustannounceditsintentiontostabilisethepermanententrymigrationprogramat160,000—from190,000overthepastfewyears—andtodivertsomeofthosemigrantstoregionallocations.ThestatedrationalewasthatthesemeasureswouldtakesomeoftheheatoutofSydneyandMelbourne’scongestionproblems.

Yet,asthispaperhasshown,themainsourceofthegrowthofthemigrantcontributiontoAustralia’soverallNOMhasnotcomefromnetpermanentmigrationbutfromoverseasstudentsandothertemporarymigrants.Moreover,asisdocumentedshortly,theseoverseasstudentshaveconcentratedininnerSydneyandMelbourne.Theyaretheeyeofthestormofthesetwocities’congestionproblems.

Withoneortwoexceptions(includingTheAustralian’sJudithSloan)therehasbeennomentionofthissituationinthepublicdiscussionofthegovernment’sinitiativesorinthegovernment’spresentationofitsplans.Thisdiscussionmissestheelephantintheroom.Thoughanoverusedmetaphor,itisappropriateinthiscase.IfSydneyandMelbournearetodealwiththeproblemsofaccommodatingtheirburgeoningpopulations,itwillhavetoinvolveareductionintheoverseasstudentcontribution.Thediversionofafewpermanentmigrantstotheregionswillmakelittledifference.

Inwhatfollowsthefocusisontwoofthekeyworriesabouttheseproblems.Oneconcernstheskillandlabourmarketconsequencesandtheother,thecongestionimplications.

Australia‘smigrantintakeislowskilled

Migrationadvocatesliketoclaimthattheimmigrationprogramaugmentstheskillsneededtobuildthehousingandinfrastructurerequiredtoprovideforrapidpopulationgrowth.Wehaveshownelsewhere

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thatthisisnoteventhecaseforthepermanententryskilledvisasubclasses.Onlyatinynumberofscarcebuildingtradespersonsareselectedinthisprogram.25

WhatabouttheoverseasstudentcontributiontoAustralia’sskilledworkforce?AnylinkbetweenAustralia‘sskillneedsandtheoverseasstudentcomponentofNOMisfortuitous.Thereisnoskillfiltergoverningtheentryandstayofoverseasstudents,excepttoalimiteddegreeforthosewhoobtainatemporaryworkvisa(6,098in2017-18accordingtoTable5)orapermanententryskillvisa.

MostofthoseholdinganoverseasstudentvisadonotpossessprofessionalortradequalificationsacceptedinAustralia.Andbecausetheyholdtemporaryvisasemployersareusuallyonlywillingtorecruitthemonacasualorpart-timebasis.Mostofthesestudentshavenochoicebuttoenterlow-skilledlabourmarkets.

Inthecaseofthepermanentprogram,thereisscopeforthepublictoputtheirviews,includinganinvitationtolodgesubmissionspriortotheannualannouncementoftheprogram.TheDepartmentofHomelandAffairsputsthecaseforitsproposedprogramofskilledmigrantsbyvisasubclasstootherdepartments,andtoCabinet,priortothisannouncement.

Thereisnotevenafaçadeofsuchjustificationfortheoverseasstudentcomponent,andnoofficialreportingofitslabourforceandlocationalimplications.Itisasthoughanelectricfencehasbeenerectedaroundanymentionoftheissue.

YetforyoungdomesticworkersenteringtheSydneyorMelbournelabourmarket,theconsequencesareserious.Amajorityofthesedomesticworkersdonotpossessapost-schoolqualificationwhentheyentertheworkforce.Mosthavetobegintheirworkinglivesinlow-skilled,entry-levelemployment.Heretheyfacedirectcompetitionfromthehugenumberofoverseasstudentswhoarealsolookingforsuchwork.Asnotedearlier,manyoverseasstudentshavetofindemploymentinsuchworkbecausetheydonotbringsufficientfundswiththemtopayfortheirlivingexpenseswhilestudyinginAustralia.

