Immigration policy change and the international student industry.

Author:Birrell, Bob

Enrolments of overseas students have grown sharply, especially in hospitality courses in the Vocational Education and Training (VET) sector. Most VET sector students undertook their studies with the expectation that their qualification would lead to a permanent residence visa in Australia. However, since late 2008, changes to Australia's migration policy mean that few will gain this outcome. This article explores the numbers of students affected and their options for staying on in Australia on a temporary or permanent basis. It argues that to be sustainable, the Australian international student industry must focus on providing qualifications that overseas students can take back to their country of origin with profit.


Since the Labor Government came to power in late 2007 it has embraced a high migration policy. At the time of its first budget in May 2008, it added a further 37,500 places to the previous Coalition Government's program. This brought the overall program to a record high level of around 200,000 for 2008-09. The government was afraid that labour shortages would contribute to inflationary forces, which the Treasury thought could abort the economic surge unleashed by the minerals boom. To this end the government wanted willing workers--the more, the better. However, at the time of the May 2009 Budget statement the Labor Government announced a slight cut in the overall program for 2009-10 to around 180,000.

On the face of it one might think that Australia's immigration policy is little changed from Coalition days. This is not the case. The overall size of the program remains very high by historic standards, especially given the Labor Government's expectation that the unemployment level will rise. But major changes have been made to the skill selection priorities and procedures. The most significant is the decision, announced on 17 December 2008 and implemented since January 2009, to focus skilled recruitment around employer and state government sponsorships. Since January 2009 the Labor Government has stopped processing visa applications from applicants with a wide range of qualifications earned in Australia which previously would have made them eligible to apply for permanent residence, including cooking and hairdressing. The only occupations being processed are those included on a critical skills list, which is limited to professional fields in the health, IT and engineering areas, accountancy (where the applicant can achieve 7 on the International English Language Testing System [IELTS] test) and a few trades. Students who complete a professional year in their field (mainly in accounting and IT) are also eligible to be processed. The government has said that it will process applicants with occupations not on the critical skills list, but which remain on the Migrant Occupations in Demand List (MODL), as discussed below, if there are visas available within its program target for 2009-10. Cooking and hairdressing are still listed on the MODL.

It is doubtful whether many such visas will be available. As indicated, the Labor Government has also decided to reduce the size of the skilled migration program slightly during 2009-10. The combination of this cut (see Table 3), along with the priority given to employer and state sponsorships and to those with occupations on the critical skills list means that few, if any, applications from former overseas students with occupations not on the critical skills list, but on the MODL, will be processed during 2009-10.

The implications of Labor's policy innovations are profound, especially as they relate to the international student industry in Australia.


Since the early 1990s, the core rationale of the migration program has been the selection of persons with skills thought to augment Australia's skill base. Successive Labor and Coalition governments have selected a modest number of those with good English, trade or professional credentials recognised for employment purposes in Australia and with relevant work experience. The policy was pitched at the long term in that it was assumed that persons with such high level skills would find employment, and thus that there was no necessity to insist on pre-arranged employment as a condition for selection.

This policy was extended in 2001, when former overseas students who had completed post-school credentials at an Australian university or vocational education and training (VET) college were permitted to apply for skilled permanent residence visas from within Australia in designated skilled occupations, as long as they did so within six months of completing their course. Their applications were treated on a concessional basis. Unlike prospective skilled migrants applying from overseas, those applying onshore did not have to have had relevant job experience in their nominated occupation and they received extra points on account of their Australian credentials.

The international education industry in Australia has since expanded rapidly, largely in response to the permanent residence opportunities that these innovations presented. Until 2005, most of the growth occurred at the university level, particularly in the business studies and IT fields. Since 2005 the VET sector has expanded much more rapidly, though from a relatively low base (see Table 1). As Table 1 also shows, students from India have been a major contributor to this VET sector growth. India is the largest single source country for the VET sector, with 32,771 commencements in 2008. China was the next largest source country with 15,421 commencements in 2008 (not shown in the Table).

Table 1: Overseas student commencements, India and all nationalities, by education sector, year to December, 2002 to 2008 Sector 2002 2003 2004 2005 2006 India Higher education 4359 7064 9958 9315 10,493 VET 818 618 1005 2865 7399 Schools 35 18 18 32 31 ELICOS 15 421 897 1111 2662 Other 74 85 107 122 251 Total 5361 8206 11985 13.445 10.836 All nationalities Higher education 56.636 60,473 65,089 64,570 66,333 VET 29,408 30,230 32,056 37,314 18,461 Schools 12,272 12,510 11,320 10,408 1,104 ELICOS 42.105 47.050 45,359 49,439 9,052 Other 19,824 21,370 21,517 21,957 2,076 Total 160,245 171,633 75.3411 183.688 17,026 Sector 2007 2008 India Higher education 11,197 12.102 VET 18,612 32.771 Schools 52 60 ELICOS 8419 14,508 Other 428 641 Total 38,708 60,082 All nationalities Higher education 69,716 77,961 VET 72,622 105,752 Schools 13,599 14,446 ELICOS 80,824 99,367 Other 22,842 26,076 Total 259,603 323,602 Source: Australian Education International (A LI) student commencements data, unpublished. Notes: VET stands for vocational education and training and ELICOS for English language intensive course for overseas students. There has been a resultant flow into the migration program as the numbers of completing university or VET courses eligible for permanent residence has increased. By 2007-08, nearly half of the skilled migrants being visaed under Australia's General Skilled Migration (GSM) categories were former overseas students trained in Australia. The GSM visas incorporate all the permanent residence skill selected visas issued by the Australian Government to principal applicants and their dependents, except for those entering under the business skills and employer nomination categories.

The statistics in Table 1 help set the scene for the analysis, but they need to be read with caution. They are based on the Australian Education International (AEI) database. The numbers refer to commencements in courses, not discrete students. This is not a problem for the higher education starts, but it is for the VET sector. This is because VET students tend to enrol in a new course each year. In the case of the hospitality fields examined below, students normally complete their study over two years. In the first year they do a Certificate III level course (or equivalent), which would be recorded as a commencement in, for example, cooking or hairdressing. In the second year they usually do a course in hospitality management, which would also be registered as a commencement, though this time in hospitality management. So an individual student would be counted as a commencing student twice, in consecutive years. In the higher education sector an individual student would normally only be counted as commencing once. This is why Table 1 shows that there were more commencements in the VET sector in 2008 than in the higher education sector. AEI does publish a limited range of statistics that identify discrete students. These show that for 2008 there were 176,161 overseas students taking higher education courses in Australia and 151,258 VET overseas students. (1)

Despite their limitations, the AEI database is the only source which allows an up-to-date identification of trends in overseas student enrolments. What they show is remarkable. There was an increase of 20.7 per cent in the number of commencements in the higher education sector over the years 2005 to 2008. But in the VET sector, commencements over the same period grew by 183 per cent. This latter figure represents an overall growth in VET commencements of 68,438. Much of this was attributable to just one source country: India. Commencements from Indians grew by 29,906. They accounted for 44 per cent of the growth in VET sector commencements between 2005 and 2008.

As is shown in Table 2 nearly half of the total growth in the VET sector since 2005 has occurred in courses recorded as being in the cooking, hairdressing, hospitality and hospitality management fields of education. This figure is undoubtedly an underestimate of the role of the hospitality sector in VET expansion because some colleges nest their cooking and hairdressing students within the management field of study. When classified in this way, it is difficult to identify students who begin with cookery or hairdressing and then do...

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