The February 2010 reforms and the international student industry.
Birrell, Bob ; Healy, Ernest
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.
INTRODUCTION
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.
THE 1999 AND 2001 GSM REFORMS
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 12,226 17,681 22,045 24,895
South Korea 3,629 4,409 4,917 5,250 5,442
Viet Nam 1,723 1,997 2,157 2,356 2,564
Thailand 4,879 5,593 5,644 5,175 4,828
Nepal 953 824 664 656 1,090
Sri Lanka 2,071 2,187 2,113 2,128 2,412
Pakistan 1,271 1,230 1,290 1,397 1,624
Bangladesh 2,033 2,754 3,338 3,619 3,451
Mauritius 726 884 888 860 899
Brazil 394 415 428 420 463
Other nationalities 72,588 79,606 80,794 78,130 75,073
All source nationalities 115,200 134,614 150,558 162,547 169,465
Nationality 2007 2008 2009
Vocational education and
training/VET
India 26,403 51,087 79,173
China 19,679 26,353 33,754
Nepal 5,284 12,645 18,848
South Korea 7,579 9,297 11,574
Thailand 6,805 8,465 11,192
Viet Nam 1,745 3,439 6,334
Brazil 4,322 5,259 5,958
Bangladesh 3,967 4,198 4,565
Pakistan 2,344 3,401 4,468
Sri Lanka 2,679 3,574 4,208
Mauritius 1,442 2,853 3,550
Other nationalities 36,331 41,782 47,828
All source nationalities 118,580 172,353 231,452
Higher Education
China 49,721 53,472 64,493
India 26,129 27,318 27,820
South Korea 5,799 6,273 6,999
Viet Nam 2,925 3,858 5,780
Thailand 4,659 4,215 4,114
Nepal 2,457 3,227 3,887
Sri Lanka 2,956 3,368 3,711
Pakistan 1,957 2,175 2,557
Bangladesh 2,881 2,206 2,125
Mauritius 971 1,103 1,343
Brazil 498 584 691
Other nationalities 73,203 73,424 80,435
All source nationalities 174,156 181,223 203,955
Source: Australia Education International (AEI) enrolments data, year-
to-November
The GSM selection system remained largely intact until 2009 despite
increasing evidence and media commentary that the system had become
dysfunctional. There were some modest reforms implemented in September
2007, the most important of which was an increase in the weight accorded
English language skills in the selection system for applicants whose
chosen occupations required professional-level English (roughly
equivalent to scoring 7 on each of the four modules tested in the
International English Testing System [IELTS] that is, listening,
reading, speaking and writing). In addition, for applicants other than
those with trade qualifications, there was an increase in the minimum
level of English required on each of the four modules from 5 to 6.
Also, DIAC made an attempt to deal with the high share of GSM visas
allocated to accountants. The rules were changed to reduce the impact of
MODL points. Few commentators seem to be aware that, after September
2007, the possession of a MODL occupation was no longer decisive for
applicants who had obtained their qualifications in Australia. They (as
well as overseas applicants) could only gain MODL points if they had
completed one years work experience in their occupation. This was
defined as equivalent to at least 20 hours per week over the course of a
year. Few overseas students with accounting or any other professional
qualification could meet this condition.
POLITICAL IMPEDIMENTS TO CHANGE
But otherwise little had changed. As Table 1 shows, overseas
student enrolments continued to increase through 2007 and 2008. The
scope for reform at this time was limited by the Coalition
Government's concerns about the health of the overseas student
industry. As senior immigration officials acknowledged privately at the
time, DIAC had to move cautiously and needed to offer something in
return, even for the limited reforms implemented in September 2007. This
came in the form of a new GSM visa called the Graduate Skills visa (visa
subclass 485). After September 2007, the 485 visa allowed former
students to slay on in Australia for 18 months with full work rights.
All overseas students who had completed a university or VET course in
Australia and whose occupation was listed on the SOL as a 50 or 60-point
occupation could apply for this visa. All they had to do was prove that
they met the new minimum English requirements and that their
qualifications were accepted by the relevant accrediting authority.
From the international education industry's point of view, by
allowing former students access to Australia's labour market for
this period, the new visa added significantly to the attractions of
Australia as a study destination. While largely a concession to the
industry, the new visa also gave former overseas students time to
improve their English, complete a professional year (by taking a course
of instruction in the practices of their profession, which included a
job placement) or obtaining one years experience in their field with one
or several Australian employers. If they successfully completed any of
these three options they were virtually assured of gaining a GSM visa.