AlltheCoalitiongovernmenthasofferedtheseyoungdomesticworkersisitsheadlineelectoralpromise(madeinFebruary2019)thatitwillcreateanadditional1.25millionnewjobsoverthenextfiveyears.26Thisreaffirmsthewell-known‘jobsandgrowth’strategy.

ThoughtheCoalitiongovernmenthasnotadmitted,thisgoalcanonlybeachievedwithacontinuedhighlevelofnetoverseasmigration.AbulRizvi,aformerseniorimmigrationdepartmentofficialandcurrentlyaprolificcommentatoronimmigrationpolicydevelopments,hasprovidedadetailedanalysisdocumentingthispoint.27

Onthefaceofitthe‘jobsandgrowth’strategymayseembenevolent.Theimplicitmessageisthat,atatimewhenthereisnotmuchgrowthinthedomesticlabourforce,residentswillbethebeneficiariesofthemanyextrajobscreated.

Treasuryestimatesthatoverthefiveyearsto2016aroundtwo-thirdsofthegrowthinthenetnumberofnewjobscreatedinAustraliawenttorecentmigrants.28Thisislikelytocontinuegivencurrentimmigrationsettings.

Yes,ABSLabourForceestimatesshowthatjobgrowthinAustraliaisoccurringacrossawidespectrumofserviceoccupations(asonewouldexpectgiventhepaceofpopulationgrowth).ThisisnotablefortheHealthandSocialAssistancesectorandtheHospitalitysector.Sothereissomejobgrowthinentry-leveljobsforthosewithnopost-schoolqualifications.

Theproblemisthatcompetitionforthesejobsisfierce.Domesticyouthwillhavetoendurethelowwagesandtheprecarioustenureofworkcurrentlyafflictingtheselabourmarkets.

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Theurbancongestionissue

TheCoalition‘simmigrationpolicy(likethatoftheopposition)isineffectsayingtotheresidentsofSydneyandMelbournethatyouarejustgoingtohavetolumpthecongestionandqualityoflifeconsequences.Neitherpartyacknowledgesthatthereasonwhypopulationgrowthissostronginbothcities,especiallyininnercityareas,isbecausethatiswheremostoftheoverseasstudentinfluxislocating.

For2016-17theABShasestimatedthat73percentoftheNOMderivingfromoverseasstudentslocatedinNSWandVictoria.ThismeansSydneyandMelbourne,sincethatiswherethevastmajorityoftheeducationalinstitutionsinNSWandVictoriaaresituated.

TheABSdoesnotpublishestimatesofthelocationofoverseasstudentsbycityorlocalgovernmentarea(LGA)withincities.

However,beginningin2016-17,theABSdidbeginpublishingestimatesofthecontributionofNOM,alongwithnaturalincreaseandinternalmigration,foreachofAustralia’sLGAs.29

TheseestimatesshowthatNOMisresponsibleformostofMelbourne’srecentinnercitypopulationgrowthandallofSydney‘sinnercitygrowth.InthecaseoftheCityofSydneyLGA,in2016-17theCity’spopulationgrewby9,006.Ofthis,accordingtotheABS,94percentwasattributedtoNOM.FortheCityofMelbourneLGA,whosepopulationgrewby11,983in2016-17,some75percentwasattributedtoNOM.

Whoarethesemigrants?Thereisplentyofanecdotalevidencethatoverseasstudentsandothertemporarymigrantsarethemainsource.RecentlypublishedABSfindingsprovidestatisticalsupportforthisbelief.

Thefirstsourcederivesfrominformationontheoccupantsofthehighriseapartmentbuildingsconstructedinthetwoinnercityareas.Thatiswheremostofthepopulationgrowthinthetwolocationsisbeingaccommodated.Thescaleofgrowthinthenumberoftheseapartmentshasbeenenormous.

