Why are taxpayers subsidising international students?

By Leith van Onselen

The 2019 Federal Budget included an obscure measure, entitled Destination Australia Program, promising to fund scholarships for both domestic and international students to study in regional Australia:

$93.7 million from 2019-20 (and $23.7 million per year ongoing) to establish the Destination Australia Program to support domestic and international students to study in regional Australia by providing scholarships towards a higher education or vocational education and training (VET) qualification.

Last week, the Minister for Education, Dan Tehan, provided more information on this package via a Media Release:

Destination Australia will provide 4,720 scholarships of up to $15,000 a year for domestic and international students to study at a regional university or vocational training provider…

“International Education made a $35 billion contribution to the economy last year, yet just three per cent of the 690,000 international students were enrolled in regional Australia,” Mr Tehan said.

“The Destination Australia scholarships will encourage more international students to study outside our major cities which means regional centres can share in the job, business and cultural opportunities that come with international students.

Other than the above information, details are thin.

Nevertheless, Australian taxpayers are facing a bizarre situation where they will soon provide millions of dollars in subsidies to international students. Why?

Rather than handing scarce taxpayer dollars to foreign citizens, these funds would unambiguously be better spent on worthwhile social programs that raise the living standards of incumbent Australian voters, such as raising Newstart.

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Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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  1. raising Newstart

    The body that gives politicians an automatic pay rise every year should also be tasked with giving dole recipients an automatic pay rise every year. The rates of increase should be linked – both are on the same teat. So no “dole stuck at 1994 levels” while corrupt politicians get a 5.3% pay rise every year.

    Bugger the scholarships for foreign “students”. Instead, train Aussies how to fly aircraft:

    the global pilot shortage

    (in 2009) a government white paper predicted the training system would fail without remedial action.

    The cost to become a commercial pilot is comparable to that of becoming a doctor or a veterinarian. A university-trained commercial pilot with a flight-instructor rating will pay more than $140,000 in fees.

    But unlike those doing medicine or veterinary science courses, trainee pilots have never been adequately assisted by federal student subsidy and loan schemes such as HECS, FEE-HELP of VET Student Loans.


    • Ronin8317MEMBER

      It is not a ‘global pilot shortage’, but a Chinese pilot shortage causing a lack of pilots globally.

  2. Yes, UC, is a bad policy, but are you telling us you are an orthodox economist by this statement:

    Rather than handing scarce taxpayer dollars to foreign citizens…

    Those taxpayer dollars are very scarce indeed. They can be counted but not re spent. Even the Bank of England agrees on this point: http://bilbo.economicoutlook.net/blog/?p=31063

    So, surprised you use the term as it just reinforces the current status quo.

    • Christopher, agree, but why via the tax system do we subsidise all the US and foreign tech companies that pay no or little tax? The ATO say they are doing a fair tax system, but this is clearly false. We’re no different to other countries, but interested in your view on how it can be fixed. This is on top of their totally unacceptable surveillance capital. Most don’t know that so many apple/android apps are not your friend in this regard. Apple knows it and the pressure is on, but google won’t ever see you other than an economic unit.

      • boomengineeringMEMBER

        Not without incident halfway down black car crossways over double white lines 3 point turn, no chance of avoiding as had to lightly hit it as squeezed thought the gap between parked cars and his front. Sucking exhaust pipes later on, so 4.00 am next time. Removed fresh road kill cat en route to avoid flat pet syndrome.

      • Double Holy Crap. I hate that as you’re in pure luck territory. I’ve seen plenty of cyclist come out on the wrong side of that. These days with polulation explosoon it’s rare not to have some incident. Take it easy and the effort today will be goid for your fitness. I was watching a youtube vid last week and thought of you. The guy was building all these metal jigs for all sorts of apps. I’m sure you’d do it way better

      • Thanks afund, allowing corporations business landscape they get reflects a wide range of policy choices at all levels of government. Both sides have been heard to say that Australia needs a competitive tax system…. They never say why we need to attract companies like Amazon, Facebook, Alphabet and so on. They would operate here regardless of the tax levels.
        Taxes at the corporate level are one way to confiscate some of their profits to fix the externalities they create. I agree we allow them too much; we turn a blind eye while they automate factories, call centres and retail outlets, while offshoring other jobs and importing cheaper workers to depress our wages and standards of living.

        This is the 2019 corporate world’s assessment of the corporate, social responsibility framework in Australia. There isn’t one and the only responsibility one has is to have a fair go and to make as much money as possible while minimising all taxes and repatriating earnings and profits offshore.