THE SITUATION IN 2008
By early 2008, the global economic boom was nearing its apex. The
Australia labour market was seriously stretched, with widespread
vacancies across the skilled and some semi-skilled occupations. The new
Labor Government lifted the permanent immigration program for 2008-09 to
a post-war record high of 200,000 (including the humanitarian visa
categories) of which skilled visas constituted 115,000.
But as Table 2 attests, the new government was intent on shifting
the balance towards demand-driven visas and away from the supply-driven.
This was despite a strong ALP campaign when in opposition against the
457 visa, the main employer-sponsored skilled temporary visa. The
government's revised rationale was that employer and state
government sponsors were much more likely to choose migrants who could
deliver needed skills than was the case for migrants who obtained GSM or
supply-driven visas. We probe this 'demand' attribution later
in the paper because the label implies that it is entirely
employer-driven. In reality, by giving precedence to employer-sponsored
migrants, the Rudd Government has prompted prospective migrants to
search for willing sponsors.
Table 2: Primary and secondary visas issued under the skilled migration
program 2004-05 to 2008-09 and planned 2009-10, by visa category
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
General skilled 55,710 68,920 68,350 70,470 55,098 51,000
migration
Employed 13,020 15,230 16,580 23,762 38,026 35,000
sponsored
State sponsored 4140 8020 6930 7530 14,055 14,000
(1)
Business skills 4820 5060 5840 6565 7397 8000
Other 190 100 230 210 201 100
Total 77,880 97,330 97,930 108,537 114,777 108,100
Source: Department of Immigration and Citizenship (D1AC), primary and
secondary visas issued data 2004-05 to 2008-09, planning level 2009-10.
Note: (1) state-sponsored visas have been separated from the GSM for
the purposes of this table.
Notwithstanding the overall increase in the skilled program for
2008-09, the number of permanent entry GSM visas issued fell from 70,470
in 2007-08 to 55,098 in 2008-09. DIAC is planning to reduce the number
further in 2009-10 to 51,000 (Table 2). By contrast, the number of visas
issued to those sponsored by employers or nominated by state governments
increased sharply.
This change in priority did not bode well for the overseas student
industry because it implied that that the pool of available visas under
the GSM was shrinking and thus that the number of GSM visas issued to
former overseas students would also decline. Nevertheless, the May 2008
budget announcements for the 2008-09 program did not foreshadow a
tightening of the GSM selection rules. This was to change at the end of
2008.
The year 2008 was a bad one for the international student industry.
Concerns about the quality of instruction in universities and by VET
providers, and about the extent to which students were basing their
choice of educational provider on the likely PR outcomes, spread into
the mainstream media. The result was a popular image that the industry
was about selling education for visas. This perception was shredding its
credibility. During 2008, Immigration Minister Senator Evans took a
critical stance on the way in which the education industry was shaping
the GSM selection outcomes. His stated concern was that, despite the
growing number of visas issued to applicants in just a few occupations,
including accountants, cooks and hairdressers, there was no sign that
these additions were solving the 'shortages' in these
occupations. Yet, it was on the basis of these 'shortages'
that the Department of Education, Employment and Workplace Relations
(DEEWR) had based its MODL listing recommendations over the past decade.
Nevertheless, as noted, the dilemma for the Labor Government was
that any reforms could damage the overseas student industry. The
industry claimed that it was generating $15 billion in export revenue by
2008, which made it Australia's third biggest export industry after
coal and iron ore. (1) The industry had behind it the weight of the
universities, Technical and Further Education institutions (TAFEs),
private VET providers, English language colleges and many high schools,
plus the backing of State Governments and DEEWR. After the November 2007
election, DEEWR was headed by the Deputy Prime Minister, Julia Gillard.