Weknowfrom2016Censusdatathatonlyatinyshareofthesehighriseapartments(lessthanfivepercent)areoccupiedbyfamilieswithchildren.Rather,theyareoccupiedbysinglesandcouples.30

Thesecondsourceofdata,releasedbytheABSinFebruary2019,linkedimmigrationvisastatusdatatothe2016Censusdata.Thisshowsthatoverseasstudentsconstituteamajorshareoftheoccupantsoftheseapartments.Thisreportindicatedthatasoflate2016,therewere65,880personsonoverseasstudentvisaswhowereoccupyingfour-storeyplushigh-riseapartmentsinSydneyand40,327inMelbourne.31

Ofcourse,theimpactofhighNOMisnotjustbeingexperiencedininnercitySydneyandMelbourne.In2016-17NOMwasresponsiblefor89percentofGreaterSydney‘spopulationgrowthand63.8percentofGreaterMelbourne‘sgrowth.

However,theworstofthetwocities’congestionproblemsisbeingexperiencedintheirrespectiveinnercityareas.Thatiswherethedestructionofhistoricbuildingformtoallowtheconstructionofhigh-riseapartmentbuildingshasbeengreatest.Thatiswheretheirmostintensecongestionproblemsareoccurring.Itisalsowheretherespectivestategovernmentshavebelatedlyhadtofocustheirmassive‘catch-up’infrastructureinvestment.

Thereisnoneedtoelaborateonthecongestionandotherqualityoflifeconcernsgeneratedbythispopulationgrowth.Theyarebeingairedonadailybasis.

17

Itmaybeuseful,however,tocommentonanotheraspectoftheissue,aboutwhichtherehasbeenlittlepublicdiscussion.

Theriseandfallofthehigh-riseapartmentindustry

Thefederalandstategovernmentshavehadlittletosayabouttheoverseasstudentcontributiontotheeconomicviabilityofthehigh-riseapartmentindustry.

Thisisnotthecaseforthehousing,propertyandassociatedfinancialinterests.Theyunderstandthatcontinuedpopulationgrowth,particularlygrowthderivingfromthestudentinflux,isvitaliftheyaretorideouttherecentdownturninthehigh-riseapartmentmarket.

Hereareacoupleofthemultitudeofmarketeconomistswhoareanxiouslymakingthispoint.PaulBloxham,prominentchiefeconomistwiththeHSBCbank,whenwritingaboutfearsaboutahighriseapartmentoversupply,adviseshisreadersnottoworry.Thisisbecause‘thelikelysolutioniscontinuedstrongpopulationgrowth’.32RobertGottleibsen,seniorbusinesscommentatorwithTheAustralian,hasconsistentlywarnedthegovernmentnottocontracttheimmigrationintake,especiallythatofstudents.Hisreasonisthat:‘Itisvitalforinner-cityapartmentsthattheChinesestudentmarketcontinuestoboombecausestudentsareahugepartoftherentalmarketthatenablesownerstogeneratethecashtopayinterest’.33

Developershavemadeahugegamble.Itillustrateshowill-adviseditwastoallowthemetropolitaneconomiestobecomesodependentonahigh-riseapartmentboomthatwasbasedonastudentfuelledpopulationinflux.

Yes,theinfluxofstudentshasprovideddomesticandoverseasinvestorswithsomeguaranteeofrentalincome.Buttheseinnercityhigh-riseapartmentshavenotattractedmanyowneroccupierbuyers.

TAPRI’sworkonhouseholdprojectionsfortheSydneyandMelbournegreatermetropolitanareasshowsthatmostofthegrowthinhouseholdsinbothcitiesisamongcouplehouseholdsonthecuspofstartingafamilyorwhoalreadyhaveyoungchildren.34Theirpriorityisfamilyfriendlyhousing–particularlydetachedhousingbut,ifnotaffordable,apartmentswithtwoormorebedroomsandaccesstoprotectedspaceforchildren.Highriseapartmentsdonotmeettheserequirements,hencetheabsenceoffamilyoccupantsnotedinthehighrisehousingstockininnercitySydneyandMelbourne.