        That’s the sort of corporation and businesses we like to attract here in Australia. The messages our politicians say to corporations of all sorts is that we’d love your support ($s) and we will continue to ensure that Australia remains wide open for looting, cough, business; we have been since the 1980s

      • I really hate the way so many modern cars have such HUGE blindspots towards the rear.
        WRT SUV’s So much of this is apparently driven by US regulations to strengthen and make the roofs more resistant to crushing/collapsing in roll-over incidents It’s all worked out so well with Roll-over deaths almost a thing of the past BUT now you’re taking your life in your hands if you ever walk behind a modern Crossover/ SUV Don’t think the driver can see you unless your looking right at his reverse camera (by which time your fate is sealed)
        Same thing goes for strengthening B Pillars and thereby creating a huge Drivers side blind spot, lots of avoidable accidents occurring while the industry safety boards congratulate themselves for the reduced injury and death from certain classes accidents.
        A while back there was a public database where you could look at different classes car of accidents and do your own sort criteria…it was eye opening to see just how much good all round visibility contributed to low accident incidence….but that’s not what we’re measuring ……ahhh

    • Thanks Christopher. I suppose we’re no different to other countries on this front, but before long as the tech giants claim most of the economy, the them basically refusing to pay tax will be even more critical. The recent Bezos Amazon NYC is a classic case when you follow the whole HQ2 drama. Governments have to act. Zukerberg got a very light grilling by congress, and it turned out that only six of those reps hadn’t be paid by him. He refused to attend the UK parliament. When we have a social security budget of $136B I think, the money has to come from somewhere and the 60% that comes from the people is not going to be enough. There is no real modern view of the economy and what’s needed for the future either. It’s just mass immigration to appear to boost GDP without the holding costs that comes with the policy. Our children are in a lot of trouble with the elites running amok IMO. Any CEO who acted this way would be booted. Anyway, thanks again. BTW I worked with and for the big US tech so I know how they think and act….very similar to the Greens …do what I say not as I do.

  3. It’s not about the international students, but rather the institutions that donate to them and the suckholes that lead them. A coordinated transfer of public wealth.

  4. Tax payers are now going to subsidise international students because they’re part of the population ponzi that funnels wealth to certain classes. It’s why tax payers also subsidise labour exploitation (via PaTH), millionaire pensioner shareholders and loss-making landlords.

    Half billion dollar deals are signed with companies based out of shacks that keep brown people locked up in concentration camps and with fake charities ostensibly set up to save the environment but run by folks whose work in mining played a hand in destroying it. We live in a rather corrupt country.

  5. International students are an export industry they need taxpayer support. Just like the car assembly industry got.

  6. mild colonialMEMBER

    Regional no doubt includes Canberra? when there’s no need for students to get an incentive to come to Canberra. how many international students are there in Canberra? How many in the year 11-12 colleges?

  7. I don’t know where to weigh in on this
    Here’s what’s going to happen Indians that want to work in Australia will enroll in a basically free degree in basket weaving and use this as their supported residency ticket. Once per week, during their first year, they’d take the train or fly to Coffs or Dubbo or Armidale and do some face time,, thereafter they’d figure out that attendance wasn’t really necessary.
    One thing is certain and that is that every man woman and child that comes in under this scheme will be working in Sydney so what’s the point? In the end it’s just one more example of how our Ponzi scheme self-reinforces, we are so far past the point where the Ponzi scheme is parasitic, today the Ponzi scheme is the Economy. This is precisely why we’ll all embrace this stupidity, we’ll find ways to describe the scheme as Inspired and surround it in all sorts of uplifting verbiage, all so that we can avoid the obvious conclusion and self reflection that would come with such a realization. Unfortunately this is what we’re now reduced to doing to support precisely that which is impoverishing us and enslaving our kids.

    • Ronin8317MEMBER

      The ‘point’ is that our regional universities’s vice chancellor wants a good looking 7 digit annual salary too, and that is not going to happen without some international student.

      • Yeah that’s a good point, at least someone benefits,
        oh why did I shun Academia for the world of Engineering? I suspect I would have been good at playing this game.

  8. We subsidise strategic industries, like foreign students, because of the net positive value they deliver to to economy, like our car industry…..oh…wait….right? What?

  9. Another free market in action. The current LNP say one thing but do another, & Labor are no better … well at least they are manning up with some tax reform.

    • Unless you’re joking I think you may be confused about what a free market is. Any time Govt intervention (in any form whatsoever) is involved you can safely ignore any concept of “free market”. There are many situations discussed in Comments on this blog that are blamed on free markets but are incorrectly diagnosed. In this day and age ‘free markets’ are becoming increasingly rare. Govts, as a rule, like to take ever greater control of key aspects of the economy in order to force desired outcomes. If something is horribly wrong with any aspect of the world around you, in particular social and economic, you can almost certainly be assured Govt has something to do with it.