DEEWR has had a long history of prioritising growth in the international
education industry and of warding off any reform which threatened this
growth. For example, despite evidence of the low English standards of
many of the overseas students completing Australian university courses,
the Department refused to act to tighten English proficiency standards
for those taking on tertiary study in Australia. In the aftermath of a
conference of industry leaders convened by DEEWR late in 2007, there was
an explicit rejection of any need to require English language testing
during or at the conclusion of an overseas student's university
studies. (2)
THE DIAC VIEW PREVAILS
DIAC, however, took a different view. By the end of 2008, it was
apparent that the Immigration Minister's stance was prevailing
within the Labor Cabinet. Our inquiries on this matter confirm the
assessment of Peter Mares, in his commentary on the 8 February 2010
announcements. Mares says that:
The outcome represent a significant victory for the Department of
Immigration and Citizenship over the much bigger and generally more
powerful Department of Education, Employment and Workplace
Relations. When the policy was contested in Canberra corridors, the
heavyweight departments of Treasury, Finance and Prime Minster and
Cabinet all came down on Immigration's side. (3)
In December 2008, Evans announced on behalf of the government that,
from January 2009, applicants sponsored by employers and state
governments would be given priority in visa processing within the
skilled migration program, followed by GSM applicants with occupations
included on a new Critical Skills List (CSL), which contained far fewer
occupations than those listed on the SOL or on the MODL. Though cooks
and hairdressers remained on the MODL, they were not included on the new
CSL. Accounting was included on the CSL, but DIAC indicated that it
would only process onshore visa applications from those who could
achieve 7 on the IELTS test for all four of the modules tested or for
those who had completed the professional year in accounting. Applicants
without an occupation on the new CSL were told they might have to wait
years before their application was processed.
However, there was one explicit message in the December 2008
announcement, which could be interpreted as a warning, about what was to
come and which we return to at the end of this article. This was to
encourage potential applicants for PR who had completed a course not on
the new CSL to seek out an employer sponsorship for a PR visa. For
example, in the course of his December 2008 announcement Senator Evans
stated:
International students who are enrolled in courses that are not on
the CSL will still be able to apply for a permanent visa without a
sponsor. However if they want their applications considered as a
priority they will need to focus upon finding an employer to sponsor
them. (4)
The direction of policy by 2009, if not the detail as to how a
reformed GSM would be structured, was becoming clear. The December 2008
announcement left open many issues. No changes were announced to the
existing selection system for GSM visas, except to flag that the English
language threshold for those with trade qualifications would be raised
to IELTS 6 from 1 July 2009. The government also announced that a new
job readiness test would be introduced for those with trade credentials
who applied onshore after 1 January 2010. The question of how the GSM
selection system would be reformed to take account of these new
priorities remained to be answered. This uncertainty about future policy
helps explain why enrolments, particularly in the VET sector, continued
to grow during 2009 (see Table 1).
Since there was nothing to stop new university and VET graduates
from applying for a GSM permanent residence visa (if they could afford
the $2550 fee) or for a Graduate Skills 485 visa, this situation left
open how the Government would deal with the pipeline of lodged
applications when these were eventually processed. Similarly, nothing
was said about what the transitional arrangements would be for those
still enrolled as students, if or when a new GSM selection system was
introduced. This probably reflected a concern not to frighten the horses
in the overseas student industry, for a scare might have led to a
tsunami of GSM visa applications. There was also uncertainty about how
far the Government was prepared to pursue reforms to the GSM. In other
words, the final battle still had to be won within the Labor Cabinet.
There were some clues given in two discussion papers issued in
August and September 2009 respectively, under the auspices of both DIAC
and DEEWR. These indicated that some change to the GSM was imminent. The
papers explored how the government might better target high-value skills
through the GSM program and how the existing MODL, which covered around
100 occupations by 2009, might be replaced with a smaller list. Since it
was assumed that employers were to shoulder the main role in meeting
short-term labour shortages through permanent and especially temporary
employer-sponsored visas, a new rationale was needed to justify the
continuation of a GSM program. This was stated to be the recruitment of
high-value skills. Issue paper number 2 says that migrants selected
under GSM visas should possess 'higher value skills than sponsored
migrants', skills that are likely to help 'meet
Australia's future skill needs'. (5)
The context, from DIAC's perspective, was that the room to
manoeuvre in developing a new selection system was limited. As noted,
the priority given to employer and state sponsored migrants meant that
the number of visas available under the GSM must shrink. Yet this
shrinkage in the GSM was occurring at the same time as the pipeline of
potential GSM visa applicants, enrolled in universities and VET courses
in Australia continued to grow.
THE FEBRUARY 2010 DECISIONS
The Rudd Government announced a set of decisions on new regulations
covering the GSM visa program on 8 February 2010. These laid the
groundwork for a tightening of the way in which GSM applicants would be
selected. The full architecture has not been revealed, including details
of the selection system which will replace the one governing the
existing GSM system. However, the main features of the system have been
announced. They are sufficient to enable conclusions to be drawn about
the immigration prospects of overseas students. We explore these
prospects sequentially, starting with those who enrol in higher
education or VET courses after 8 February 2010 (new students), those who
were enrolled in such courses as of 8 February 2010 and those who have
completed courses and are still in Australia on various temporary visas
including the 485 visa (transitional students).