Weconcludedinthesestudiesthatthehugegrowthinhigh-riseapartmentconstructioninbothcitieswaswellbeyondwhatwasneeded.Demandwasbeingdrivenmainlybyoverseasandlocalinvestorswhowerebuying‘offtheplan’.35

Theproblemis,thatinpresentcircumstances,thereareplentyofprospectivetenantsbutrelativelyfewbuyers.Residentfamilieshavelittleinterestinbecomingowneroccupiersoftheseapartments.Investors,bothlocalandoverseas,havebeenavidbuyers,intheexpectationofreapingcapitalgains.

TherecentdownturninhousingandapartmentpricesinSydneyandMelbournehavedeflatedthisexpectation.Thishasmeantthatfewinvestorsarenowwillingtobuyoff-the-planfordevelopmentsabouttobeginconstruction,andevenfewerarewillingtobuysuchapartmentsfromoff-the-planinvestorsorthosewantingtoselltheircompletedapartment.Sowhoarethebuyerswhoaregoingtosustainthemarketfortheseapartments?

Itwon’tbethetemporarymigrants,includingoverseasstudentswhoarethemaintenants,because,notbeingpermanentresidentstheyareonlyallowedtobuynewapartments,andinanycasemostdonotpossessthefundsneededforsuchaninvestment.

18

ThepopulationadvocatesareprobablyrightthatcontinuedimmigrationwillhelpputafloorunderthemarketfordetachedhousesandfamilyfriendlyapartmentsinSydneyandMelbourne.Mostmigrantsarerelativelyyoungandwilladdtothenumberofdomestichouseholdsseekingafamilyfriendlydwelling.

Buttheseadvocatesarewrongtoassumethesameinsuranceforinnercityhigh-riseapartments.Thissituationimpliesaseriouscontractioninthehigh-riseconstructionindustryandsevereconsequencesforinvestors.Thereisnoparallelinsuranceorfloorthatwillholdupthevalueoftheseapartments.Itisanillusiontothinkthatacontinuedinfluxofstudentswillsolvetheproblemsinvestorsnowfaceinreapingthecapitalgainstheyoriginallyexpected.Theywillbeabletofindtenants,butbuyerswillbedifficulttocomeby.

Whatshouldbedone?

Thereisonlyoneclearcutanswer.TherewillhavetobeareversalofthewateringdownoftherulesontherecruitmentofoverseasstudentsinstitutedintheaftermathoftheKnightReview.

Thereislittlepossibilityofthishappeningintheimmediatefuture.ThereisstilltoolittleinformationonthescaleoftheoverseasstudentinfluxanditsimplicationsforthelocallabourmarketandforthecongestioncrisisafflictingSydneyandMelbourne.

Inanycase,AustraliangovernmentsanduniversitieshavebeensuccessfulinpropagatingthenotionthattheoverseasstudentindustryisoneofthefewsuccessstoriesinAustralia’scapacitytosellknowledgeintensiveservicestotherestoftheworld.Thisbeingthecase,theseinterestshavebeenabletobatawaytheoddcriticwhochallengesthis‘success’story.

Nevertheless,therearesomestrawsinthewind.Theselargelyhavetodowithincreasedpublicawarenessoftheloweducationstandardswithintheuniversityfacultiescustomisedtoprovidecoursesforoverseasstudents.

Itishardtokeeptheseoutcomesasecret.Manythousandsoflocalstudentsandotherobservershavefirst-handexperienceofwhatisgoingonintheseenclaves.SuchhasbeenthispublicitythattheVictorianStateGovernmenthasproposedtosetupaninquiryintothematter.

TheUniversityofNSWmusthavegotquiteashockwhenitreceivedtheresultsofanationalopinionsurveyitcommissionedinFebruary2019onpublicattitudestoAustralia’suniversities.Itnodoubtexpectedthepublictoendorsetheuniversities’viewofthemselvesasexemplarsofexcellenceinteachingandresearchinthenation’sinterest.Someoftheresultsdidconfirmtheseexpectations.

