The February 2010 reforms and the international student industry.

Author:Birrell, Bob

In February 2010 the Australian Government announced set of reforms to the rules governing access to permanent residence visas and the temporary entry graduate skills visa (485)for overseas students who have completed courses in Australian universities and VET colleges. This article provides a history of Australian policy on the issue and an analysis of the likely impact of the new reputations. It concludes that the government has largely succeeded in de-coupling education in Australia from migration selection. As a result, it is likely that enrolments in the VET sector will shrink and that enrolments in the higher education sector will largely be confined to courses where students obtain qualifications that are of value in the country of origin.


By 2008, there was overwhelming evidence that Australia's permanent entry migration program was in disarray. The core of the problem lay with the very large number of applicants who had come in on student visas, completed Australian qualifications and were succeeding in gaining permanent residence (PR) status on completion of their studies. Paradoxically, these outcomes were a product of reforms in 1999 and 2001 which were intended to deliver migrants with high-level skills, especially in areas where shortages were evident.

The visa categories under review are included under the General Skill Migration (GSM) program, which is part of the skilled migration program administered by the Department of Immigration--subsequently referred to under its present rubric, that is the Department of Immigration and Citizenship (DIAC). DIAC refers to these as supply-driven visas, because they are dependent on the initiative of would-be migrants to apply for a visa. By contrast, those skilled program visas that require sponsorship by an employer or sponsorship/nomination by a state government, are referred to as demand driven.

On 8 February 2010, the Australian Government announced a set of reforms to the operation of the GSM migration program. This article assesses the implications of these reforms for the overseas-student industry in Australia. The analysis relies primarily on the published DIAC statements about the reforms. However where there was uncertainly about their meaning, immigration officials were consulted in order to verify our interpretation.

Readers familiar with the history of the interface between the overseas student industry and migration selection in Australia may wish to skip our summary of this history. If so, they should go to page 72, where the discussion of the consequences of the new regulations begins.

The reason for recounting the history is that an understanding of where we have come from is essential for an appreciation of the significance of the February 2010 reforms. There are many lessons to be learned from this story about how migration selection mistakes can morph into major crises. Our judgement is that the Labor Government (led by Kevin Rudd) has gone a long way towards cleaning up the mess it was bequeathed by the previous Coalition Government. However, it may soon confront a new crisis, this time of its own making, because of its embrace of an employer and state government driven migration selection system.


There were two key reforms. The first, implemented in 1999, had to do with how changes in occupational labour market demand and supply were factored into the GSM. At the time, there were few skilled labour shortages in Australia. DIAC sought to legitimate its reforms by claiming that they would add to Australia's high skill base. DIAC also wanted to incorporate a control mechanism which would give preference to applicants with high-level skills and those with occupations where there were significant supply shortages. This was accomplished in part by introducing a Skilled Occupation List (SOL). For a GSM application to proceed, the applicant had to have an occupation listed on the SOL. The initial SOL covered most, but not all, professional, managerial and trade occupations. Applications under the GSM were evaluated by a points test and the SOL was divided into 60, 50 and 40-point occupations. The occupations classified within the 60-point category were mostly professional and trade occupations, including cooks and hairdressers. They included occupations where the possession of degree or trade-level qualifications was crucial to carrying out the requirements of the occupation. They were heavily advantaged in the new points test.

DIAC also added a further control mechanism designed to advantage applicants whose occupation was judged by the Department of Employment (in consultation with DIAC) to be in national shortage. This was the Migrant Occupations in Demand List (MODL). Applicants with MODL occupations received extra points in the new selection test as from May 1999.

The second key reform was the establishment, beginning in mid-2001, of skilled visa subclasses for overseas students who had completed trade or higher-education qualifications in Australia. These subclasses were initially limited to applicants with 60 point occupations. To be eligible, such former students had to apply within six months of finishing their course. Former students were further advantaged by being granted extra points for Australian training and by the waiving of the work experience requirements that offshore applicants had to meet. This innovation seemed justified at the time, since there was evidence that migrants trained in Australia did better in the job market than those trained in the same discipline overseas, especially if the overseas-trained migrants originated from non-English-speaking-background countries.