NEW STUDENTS
In order to apply for a PR GSM visa, students enrolled after 8
February 2010 will have to meet three new threshold requirements. The
first is that their occupation is included on a new Skills Occupation
List (SOL)--to be released in April 2010 and to be made effective for
applicants after mid-2010. This list will mean the end of the
broadly-based SOL introduced in 1999, and of the MODL. The Government
abolished the MODL on the 8 February 2010. The new SOL will include
fewer occupations than the old SOL. According to Evans, the list will
include occupations:
... where the skills take considerable rime and diligence to
acquire, where there is every likelihood that the skills will
be deployed as intended, and where the cost to the economy and
local communities of the skill being in short supply is great.
(6)
The list will be based on a review by Skills Australia, the
Government's advisory body on labour market issues, in consultation
with DEEWR and DIAC. Skills Australia gave an indication of its advice
on 5 March 2010 when it issued a 'Specialised occupations'
list, which it states will be the basis of the new SOL. (7) The list
covers 94 mainly professional and trade occupations al the ANZSCO
4-digit level (which encompasses larger numbers of occupations at the
most detailed 6-digit level). Most of the professional occupations are
the same as those included in the current CSL (which will be abolished
when the new SOL is introduced). However, it includes a wider range of
trade occupations than the current CSL. These are almost all traditional
trades requiring a completed apprenticeship. The Skills Australia list
does not include cooking or hairdressing.
The implication is that eligibility for a GSM visa will be far more
restrictive than has been the case. Hundreds of occupations that were on
the superseded SOL may no longer be eligible. For example, public
relations, human resources and general management professionals are
likely to be excluded. The only business professions on the Skills
Australia list are accountants, auditors, company secretaries and
corporate treasurers and financial brokers. This is important because
students completing business courses dominate the ranks of those
applying for a GSM visa. As we show below, there are far more potential
applicants than GSM visas available. As far as the VET sector is
concerned, the main impact will come from the almost certain absence of
cooking and hairdressing from the list of eligible trades on the new
SOL.
Another very important development from the point of view of the
international student industry is that, for new students, the new SOL
will also affect their access to the 485 visa. If a student completes a
course where the qualification is not applicable to an occupation on the
new SOL, they will not be able to apply for the 485 visa. This
restriction is likely to apply to those with cooking and hairdressing
qualifications and to those with business degrees other than the ones,
like accounting, included in the fields listed above.
IMPLICATIONS FOR THE OVERSEAS STUDENT INDUSTRY New students in the
VET sector
The implementation of the new SOL from mid 2010 will, for new
students, decouple the GSM selection system from the VET sector. As
noted, cooking and hairdressing are the only major trade occupations
where overseas students can do a full-time course without a rigorous
on-the-job training component and still obtain a GSM visa. This is why
these two fields have dominated the provision of VET courses for
overseas students. This market will probably no longer exist, because
cooking and hairdressing are unlikely to be eligible occupations on the
new SOL.
The industry is about to be transformed. Overseas students will
still be able to apply for a student visa to study in the cooking or
hairdressing fields. However, the PR carrot will be removed, as will the
prospect of staying on in Australia (on full work rights) for 18 months
on a 485 visa. Apart from the tiny minority who believe that an
Australian cooking qualification will enhance their job prospects back
home, the only inducement left to those contemplating taking out a VET
student visa would be the opportunity to visit Australia and, while
studying, to work during the period of the student visa.
This still leaves the option of seeking an employer or state
government sponsorship for a skilled PR visa. On the face of it employer
sponsorships will be hard to find. Since mid-2009, the minimum salary
for a cook or any other occupation has been $45,220 in the main
employer-sponsored PR visa, the Employer Nomination Scheme (ENS) visa.
This is well above the award rate for cooks. Also applicants need to
have had three years experience. We deal with this issue below when
exploring the options that former students may have to get around these
obstacles.
New students in the university sector
The outlook for new students in the university sector is mixed.
Quality institutions are not likely to be affected much, even where most
of their overseas students are enrolled in accounting and other business
studies. This is because an accounting degree from a good university
will yield a reasonable return in the home country. The outlook is more
problematic for those universities that have aggressively pursued the PR
market by offering relatively cheap course fees.
