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Downturn Down Under

November 30, 2010

Central Queensland University’s main campus is located in prime territory for mining -- of coal, natural gas, nickel and precious stones (emeralds, rubies and sapphires). Australia’s is largely an extractive economy -- its two largest export industries are the mining of coal and iron ore -- but vying with gold mining for third is international education, which depends not on the removal of nonrenewable resources but on the importation of a renewable resource: students.

In general Australia’s universities derive between 15 and 20 percent of their revenue from international student fees, but for Central Queensland -- which runs campuses solely for international students in Brisbane, the Gold Coast, Melbourne and Sydney -- the figure is 44 percent. In the third term of this year, the institution saw declines in new international enrollments of about 20 percent. It was the first manifestation of an anticipated, sharp drop, which universities throughout the country are bracing for, and which Scott Bowman, Central Queensland’s vice chancellor, attributes largely to changes in Australia’s student visa approval process. “Countries that have always been our traditional competitors, the United States and the United Kingdom, are making it far easier to go and study there instead,” he says.

For observers of international education, this represents a significant shift, from when, after Sept. 11, the U.S. was making it hard and Australia was making it easy -- no doubt, in retrospect, too easy. The total number of students worldwide who are crossing national borders for higher education continues to grow -- to about 3 million in 2008 -- but each country’s share of the pie rises and falls in large part due to national policies.

The United States tightened its student visa approval process after the Sept. 11 attacks, around the same time Australia made it easier for international students to obtain permanent residency. The U.S. subsequently experienced a period of declines before international enrollment numbers began trending up again, while Australia has been experiencing rapid growth. By many accounts, the magnitude of growth was unsustainable, fueled, as in large part it was, by the rapid expansion of the vocational education and training sector, where students enrolled in short-term certificate programs – in some cases at low-quality institutions that could best be described as immigration mills -- in order to qualify for permanent residency.

International Student Enrollments in Australia

 

Sector

 

 

2002

 

 

2009

 

 

Higher Education

 

 

115,402

 

 

203,324

 

 

Vocational Education and Training

 

 

53,699

 

 

232,475

 

 

English Language Intensive Courses

 

 

57,273

 

 

135,141

 

 

Schools (K-12)

 

 

23,224

 

 

27,506

 

 

Other (Non Credit Awarding)

 

 

24,121

 

 

33,489

 

 

Total

 

 

273,719

 

 

631,935

 

Source: Australia Education International

But now it is the Australian government that has cracked down, tightening its own visa approval process to cut down on immigration through education. Students applying for visas to Australia are now facing longer delays, the government has increased the amount of money students are required to have in the bank -- over and above tuition costs -- from Australian $12,000 to $18,000 per year, and, perhaps most important, the word is out that it’s now much more difficult to obtain permanent residency after graduation. Australia has tightened its criteria for admitting skilled immigrants, among other things raising the requirements for English language skills and previous work experience. As the then-minister for immigration and citizenship, Chris Evans, said in a speech in February, the government’s goal was to transition from a supply-driven to a demand-driven immigration system. Heretofore, he said, “Australia’s skilled migration program has been delivering too many self-nominated migrants from a narrow range of occupations with poor to moderate English language skills who struggle to find employment in their nominated occupation."

Among those in higher education, there is a sense that this is true but that the government’s response to real abuses has been overly broad, and that international student numbers in every type of institution – high-quality universities and trade schools alike -- stand to plummet accordingly.

Australia has long been envied for its success in carving out a disproportionately large piece of the international student pie – a nation of 21 million people has cornered 6 percent of the global market. At the same time, scholars like Simon Marginson, a professor of higher education at the University of Melbourne, have raised concerns about the degree to which Australian universities are overdependent on income from international students and underfunded by the government, leading to erosions in quality. In a forthcoming article, Marginson writes, of Australia’s change of fortunes: “The Australian business model of international education has long been noted by other countries as a sign of the potential -- and limits -- of what educational marketing can achieve.”

“But if you live by the sword you die by the sword. When market forces rule, while business is booming everything looks sweet... but in the world of the market, boom is always followed by bust. The only question is the size and duration of the bust.”

The Bust

According to the latest figures, for September, new international student enrollments in the higher education sector are still up just slightly, by 2 percent, but new foreign enrollments in the vocational education and training sector are down by 8.7 percent and, most worrisomely for universities, new enrollments in intensive English language courses -- seen as the pathway to university study -- have decreased by 22.5 percent from this time last year. In addition, student visas awarded for higher education declined by 11.5 percent from 2008-9 to 2009-10, from 133,990 to 118,541.

“From all the intelligence we’re getting, there does seem to be a problem looming in the higher education sector,” says John Phillimore, a professor and executive director of the John Curtin Institute of Public Policy at the Curtin University of Technology. In August, Phillimore published an economic analysis modeling three scenarios: a “sideways” scenario in which new enrollments slide by 10 percent in 2011, remain stable in 2012, and begin to grow again in 2013; a “trough" scenario, or that of a “rolling decline,” where new enrollments decrease by 20 percent each in 2011, 2012, and 2013, and begin to grow again in 2014, and the “perfect storm,” in which new enrollments drop by 35 percent in 2011, remain flat until 2013, and then begin to grow from this reduced base.

