Can Australia maintain its stranglehold on international students?

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By Leith van Onselen

One of the reasons why Australia has been so successful in attracting huge numbers of international students, whose numbers have increased by around 200,000 over the past five years to around half a million, is because:

  • Australia allows international students to work for up to four years after graduation, versus three years in the US, Canada and New Zealand; and
  • Studying in Australia is a recognised pathway towards obtaining permanent residency.
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Recently, competitor nations have ramped-up competition for international students in a bid increase their market share and export earnings.

Earlier this month, we learned that the Canadian Government plans to expand its presence overseas in order to significantly increase the volume of international students studying in Canada from 572,415 in 2018, with particular focus on non-Asian nations:

Officials from universities, colleges and the federal government are now in the early stages of developing an “aligned” strategy that will broaden campaigns in other parts of the world… in places with expanding economies and large populations of young people, like Colombia and parts of Africa…

Denise Amyot, president and CEO of Colleges and Institutes Canada, said… immigration policy changes in Canada have helped it compete with other countries in attracting the world’s increasingly mobile post-secondary students. The policies, she added, have sped up visa processing times, permitted foreign students to work in Canada while they study and improved a graduate’s chance of obtaining permanent residency.

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Now, the UK Government is under intense pressure to allow international students to work in the UK for two years after graduation, up from four months currently:

[Former universities minister] Jo Johnson said Britain was missing out on billions of pounds, and losing top talent to other countries, by limiting their post-study stay to just four months.

He and Labour MP Paul Blomfield are tabling an amendment to the Immigration Bill which would see a relaxation of the current rules…

The proposed change would also ensure that the number of overseas students cannot be capped in order to comply with the Government’s aim of limiting net migration to less than 100,000 a year…

Mr Johnson – who quit the Government over Brexit last year – said: “We have no chance of meeting education export targets unless we adopt a smarter approach to students…

The US, Canada and New Zealand offer international graduates the opportunity to work for up to three years after graduation, and Australia for up to four years.

Mr Blomfield said: “Slashed in 2012 to just 4 months, from two years, the UK’s post-study work offer is simply not competitive. While the International Education Strategy will increase this to 6 months, that’s not nearly enough to make the difference we need.”

As we know, Australia’s biggest international student market – China – is also increasing investment in its own universities and lifting its standards, which other things equal should stem the flow of Chinese students arriving in Australia.

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Unlike with commodities, Australia has no natural advantage in university education. Rather, standards have been lowered, year in and year out, to keep international student numbers (and profits) flowing, such as by going easy on language skills, as well as passing low performing students. In turn, this has eroded the value of an Australian qualification in the international market-place, which could adversely impact on student numbers down the track.

Indeed, over the past year we have witnessed multiple reports warning that the deluge of international students has degraded Australian university standards (for example here, here, here and here).

This led to the Victorian Government in January calling for a review of entry requirements into Australia’s universities, which was immediately followed by academics “inundating” Fairfax with complaints that they had been forced to lower teaching standards and pass failing international students in order to maintain the inflow.

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Even the international student association called for greater regulation of overseas migration agents amid reports of widespread cheating on English tests to gain access to Australian universities.

In short, the volume of international students flowing into Australia is likely nearing a peak as competitor countries offer sweeter enticements in post-study work/residency, source countries improve their domestic standards, and Australian universities lose their prestige value after dropping their standards.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.