Subsequent enrolment levels by overseas students will depend on the
extent to which potential students think they have a realistic chance of
obtaining PR. This will depend on the number of places available under
the new GSM arrangements and on the rigour of the proposed new
points-based selection system. In what follows, the prospective supply
of and demand for PR places is explored. We then consider the likely
structure of the points-based system.
THE SCALE OF LIKELY DEMAND FOR PR FROM UNIVERSITY GRADUATES
As indicated, there will be more potential applicants than visas
available under the new GSM program. Perhaps the best way to indicate
the size of the prospective logjam is to examine the statistics on the
number of overseas students completing university courses in Australian
universities. As Table 3 shows, their numbers have grown from 32,380 in
2002 to 64,964 in 2008. By 2008, just over half of these students had
completed courses in the Management and Commerce field of study. The
attraction of this field is that it includes accounting, which, as we
have seen, has offered a relatively easy route to PR.
Table 3: Onshore completions by course type, management/commerce and
total 2002 to 2008
Total
Overseas student Domestic student Total
2002 Postgraduate 16164 45390 61554
Undergraduate 16216 106162 122378
Total 32380 151552 183932
2003 Postgraduate 19743 47836 67579
Undergraduate 19125 109167 128292
Total 38868 157003 195871
2004 Postgraduate 20936 50642 71578
Undergraduate 21359 110980 132339
Total 42295 161622 203917
2005 Postgraduate 25509 51959 77468
Undergraduate 23300 110856 134156
Total 48809 162815 211624
2006 Postgraduate 27617 53313 80930
Undergraduate 26165 111027 137192
Total 53782 164340 218122
2007 Postgraduate 28776 54430 83206
Undergraduate 30472 111370 141842
Total 59248 165800 225048
2008 Postgraduate 33028 57337 90365
Undergraduate 31936 111691 143627
Total 64964 169028 233992
Management and Commerce
Overseas student Domestic student Total
2002 Postgraduate 6209 13093 19302
Undergraduate 6809 19766 26575
Total 13018 32859 45877
2003 Postgraduate 8223 13848 22071
Undergraduate 7666 20231 27897
Total 15889 34079 49968
2004 Postgraduate 8784 14450 23234
Undergraduate 9115 20284 29399
Total 17899 34734 52633
2005 Postgraduate 11056 14433 25489
Undergraduate 10492 20542 31034
Total 21548 34975 56523
2006 Postgraduate 12006 13976 25982
Undergraduate 12623 20753 33376
Total 24629 34729 59358
2007 Postgraduate 14152 13452 27604
Undergraduate 15772 21401 37173
Total 29924 34853 64777
2008 Postgraduate 17020 13612 30632
Undergraduate 17314 21185 38499
Total 34334 34797 69131
Management and Commerce as proportion of total
Overseas student Domestic student Total
2002 Postgraduate 38 29 31
Undergraduate 42 19 22
Total 40 22 25
2003 Postgraduate 42 29 33
Undergraduate 40 19 22
Total 41 22 26
2004 Postgraduate 42 29 32
Undergraduate 43 18 22
Total 42 21 26
2005 Postgraduate 43 28 33
Undergraduate 45 19 23
Total 44 21 27
2006 Postgraduate 43 26 32
Undergraduate 48 19 24
Total 46 21 27
2007 Postgraduate 49 25 33
Undergraduate 52 19 26
Total 51 21 29
2008 Postgraduate 52 24 34
Undergraduate 54 19 27
Total 53 21 30
Source: DEEWR customised datset held by CPUR
Our interviews with university staff teaching in management and
commerce fields have indicated that most overseas students taking these
courses are, at the very least, interested in the PR option. Survey
research conducted as part of the 2006 International Student Survey
initiated by DEEWR indicated that around two thirds of final year higher
education and VET students were considering applying for PR at some time
in the future. (8) Other indicators, like the remarkable parallel
changes in enrolment patterns by international students following
changes to the GSM selection rules, are consistent with this PR
aspiration. For example Masters by coursework and undergraduate
commencements at Australian universities by international students in
the information technology field fell from 10,332 in 2004 to 6,461 in
2006 and 7,848 in 2008. By contrast, commencements at the Masters by
coursework and undergraduate level for management and commerce courses
increased from 26,326 in 2004, to 31,000 in 2006 and 45,853 in 2008. (9)
This divergent pattern coincides with the addition of accounting to the
MODL in August 2004, but not the professional computing occupations.