Butnotwhenitcametopublicattitudestowardstheenrolmentsofoverseasstudents.Thequestionaskedwasasfollows:

ForeignstudentshavefordecadesbeenattendingAustralianuniversitiesbuthavebeenaccommodatedsotheydonottakeplacesfromAustralianstudents.ShouldtheAustralianGovernmentlimitthenumberofforeignstudentscomingtoAustralia?

Some54percentofrespondentssaidYesthenumberofsuchenrolmentsshouldbelimited.Thisincluded61.8percentofthoseage18-34.36

Thisisdespitethefalsestatement(atleastfortheGo8)embeddedinthequestionthatforeignstudentsdonottaketheplaceofAustralianstudents.Overtheperiod2012to2017commencementsofdomesticstudentsintheGo8havebeenstable–thisdespitemassiveinterestfromlocalstudentstogainaplaceinaGo8university.Duringtheseyears,thenumberofoverseasstudentcommencementsincreasedfrom30,320to56,363.37TheGo8universitieshadthecapacitytotakeonmoredomestic

19

students.However,theychosenotto,intheinterestsofmaximisingtheinfluxofhighfeepayingoverseasstudents.

ThebubblingupofsuchconcernsseemstobehavinganimpactonsomeGo8universities’recruitmentpolicies.By2017theshareofoverseasstudentcommencementstototaldomesticandoverseascommencementshadreachedaround40percentintheGo8(including42.9percentattheUNSWand43.1percentattheAustralianNationalUniversity(ANU).38

TheVicechancelloroftheANU,ProfessorBrianSchmidt,toldthemediainearlyMarch2019thathisuniversitywasabouttoputalimitonthenumberofinternationalstudentsenrolledatANU.39

Itisunlikelythattheseconcernswillhavemuchinfluenceonnon-Go8universities.TheyhavemuchlowersharesofoverseasstudentstototalstudentsthantheGo8andareunderpressuretoimprovetheirresearchperformancerelativetotheGo8.Theyhavefoundithardtoachievethisoutcome,inpartbecauseofthedeclineingovernmentfunding(inrealterms)fordomesticstudentsoverrecentyears.Theironlyrealisticoptionforfindingextrafundsisbyexpandingtheirintakeofoverseasstudents.

Thenon-Go8universitiesareeyeingtheIndiansubcontinentasthemostlikelyprospect.TheywillfindplentyofprospectivestudentskeentotakeuptheopportunitiesofcomingtoAustraliaviaanoverseasstudentvisaandofstayingonasworkers.Thereisawell-oiledrecruitmentnetworkofoverseasandlocalagentskeentofacilitatesuchenrolments.

Inotherwords,theredoesnotseemtobeanyimmediateprospectofaslow-downinthegrowthofoverseasstudentenrolmentsandoftheircontinuingsignificantcontributiontoAustralia’shighlevelofNOManditsconcentrationinSydneyandMelbourne.

Therewillbenosuchslowdownwithoutgovernmentaction.Ithashappenedbeforeasintheaftermathoftheexplosionofenrolmentsinthe2000s.Itmaywellhappenagainwithincreasedpublicawarenessoftheindirectcostsoftheoverseasstudentindustry,includingthedamagetheuniversitiesaredoingtotheirownreputations.

Iforwhenthishappens,therewillhavetobeareversalofthepost-Knightliberalisationoftherulesgoverningtherecruitmentofoverseasstudents.Hereareafewoftheactionsneeded,pendingacomprehensivepublicreviewoftheoverseasstudentindustry:

• Alimitontheoverseasstudentshareofeachuniversitycommencements–nohigherthan30percent.

• ArequirementthatallhighereducationoverseasstudentsdemonstrateatthetimeoftheirgraduationthattheypossessprofessionallevelEnglish,thatis,7.0ontheIELTStest.

• ArequirementthatoverseasstudentsdemonstratewhenenrollingthattheyhaveaccesstothefundsnecessarytofinancetheirfeesandlivingexpenseswhileinAustralia.

• ArequirementthatthoseoverseasstudentswhoseapplicationforanadditionalstudentvisaisturneddownandwishtoappealmustleaveAustraliawhiletheirappealiswaitingtobeheard.

• Areviewofthe485visatargetedtolimitingaccesstothisvisatooverseasstudentswhereworkinAustraliaasaninternortemporaryemployeewillsupplementtheiruniversitytraining.

ThesemeasuresareneededifAustralia’soverseasstudentindustryistoavoidfurtherreputationaldamage.ThiswillonlyhappeniftheoverseasstudentindustryisrestructuredsoitsfocusisonprovidingahighqualityeducationratherthansellingaccesstotheAustralianlabourmarket.

ThemeasuresarealsorequiredifthehugescaleoftheoverseasstudentcontributiontoAustralia’sNOMistobereduced.TheCoalitiongovernment’sproposalsonthemigrationissuehavefocussedonthepermanentresidentcomponent.

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ThefarmoreimportantcontributionofoverseasstudentstoAustralia’sveryhighlevelofNOMhasbarelyratedamention,eitherbytheAustraliangovernmentorbycommentatorsonthemigrationissue.

21

References

1ProductivityCommission,MigrantIntakeintoAustralia,ProductivityCommissionReportNo.77,13April2016,p.374.2AustralianGovernment,StrategicReviewoftheStudentVisaProgram2011,Report,30June20113BobBirrellandKatharineBetts,Australia’sOverseasStudentIndustry:inaPrecariousState,TheAustralianPopulationResearchInstitute(TAPRI),November2018

4AustralianBureauofStatistics,3412.0.55.004-InformationPaper:ImprovementstotheEstimationofNetOverseasMigration,March2018:Undera‘12/16monthrule’,incomingoverseastravellers(whoarenotcurrentlycountedinthepopulation)mustberesidentinAustraliaforatotalperiodof12monthsormore,duringthe16monthfollow-upperiodtothenbeincludedintheestimatedresidentpopulation.Similarly,thosetravellersdepartingAustralia(whoarecurrentlycountedinthepopulation)mustbeabsentfromAustraliaforatotalof12monthsormoreduringthe16monthfollow-upperiodtothenbesubtractedfromtheestimatedresidentpopulation.The12/16monthrulethereforetakesaccountofthosepersonswhomayhaveleftAustraliabrieflyandreturned,whilestillbeingresidentfor12monthsoutof16.Similarly,ittakesaccountofAustralianswholivemostofthetimeoverseasbutperiodicallyreturntoAustraliaforshortperiods.

5CatrionaJackson,LettertotheEditor,TheAustralian,20February20196SenatorChrisEvans,MinisterforImmigrationandCitizenship,‘Newvisameasurestoassistinternationalstudents’,9November2009

7AustralianGovernment,StrategicReview,op.cit.8ChrisBowen,MinisterforImmigrationandCitizenship,andSenatorChrisEvansMinisterforTertiaryEducation,Skills,JobsandWorkplaceRelations,‘BoosttoInternationalEducationSectorinResponsetoKnightReview’,jointmediarelease,22September2011.https://ministers.jobs.gov.au/evans/boost-international-education-sector-response-knight-review

9DepartmentofImmigrationandBorderProtection[DIBP],answertoquestiononnotice,17July2015(received11August2015);MrDavidWilden,ActingDeputySecretary,DIBP,CommitteeHansard,17July2015,p.46.SenateEducationandEmploymentReferencesCommittee,TheimpactofAustralia‘stemporaryworkvisaprogramsontheAustralianlabourmarketandonthetemporaryworkvisaholders.