      • That’s something that baffles me too.
        All manner of maleficence is attributed to “free Markets” when there’s absolutely no evidence to suggest that the markets arrived at these solutions, more often than not it’s the heavy hand of Government that is the only guiding hand. All real “free markets” have an inbuilt habit of arbitraging advantage, if any economic advantage exists than you will always find another company or individual that’s inserting themselves at precisely this location in the goods or services value chain. The free market always acts in a manner to reduce whatever advantage these free marketeers create and that’s the real beauty of the free market, unfortunately it’s a brutal unforgiving place so we impose rules and in the process protect exactly that which the free market would destroy, and than we blame the free market forces for these undesirable outcomes. Amazing

      • @fisho.
        100% mate. The beauty of free markets is that they are dynamic and self-regulating by default. In fact, you can almost define a free market thus: if an economic advantage cannot be arbitraged away you are almost certainly NOT in the presence of a free market.

        I think the people who are anti-free markets believe them to be markets in which rapacious companies are ‘free’ to do what the hell they like. The reality is that where you get ugly consumer outcomes is in situations where Govt intervention has prevented competition from ironing out things like price gouging, poor products & services, monopolies etc. Investors like Warren Buffet generally avoid investing in industries that operate in free markets as they are too difficult to make money in on a sustained basis. He deliberately looks for companies that enjoy some kind of protection from competition (via regulation or legislation) or has a natural monopoly via operating in a niche area. This is why big business and Govt are in bed together — the former are constantly lobbying the latter for MORE regulation, knowing full well that the regulatory burden will slow the smaller competition down — if not crush it altogether.

        Those crying out for ever greater regulation don’t realise they are simply begging for more monopolies — and thus poor consumer outcomes.

      • Shhhhhhh!! You guys are supposed to keep quiet about how the real world works.

        The funny thing is, those who are calling for big governments are usually those who oppose lobbying. Guess what, the surest way to eliminate lobbying is to make governments smaller because, quite obviously, the larger the government the higher the return on lobbying.

      • @dumping
        …. and my all time favourite: “the Govt must do something to stamp out corruption!” (the implication being that corruption is something that occurs outside of government — like, in the private sector somewhere).

        To your point, reducing the size of Govt would go a helluva long way to reducing corruption.

        According to the Anti-Corruption Commission, Victoria” “Corruption is the misuse of public power or position.”

        Public. Power.

      • Yes, at times the level of public misconception is so out of scale that I just shake head and move on.

        Do not underestimate the power of the Moron Side of the Force.

      • Yeah my favorite is
        The government needs more extensive powers to once and for all Stamp out Corruption.
        Huh like how’s that suppose to work!
        Who is it that’s by definition corrupt?

      • drsmithyMEMBER

        Unless you’re joking I think you may be confused about what a free market is. Any time Govt intervention (in any form whatsoever) is involved you can safely ignore any concept of “free market”.

        Except, of course, for the interference that’s “blessed”. Like, say, laws about property, theft, murder, fraud, contracts, etc.

        The only actual free market is one without laws. Everything else is just different opinions on what outcomes markets should be trying for and consequently what constitutes “big” Government (“big” Government is simply any government that has one more law than the accuser deems necessary).

      • drsmithyMEMBER

        Guess what, the surest way to eliminate lobbying is to make governments smaller because, quite obviously, the larger the government the higher the return on lobbying.

        Well, when corporation and state are interchangeable terms it’s not really “lobbying”, is it ? Same way there’s no “corruption” anymore because what would otherwise be “corrupt” behaviour is just “doing business”.

        Kind of like how back in the days when duels were legal, the loser wasn’t “murdered”.

      • What really irks me is when government interferes with THE MARKET by defining and enforcing its prefered definition of property rights.
        Far better to have pure freedom with everybody fighting over the definition and the private property itself. That’s efficient they tell me.

  10. “Rather than handing scarce taxpayer dollars”
    Money should not go to foreign students but taxpayers dollars are not scarce, there is plenty of money in the budget
    It’s just distribution that’s the problem because most of money goes to people and things that have enough

  11. Hi Guys, International Student here !, I studied software development , I paid 20.000 aud for the whole course, while a local student pay 6.500 aud , It means that I am founding 2 local students alone, additionally I had to pay upfront health insurance for the whole visa for 2 years…total 2400 aud because I am with my partner, and obviously I paid taxes , total 1427. Multiple all this values for around 360.000 visas X year….guys you must be happy and grateful that we are here….