The Permanent Residency Rort

International Students and the Permanent Residency Rort

That international students will face tougher regulations in obtaining permanent residency (PR) at the completion of their studies, as Guy Healy reported in the Australian last year, should be welcome news for students and for the higher education sector. The “PR rort”—the openly acknowledged fact among international students that completion of a qualification in Australia is tantamount to gaining permanent residency (and, inevitably, a new life for the students and their families)—is a rort that had to end.

I have no objection at all to international students studying at Australian universities and other institutes of higher learning. International students have made universities more diverse, they have enriched the educational experience of many who study here, and they have contributed much to the higher education sector overall. Nor do I object to international students seeking permanent residency in Australia. The issue is one of balance—and what is right for students and Australian higher education. It seems to me that the connection between tertiary qualifications and permanent residency is in need of considered realignment.*

The Situation

As Guy Healy noted, around 20,000 overseas students achieve permanent residency in Australia each year. This represented only 11 per cent of all students that studied here in 2007–08. However, more recent studies have noted that 65 per cent of international students intend to apply for PR. The numbers of students with PR, or intending to apply for PR, is growing rapidly. 8000 graduate accountants obtained PR in 2008. Visas issued to qualified cooks have trebled since 2005–06. The numbers of students graduating from hairdressing too have risen sharply compared to other trades, from 12 in 2001–02 to 153 in 2005–06. In the sector known as “services, hospitality and transport” (including commercial cookery and hairdressing) the numbers of enrolments almost quadrupled between 2002 and 2006, from 4516 to 17,869. The demand for permanent residency and the rise in the number of places in certain tertiary programs and trade courses is no accidental relationship.

For many students, permanent residency—not necessarily the calibre of our qualifications—has become a raison d’être for studying in Australia. It is common knowledge among those who work with international students, for example, that Indian men (and they are almost exclusively men)—many of whom say they are used to a lifetime of servant cooking at home—have suddenly become interested in TAFE cooking courses. Is this because of a new-found passion in the culinary arts? Or is it because a course in cookery is the most expedient way to get permanent residency? Similarly, students with little interest or aptitude in accounting are now pursuing accounting degrees. Within a year or two of a degree in a non-priority area, other students change tack completely, and enrol in accounting, computer science, engineering, hairdressing or hospitality.

In some cases, more devious means are adopted to secure residency, including bogus documents, faked qualifications and forged references from employers claiming to show 900 hours of work experience (a condition of residency in some areas). In other cases, institutional corruption is involved, with rogue colleges upgrading student marks for cash payments.

How did it come to this?

The Changing Tertiary Environment

A demographic shift has taken place in the student body in Australian universities over the past two decades. This shift has perhaps been largely imperceptible to those outside the higher education sector, but obvious to those within. The move from an exclusive education system of wealth and privilege in the nineteenth century, to an open and more equitable mass market education system in the late twentieth century, has now undergone a further transformation. Beginning in the 1980s and 1990s, but increasing pace since the turn of the century, the Australian tertiary sector has been led by international students, principally from Asia. The most recent data is illuminating:

         International students represented 39 per cent of enrolments nation-wide in 2007. This grew more than 5 per cent in 2008 and it is rising each year.

         Postgraduate international student enrolments have risen 81 per cent since 2002.

         In 2008, 74 per cent of international enrolments were in Business/Management, Computer Science and Engineering-related courses.

         48 per cent of all international enrolments were in Commerce in 2008, most of those in Accounting.

         Most international students are from Asia, and the vast majority of those from mainland China. In 2008, two source countries, China and India, made up more than 43 per cent of all international enrolments, with international students from China increasing 8 per cent since 2007.

         Of the top five nationalities, four comprise students from the Chinese diaspora (China, Malaysia, Hong Kong and Singapore).

         At my university alone, the University of Melbourne, students from the Chinese diaspora represent 65 per cent of our international students.

This massive growth has certainly had its good side. It has turned the Australian higher education sector from a relatively small contributor to the Australian economy, to a major influence. The international education sector now injects more than $15.5 billion into the Australian economy annually. Tertiary education now represents the largest service sector in the country, and the third-largest sector overall (after coal and iron ore).

More impressively, this growth has occurred at a time of revenue shortage. Since the 1980s, a succession of Australian governments has reduced the operating budgets of universities down from 100 per cent (full public sector funding) to less than 30 per cent. This has forced universities to compete for funding, with most funding coming from international students. This has resulted in the largest expansion in the tertiary sector since the end of the Second World War. It is perhaps not an exaggeration to say that international students are now providing the income necessary to maintain the viability of the Australian university system.