If just half of the 34,334 overseas students who completed a
business and commerce course in 2008 (see Table 3) apply for a GSM visa,
this would represent some 17,000 applicants. Several thousand more with
engineering, medical and nursing degrees are also likely to apply. Yet,
in 2008-09, only 27,496 principal applicants received PR visas issued
under the GSM program. The rest of the 55,098 visas noted in Table 2
were issued to dependents of principal applicants. As explained, there
will be fewer visas available in 2009-10.
Unpublished DIAC statistics for 2008-09 and the first half of
2009-10 for the 485 visa, and for the two major permanent entry GSM
visas limited to overseas students (visa subclasses 885 and 886), give
an indication of the scale of interest on the part of overseas students
in migration. In the case of the 485 visa, the number of lodgements from
principal applicants was 23,850 for the full year 2008-09 and 17,026 for
July to December 2009. In the case of the 885 and 886 visa subclasses
the total lodgements by principal applicants was 19,629 in 2008-09 and
14,510 in the six months to December 2009.
The logjam of student applications will be exacerbated if overseas
experience and qualifications are given more weight in the selection
system. As flagged in its 15 February 2010 discussion paper,
'Review of the General Skilled Migrants Point Test', the
government may choose to put more emphasis on credentials from top
overseas universities and on work experience--whether in Australia or
overseas.
The reality is that, short of an increase in the GSM program, DIAC
will have to run a severe filter across all applicants, including those
with university or VET credentials obtained in Australia.
FROM ELIGIBILITY TO GSM SELECTION
Unfortunately at this point, it is only possible to speculate how
much tougher the new filler will be than that currently prevailing. The
February 2010 Discussion Paper hints that everything is under review.
The government may decide to increase the minimum English standard for
some occupations. The current minimum of level 6 on the IELTS test is
well below that needed in most professional occupations, which is at
least level 7. Alternatively, it may insist that all applicants in
professional occupations complete a professional year in their
discipline. If this occurs, it would imply that the points currently
allocated to applicants for study with an Australian provider, or for
studying in a regional location, or from sponsorship for a relative
holding a permanent residence visa in Australia, will be given less
weight in the selection outcome. Indeed, the Government will have to do
this if it wants to leave room to recruit high-quality applicants from
abroad.
We conclude that for students contemplating taking an Australian
university degree with the purpose of obtaining a permanent entry visa
the prospects of success will be lower than under the pre-8 February
2010 rules. Students will have to take on a difficult and expensive
course in engineering, in one of the health professions or in the other
high-skill occupations likely to be on the new SOL if they wish to be
assured of a PR visa under the GSM.
As regards the VET sector, as noted, the government has already
decided to toughen the assessment of trade skills. All those who apply
onshore for a permanent entry GSM visa after 1 January 2010 and who hold
trade credentials will have to meet the new job readiness test. This
test will be far tougher than the previous arrangements described above.
The TRA has abolished the 900-hour work experience requirement which
students had to complete during their course. Instead, the new job
readiness test requires one year's full-time job experience, which
it expects will be completed while the student is on a 485 visa, and a
competency test, or what it terms a job-ready workplace assessment, to
be conducted by a TRA-approved assessor. (10) This sis a radical and
welcome change. However, it will not have much practical impact because,
for the immediate future, the great majority of potential VET graduates
will be cooks and hairdressers. Those who are new students will not be
eligible for a GSM visa anyway, because their occupation is unlikely to
be on the new SOL.
STUDENTS IN TRANSITION
Here the focus is those overseas students who on 8 February 2010
were holding a student visa entitling them to take a higher-education or
VET course. This group also includes those who have completed a course
and are still in Australia either on a 485 visa or on a bridging visa
pending the processing of a permanent residence GSM visa or a 485 visa.
There were several hundred thousand overseas students enrolled in
courses prior to the February 8 announcements. As of mid 2009, according
to DIAC stock data, there were 386,523 overseas students in Australia on
student visas. About 80 per cent of these would have been enrolled in
higher-education or VET courses. All of these students can apply for a
485 under the old SOL up to December 2012. This will allow them full
lime work rights in Australia for up to 18 months. Those with trade
qualifications will not have to complete the TRA work readiness test.
Instead, TRA will accept the certification from their provider. However,
those who obtained a 485 visa without having completed the job readiness
lest will have to do so if they subsequently decide to apply for a PR
GSM visa. Those who obtained their certification from TRA prior to 1
January 2010 are exempted from this requirement. In addition, all
applicants in this transition group who hold a trade qualification will
have to meet the minimum English standard of IELTS 6 for each of the
four modules, both for a 485 visa and a PR GSM visa.