The reformers did not anticipate the alacrity with which Australia's universities and, after 2005, private sector Vocational Education and Training (VET) providers would set up courses designed to attract international students looking for the cheapest and easiest ways to obtain qualifications in occupations that could lead to permanent residence (PR) in the GSM program. By 2005, there were so many applications for PR from former overseas students that DIAC had to increase the selection system pass mark (in April 2005) from 115 to 120. After this, the possession of a MODL occupation, and the extra points it delivered, became a crucial determinant of PR outcomes.

IT and accounting were to become the study areas of choice for overseas students taking higher education courses who were interested in a PR outcome. All they had to do was complete a two-year Masters course in IT or accounting (with no prerequisite study or experience in these fields needed) at any Australian university and PR was assured. Accounting had been added to the MODL in September 2004, but not the professional computing occupations. Subsequently, accounting dominated the ranks of applicants for GSM visas with Australian university qualifications, while those with IT qualifications fell.

At the trade level, in May 2005 cooking was added to the MODL. According to the Department of Employment methodology this was justified because there was a widespread shortage of trade-level cooks in Australia at the time. As with the decision to include accounting on the MODL, no questions were asked about whether former overseas students who had trained as cooks in Australia had the skills or motivation to actually take up cooking jobs once they gained PR.

The inclusion of cooking on the MODL was a decisive moment in recent migration history. The door was thrown open for VET providers to market cooking courses as a secure pathway to PR. Private VET providers flourished in a highly-profitable, but poorly regulated environment. Cooking was one of the few trades (hairdressing was another) where with just one year of full-time training and without any associated on-the-job training, students could obtain a Certificate 111 accreditation. The accrediting authority, Trades Recognition Australia (TRA) was prepared to accept certification from the VET provider that the student had reached trade level without a requirement that there be an independent competency test. In 2005, TRA added an additional requirement, which was that applicants must have completed 900 hours of work experience in their held (though this could be any work like that of kitchen hands, in the case of cooks). TRA accreditation was required by DIAC as one of the threshold attributes that applicants needed before a GSM visa application in a trade area could proceed.

This confluence of events gave VET providers a new and potent marketing tool in order to attract students. They found a huge pool of potential clients in Asia, particularly in the Indian Punjab, who were interested in taking up the opportunity. The message was, complete a cooking qualification and you are assured of a PR outcome.

As Table 1 shows, there was an explosion in enrolments in tertiary education in Australia by overseas students after 2005, particularly in the VET sector, with most of this growth being driven by students drawn from the sub-continent of India. Table 1 shows year to November data, because at the time of writing full year data were not available.

Table 1: Enrolments by education sector by selected nationality, year- to-November, Australia, 2002 to 2009 Nationality 2002 2003 2004 2005 2006 Vocational education and training/VET India 2,213 1,435 1,608 3,791 10,091 China 5,980 8,367 10,682 13,111 15,358 Nepal 492 374 315 515 1,223 South Korea 4,594 3,777 3,586 4,496 5,994 Thailand 3,636 4,366 4,310 4,818 5,556 Viet Nam 1,072 755 682 813 1,086 Brazil 1,212 1,288 1,578 2,308 3,419 Bangladesh 1,035 1,386 1,942 2,275 2,919 Pakistan 365 378 440 672 1,204 Sri Lanka 967 748 830 1,169 1,762 Mauritius 375 476 565 706 968 Other nationalities 31,360 33,212 31,286 30,453 32,083 All source nationalities 53,301 56,562 57,824 65,127 81,663 Higher Education China 16,110 22,489 30,644 40,5111 46,724 India 8,823...

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