Such declines have the potential to wreck university budgets: the analysis projects income gaps of $2.6 billion to $7 billion from 2011 to 2015 for Australia’s universities. To take one example, Monash University, in Melbourne, is anticipating cutting its budget by about $45 million next year, in large part by eliminating 300 staff positions, as Australian publications have reported.

“The best way to describe it is that the situation is unprecedented in historical terms,” says Dennis Murray, executive director of the International Education Association of Australia. “Despite such events as the bird flu, the Asian economic crisis, 9-11, and the global financial crisis, we’ve never seen a downturn. But now we’re about to see one for the first time since the records have been kept. It’s certainly the first time in the last 25 years.”

There are a number of factors, not least the growing strength of the Australian dollar, which is now trading about on par with the U.S. dollar. A series of attacks on Indian students in the last year attracted major media attention and damaged Australia’s reputation. Already in the higher education sector, total enrollments from India -- Australia’s second-largest source country -- have declined by 19.7 percent, and new enrollments by a staggering 47.9 percent.

But the main reasons have to do with the government’s move to sever the tight link between education and immigration. This change has its roots in both anti-immigration backlash in Australia and an indisputable need to crack down on the growth of low-quality education in the vocational education and training sector.

To start with the second point, as Paul Rodan, director of the International Education Research Centre at Central Queensland’s Melbourne campus, explains, from around 2001, Australia’s government made it easy for international students who graduated in areas where there were “declared” skills shortages -- such as information technology and accounting -- to obtain permanent residency “virtually automatically.” No doubt many students were choosing majors based on their desire to immigrate, and at the time, he says, many institutions were “seen to become de facto immigration factories as new programs were developed to reflect changed immigration requirements.” But things got worse when the government declared skills shortages in fields that required only a certificate – hairdressing or cooking, for instance. This led to the growth, as Rodan says, “of many hundreds of small, unprofessional, ethically unsound operations where the aim was clearly to make money and nothing else.”

“At the bottom end of the market were programs of poor quality, providers without the infrastructure, the resources or a background in education they were allegedly providing, and students who couldn’t afford to be here,” Rodan says. “Getting those elements out of the sector, I have no problem with.”

"On the one hand, I hold the view that the massive numbers which were secured at the height of the growth were unsustainable and that some leveling out was inevitable and, in terms of cleaning up some of the dubious practices, desirable,” Rodan says. “However, the sector here seems on sound ground in contending that there has been a ‘throwing out of baby with bathwater’ and that the new rules have not been sufficiently flexible, treating potential Ph.D. students and certificate students as if they represent the same thing.” In other words, he says, it is not just the very low-quality providers that have taken the hit, but the entire education system. “The best universities will be those that are best able to bounce back, but there clearly is damage lower down the food chain and toward the middle,” Rodan says.

Echoing a similar point: “We had a serious problem,” acknowledges Murray, the executive director of the international education association. That said, “The government’s response to it has been unsatisfactory. It has been ham-fisted.”

The other factor at play here has little to do with education per se, but a resistance to immigration among the Australian populace. “My concern,” says Bowman, the vice chancellor of Central Queensland, “is a lot of the migration issues are all getting mixed in together. So some of these problems about refugees arriving on boats have been mixed up with international students who have an ambition to stay on in Australia and get permanent residence. They’re different issues but my worry is that it’s all being mixed up together and confused, and we’ve got policy that is really detrimental to international students.”

As Marginson, of the University of Melbourne, points out, in a country so flush with international students, “any substantial downsizing of net overseas migration can only be achieved through major reductions in the number of visas issued to international students.”

Implications

Australia’s rapid rise in the international student scene began at the same time U.S. immigration policy became more restrictive. Now that the tables have turned, there may well be opportunities for Australia’s competitor countries -- the United Kingdom and the United States -- to increase their own numbers. But in the international education landscape the balance of powers can change quickly. Madeleine Green, a senior fellow at the International Association of Universities and an education consultant, said that in surveying the big picture of the future of student mobility, she has come to the conclusion that it’s really “kind of a crapshoot.”

“There really are many unknowns, and I think we know that if you tweak some of the variables, they will have an effect,” she says. “So we know that when the United States got crazy about visas after Sept. 11, it had a pretty immediate effect. When Australia went to making it easier for people to get permanent residence, that too had an effect.

“When the spigot turns down in one country, does that mean it opens up in another? Students who were thinking of going to Australia, will they go to the United States? Is this a big opportunity for us?” Green asks. “I’m not sure it is. I think student choice is more complex than that. And I think the U.S. is on its own trajectory, especially as states get more and more pinched for money, in terms of seeing the financial advantages as well as the educational advantages of having international students. So I think the U.S. has already received its own wake-up call, both at looking at what’s going on abroad, and understanding the potential for revenue.”

No place realized that potential more impressively than Australia.

 

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