There is one final hurdle for those transitional students who do
obtain a 485 visa. If they wish to apply for a permanent entry GSM visa
after mid 2010, they will not be able to do so unless their occupation
is on the new SOL.
There is one transition group of former students who are in a
better position to access a GSM visa. DIAC has been allowing former
overseas students to apply for a GSM visa since January 2009, as long as
their occupations were on the old SOL and they could meet the language
threshold requirements. This has been permitted even if the
applicant's occupation was not included on the Critical Skill List
in place since 1 January 2009. DIAC has only been processing GSM
applications which are on the CSL. For all others, the applicants have
been granted a bridging visa with full work rights and indefinite stay
in Australia until DIAC decides to process their application. In the
eight months from January 2009 to August 2009 some 3472 cooks applied as
did 560 hairdressers (unpublished DIAC stats via a freedom of
information request by The Australian). When they are eventually
processed, most will meet the selection rules applicable at the time
they applied. Those holding a 485 visa or those who finished their
courses at the end of 2009 can still apply for a GSM visa under these
arrangements. This concession will end in mid-2010 when the new SOL is
announced.
CONCLUSION
The party is over. For new VET and university students the Rudd
Government has largely decoupled education from migration selection.
For new VET students (those who enrol after 8 February 2010) the
carrot of PR will largely be removed, including those enrolling in
commercial cookery or hairdressing courses. They will not be eligible to
apply for a GSM or a 485 visa after completing their courses. For new
university students the PR pathway will be far more difficult than it is
currently, in part because of the limited range of occupations that will
eligible for a GSM or 485 visa, and in part because the proposed new
selection test will be much tougher than that in place at present.
This means that to sustain and grow their market, educational
institutions will have to provide courses which are of value back in the
countries of origin of prospective students. This is as it should be.
For students in transition, that is, those who have already applied
for a GSM visa and are waiting to be processed, those who have applied
for or hold a 485 visa, and those who held a student visa on 8 February
2010, the picture is more complex. There were at least 400,000 in these
categories by the end of 2009.
At one level, the transitional arrangements for these students are
generous. All those with qualifications relevant to occupations listed
under the old SOL will be able to apply for a 485 visa as long as they
do so before the end of 2012. Those that obtain the 485 visa will be
able to stay in Australia for 18 months with full work rights. This will
allow them to recoup some of the costs of their education and repay any
loans taken out to finance their education in Australia.
However, the 485 visa will no longer offer a relatively secure
pathway to a GSM visa. Those who apply for a GSM visa will have to have
an occupation on the new SOL and meet the requirement of the new
selection system when it is introduced.
The ramifications of these transitional arrangements will be
enormous.
The first concerns future competition for GSM places. For the
thousands who have already applied for a PR GSM visa, they will have to
be assessed according to the selection rules at the time they put in
their application. When their applications are eventually processed,
most are likely to succeed. They will add to the competition for the
limited number of GSM places available. How DIAC is going to ration
these places remains an unresolved puzzle.
The second concerns the implications of the large number of
overseas students in Australia's cities. The students who have
applied for a GSM visa, as well as those studying, or on a bridging visa
waiting for their 485 visa to be dealt with, will remain a huge presence
in these cities. Of most concern is their competition, with young
unskilled domestic job seekers in the low-skilled job markets of
Australian metropolises.
The third ramification concerns the responses of students to the 8
February rules. As the reality sinks in that most of the transitional
group of former overseas students will not be able to obtain a GSM visa,
this will increase their desperation to find an alternative pathway to
PR. One possibility is via stale sponsorship. Slates are coming under
intense pressure to provide such sponsorships. Our earlier inquiry
suggests that most states will exercise restraint. (11) However, DIAC
has stated that it wishes to partly devolve migration selection to the
states and several, including South Australia and Victoria, have
announced their intention to boost their share of the migrant intake.
DIAC will have to exercise close control over any propensity of these
states to sponsor students who would not be eligible under the new GSM
rules.
The most likely alternative option for PR for overseas students
will be the Employer Nomination visa subclasses. Many of the students
affected by the new GSM rules will pursue the suggestion of Senator
Evans and his Department, that they find an employer to sponsor them.
There is no doubt that the network of providers, education agents
and migration agents that have facilitated the recent enormous growth in
student enrolments will be out and about looking, on behalf of their
clients, for such employers. Indeed, agents tell us that the search is
underway.