The financial advantages for higher education, and Australian society, however, have not come without a quid pro quo.

The Rort

Since mid-2001, the federal government has given incentives to students in certain areas of study to apply for permanent residency status. The rationale for this was initially sensible; it was to fill areas of employment shortage. However, since then things have gone awry.

International students now almost exclusively study subjects which result in higher priority in gaining residency. These include (in the “critical skills list”) accounting, computer science and engineering; and (in the Migration Occupations in Demand List, (MODL)), hairdressing and hospitality and cookery. The students themselves are not, on any casual observation, particularly interested in the subjects they study. The aim is strategic: permanent residency. As a result, enrolment in small, city-based hospitality institutes is exploding; Commerce is the largest faculty by far in most, if not all, Australian universities; qualified cooks and hairdressers are being churned out of trade courses with monotonous regularity.

This is all fine for the students, and the institutions that rely on them. However, it is a rort in the definitional sense, in that a subterfuge is occurring; a deceit, which, seems—on the surface at least—to be benefiting all concerned. This deceit is occurring on the part of students, the universities and the government. Since mid-2001, when the incentives system was introduced, a tidy nexus has formed between the three for the purpose of mutual benefit. Students are studying subjects for other than legitimate educational reasons (though they are open about doing so, this fact is understandably never mentioned in university promotional documents); the universities—in their advertising pitch at least—claim that the quality of their courses is the reason for their success in attracting international students; and the government presents the higher education sector as an international and financial success story for all the wrong reasons.

The reason for the success of the Australian tertiary education sector has relatively little to do with educational quality or the calibre of the academic staff (though this may be part of the story); it is, first and foremost, a function of a “deal” between international students, universities and trade course providers; and—further down the chain—English Language Intensive Courses for Overseas Students (ELICOS) providers, migration agents, and university representatives at promotional fairs.

Of course, one needs to distinguish here between legitimate institutions of higher learning, such as our recognised public and private universities on the one hand, and on the other the many “fly-by-night” institutions set up as little more than permanent residency factories. However, the uncomfortable fact is that these differences are largely differences of degree, not kind. In both cases, permanent residency is the principal aim of large numbers of international students, a fact that students themselves are almost uniformly open about. “What do you plan to do when you finish your course?” I routinely ask. “Get PR,” they usually answer.

Several problematic educational issues arise as a result of this rapid internationalisation.

The Issues of Concern

Diversity. One issue, paradoxically, relates to lack of diversity in classrooms and on campus, a problem recognised by universities in the planning documents (see Refining Our Strategy: A Discussion Paper, 2009). The monoculture of native English-speaking Australian students until the early 1980s is now, in some discipline areas, a monoculture of non-native-English-speaking Chinese. In some accounting subjects 100 per cent of students are Chinese, or from the Chinese diaspora. This raises problems of student engagement in assessment regimes involving group work and team-based projects, as well as issues concerning interaction with academic staff.

University staff often raise concerns about the persistently low numbers of local students enrolled in such subjects. This is also an issue of concern to the overseas students coming to Australia expecting an “international” experience and exposure to Australian students and Australian culture. Many recently-arrived students from China are initially shocked by the large numbers of Chinese students on campus; a shock that is quickly mitigated by the comforting familiarity and solidarity of their own culture.

Loss of diversity also raises problems with lack of “mixing” between international students on university campuses. For a variety of reasons, mostly cultural, Asian students tend to remain in ethnic sub-groups, with little interest in the activities of local students. Recent university policy documents have identified some of these challenges, but have offered little in the way of solutions.

Concerns about the dominance of some cultures in classes over others, and declining local student enrolments, are routinely expressed amongst academics desperate for change. But these concerns are rarely treated with any degree of seriousness. International students are big business. Faculty reports on class diversity and problems with student engagement tend to be buried quietly with little discussion.

The critical role of the university. For various reasons there has also been a decline in the critical and analytical role of a university education, towards more pragmatic, employment-focused aims. One of those reasons is to do with international students. Many international students are weak in English. This leads, inexorably, to limitations on their ability to argue and critique information in an academic context. It would be deceptive to argue that there has been no corresponding shift to “teach to textbooks”, provide content that is easily assimilated, and to examine students using short-answer questions and multiple-choice.