10Legislativeinstrument,Migration(IMMI18/010:EvidenceoffinancialcapacityforSubclass500(Student)visasandSubclass590(StudentGuardian)visas)Instrument2018.https://www.legislation.gov.au/Details/F2018L00032

11FairWorkOmbudsman,Statementon7-Eleven,9April2016.https://www.fairwork.gov.au/about-us/news-and-media-releases/2016-media-releases/april-2016/20160409-7-eleven-presser

12BobBirrell,‘ImplicationsoflowEnglishstandardsamongoverseasstudentsatAustralianuniversities‘,PeopleandPlace,vol.14,no4,2006

13BobBirrell,Australia’sSkilledMigrationProgram:ScarceSkillsNotRequired,TheAustralianPopulationResearchInstitute(TAPRI),ResearchReport,March2018

14ThesepointsaredocumentedinBirrellandBetts,November2018,op.cit.15StatisticsreportonTEQSAregisteredhighereducationproviders,TEQSA[TertiaryEducationQualityandStandardsAgency],2018,p.14

16HigherEducationStatistics,unpublished17TheTreasuryandDepartmentofHomeAffairs,ShapingaNation:Populationgrowthandimmigrationovertime,2018,p.2118TheyalsohavetimetocompletetheProfessionalYear,setuptoallowoverseasstudentstoimprovetheirjobreadinessskills.Theyreceiveanadditionalfivepointsonthepoints-testedskillvisasiftheydocompletethisyear.

19GroupOfEightAustralia,PolicyNote,InternationalstudentsinhighereducationandtheirroleintheAustralianeconomy,March2014,p.5

20ThemeasureswhichhaveproducedthisoutcomearedetailedinBobBirrell,TheCoalition’s457VisaReset:TougherThanYouThink,TheAustralianPopulationResearchInstitute(TAPRI),August2017

21DepartmentofImmigrationandBorderProtection,BR007StudentandTemporarygraduatevisprogramreport30June2018,Table7.03

22ThereisasmallnumberofrecipientswhoreceiveaGraduateWorkvisa(alsolabelledasa485visa)whodon’thavetopossessahighereducationqualification.Theirnumberhasfallento8,142in2017-18.

23DepartmentofHomeAffairs,Subclass485TemporaryGraduatevisa,2017-18to30September2018,PivotTables24JoeKelly,‘Foreignstudentappealsbogdowntribunal’,TheAustralian,8August201825BobBirrell,Australia’sSkilledMigrationProgram:ScarceSkillsNotRequired,March2018,op.cit.

22

26https://www.abc.net.au/news/2019-01-29/morrison-echoes-abbott-pledge-to-create-1-million-jobs/1075679427https://johnmenadue.com/abul-rizvi-is-the-government-walking-both-sides-of-the-street-on-immigration/28TheTreasuryandDepartmentofHomeAffairs,2018,op.cit.,p.3729ABS,3218.0RegionalPopulationGrowth,Australia2016-1730BobBirrellandErnestHealy,ImmigrationandtheHousingAffordabilityCrisisinSydneyandMelbourne,TheAustralianPopulationResearchInstitute(TAPRI),July2018

31ABS3419.0,InsightsfromtheAustralianCensusandTemporaryResidentDataset,2016,released14/02/201932PaulBloxham,‘Housingtofindafloor’,TheAustralian,18February,201933RobertGottliebsen,‘Alarmbellsringasapartmentsfallintonegativeequity’,TheAustralian,16January201934BobBirrellandErnestHealy,ImmigrationandtheHousingAffordabilityCrisisinSydneyandMelbourne,op.cit.35ibid.36SurveyresultsprovidedbytheUNSWExternalCommunications37BobBirrellandKatharineBetts,Australia’shighereducationoverseasstudentindustryrevisited,TheAustralianPopulationResearchInstitute(TAPRI),December2018,pp.3-4

38Ibid.,p.339RobertBolton,‘Thereisalimit’:ANUsaysinternationalstudentsarenearthemaximum’,AFR,March3,2019

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