Few will succeed via the permanent entry Employer Nomination Scheme
(ENS). To be eligible for this visa subclass, an applicant must have had
at least three years full-time experience in the occupation for which he
or she is sponsored. Students are being advised to first seek out a
temporary entry employer sponsorship under the 457 visa category. Almost
all trade and above occupations are eligible for 457 visa sponsorship.
That is, eligibility will not be restricted by the new SOL when
introduced in mid-2010. Also, it is the sponsors of 457 visa applicants
who make the decision whether the person seeking sponsorship has the
skills or experience necessary for the job. In the case of those with
trade skills, there is no requirement to pass a job readiness test, as
is now the case for those with trade qualifications who apply for a GSM
visa.
Once the student has worked two years in Australia, he or she can
then apply for an ENS visa, as long as during one of these two years,
the person was employed by the prospective ENS sponsor. If the employer
is willing to provide the ENS sponsorship, no job readiness test is
necessary and the minimum English standard is just 5 on the IELTS. This
is well below that which is now required for GSM applicants, which is
IELTS 6.
Readers may wonder why an employer would he willing to act as a
sponsor, given that 457 and ENS sponsors have to guarantee a minimum
salary payment of $45,222 a year. Yet they do. About 80 per cent of all
those who currently obtain ENS visas are former 457 visa holders. Many
of course, have the skills necessary to justify such payments. But in
the case of the hospitality industry, which is likely to be under the
greatest pressure to provide sponsorships for overseas students, this
salary level is well above the award wage. It is also way above what
most employers would be prepared to pay an employee who is a former
commercial cookery or hairdresser graduate from an Australian VET
provider.
From the employer's point of view, the willingness to sponsor
an overseas student or a relatively low skilled person from a developing
country is likely to be influenced by the power relationship between the
sponsor and sponsored person. The person sponsored, initially on a 457
visa, is dependent on the employer's willingness to act as an ENS
sponsor after the two years employment is complete. The employer can
drive a hard bargain as regards hours, wages and work conditions in
return. There will also have to be a willingness of the two parties to
violate the legal requirement to pay the minimum wage of $4-5,222.
It would be naive to deny the possibility of this occurring given
that the stakes are so high from the point of view of former students
desperate for PR and the commercial advantage for the employer in the
hospitality industry where margins are low. Given DIAC's limited
inspection capacity, those involved in these arrangements probably do
not have much to fear. The miserable record of compliance in the VET
sector should leave no illusion that some employers and students will be
party to non-compliance with the official regulations.
We thus have the situation where the Rudd Government has tightened
up the GSM procedures, such that those with cooking and hairdressing
qualifications, as well as wide range of business qualifications at the
higher education level, are unlikely to be eligible for PR. Yet, at the
same lime, it is allowing employers to sponsor former students with
qualifications in these fields under the 457 and ENS visa category
according to selection criteria which are far softer than those
incorporated into the new GSM selection system.
This inconsistency should be removed by limiting the range of
occupations eligible for employer sponsorship.
References
(1) B. Birrell and T. F. Smith. 'Export earnings from the
overseas student industry; how much?',. Australian Universities
Review, vol. 52, no. 1 2010. We argue that the $15 billion Figure
significantly overstates the actual figure.
(2) B. Birrell and E. Healy, 'Migrant accountants--high
numbers, poor outcomes', People and Place, vol. 16, no. 4, 2008, p.
20
(3) Peter Mares, 'From queue to pool: skilled migration gets a
makeover', Inside Story, 10 February, 2010
(4) Ministerial Statement by Senator Chris Evans, Minister for
Immigration and Citizenship, Changes to the 2008-09 Skilled Migration
Program, p. 8
(5) Review of the Migration Occupations in Demand List, Issues
Paper no. 2, September 2009, p. 9
(6) Senator Chris Evans, Announcement of changes to the skilled
migration program, 8 February, 2010, p. 10
(7) Skills Australia. Australian Workforce Futures: A National
Workforce Development Statregy. Commonwealth of Australia, Appendix 3:
Specialised Occupations, p. 83
(8) DEEWR, Submission to the Inquiry by the Senate Educaton
Employment and Worplace Relations Committee into the Welfare of
International Students. September 2009, p. 34
(9) DEEWR, unpublished higher education enrolment data held by the
CPUR
(10) Trade Recognition Australia website
<www.deew.gov.au/Skills/Programs/SkillsAssess/TRA/Pages/default.aspx>
(11) B. Birrell and B. Perry, 'Immigration policy change and
the international student industry', People and Place, vol. 17, no.
2, June 2009, pp. 76-78