Some academics have maintained that professional standards in disciplines which international students tend to study may have slipped, with academic integrity being compromised and plagiarism on the rise. Others have argued that the apparent promise shown by international students in their studies is masked by achievement in “technical” subjects where English-language skills are not assessed, and that performance in “professional” subjects is consistently poor.

Employment. Perhaps the most worrying change has been a decline in the employment success of university graduates, especially of international students. Recent statistics again show the trends. According to a major government-sponsored report, former international students from Australian universities have:

    • low professional work opportunities relative to local students—as low as 16 per cent for Chinese nationals;
    • lower salaries ($33,000 compared to $52,000);
    • lower job satisfaction (44 per cent compared to 57 per cent);
    • less often used professional qualifications (46 per cent compared to 63 per cent).

These differences have been attributed largely to the inadequate English language skills of graduating students. In one study, Bob Birrell notes that, while accounting is now experiencing a record number of international student enrolments, there remains a skills shortage in the profession.

Employers, it appears, are often reluctant to recruit graduates from non-English-speaking backgrounds. Reasons for this are difficult to determine with precision. However, we can make a plausible guess at what might be going on. Employers have always valued communication skills highly. There may be other explanations too, such as difficulties associated with cultural adjustment, and organisational “fit”. Is it possible that this has compounded prejudice on the part of some employers? A recent ANU study found that individuals with Chinese surnames had to send 92 per cent more job applications than people with anglicised surnames in order to get a job interview.

However, regardless of whether racism is an issue, it is clear that low levels of English-language skills are a major factor. This issue has become so serious that a tri-institutional project has begun to investigate the issue by looking at English-language skills as one “mismatch” (among many others) between employers and student recruits.

At the same time, universities maintain that their English entry standards are rigorous and competitive. Most universities only accept students from overseas with high IELTS (International English Language Testing System) band-scores (usually 6.5 or higher). However, claims about high standards are hard to reconcile with the low employment opportunities for graduates from non-English-speaking backgrounds. Lesleyanne Hawthorne has outlined this problem in terms of a “gulf” between the institutional claims about students’ English standards, and their actual abilities as demonstrated in the workplace:

the 2006 skill migration review alerted the export education industry to two critical issues: the gulf between some institutions’ declared and actual English language standards, and the extent to which graduates’ exit levels may deviate from those required for skilled knowledge economy work. While governments frame education and migration policies, it is employers who retain the power to offer or withhold work. There is compelling evidence to suggest international students’ English ability influences the perceived calibre of their training, accreditation status, employment, and remuneration outcomes … inadequate English standards may affect the career and study trajectories of international students.

This is not merely opinion. It resonates with how employers view future employees, and the attributes they look for in graduates. A survey of employers in 2006 provided endorsement of this concern from the private sector and business community. Employers rated interpersonal and communications skills (written, oral, listening) far above “qualifications” and “previous employment” as the most important selection criteria when hiring graduates (57.5 per cent, 35.4 per cent and 27.6 per cent respectively). Similarly, employers regarded “the least desirable characteristics” when recruiting graduates to be lack of communication skills (written, oral, listening) in first place in a list of ten characteristics (40.2 per cent). Professional employer bodies have also issued a number of publications and press releases expressing concern about the English-language abilities of graduating students.

The untrammelled pursuit of permanent residency, it appears, is doing nothing to help international students get jobs. It has disadvantages for universities, too, as we have seen.

What is to be done?

This paper does not propose solutions to this issue. I have no expertise in making recommendations in this area. However, the following suggestions might be considered in any debate on the topic:

  • The government might consider a more robust evaluation and prosecution of fly-by-night institutions that simply provide a cover for what amount to permanent residency applications under the barely concealed guise of cookery, hairdressing and hospitality courses. I understand this is already happening.
  • There should be a reconsideration of the “points system” for migration. There is little point in producing thousands of accountants if the accounting profession is not going to employ them. Similarly, there is little virtue in producing hundreds of hairdressers or cooks.
  • The language-skill level of incoming migrants is a perpetual concern. There is ample empirical evidence that facility in English is correlated strongly with social mobility in Australia. Universities can help here. English-language programs should be thoroughly embedded into the tertiary curriculum, not be—as they often are at present—peripheral and optional. Stronger weight should be given in residency applications for the completion of these English programs. If they are to be taken seriously, they should be core elements of the university curriculum.
  • Stronger connections should be formed between universities and the industries that employ our international student graduates. Migrants are beneficial to Australia for many reasons, but not when their potential for future employment is diminished. Perhaps further efforts could be made in funding mentoring programs between universities and companies in search of suitable employees.


Rapid internationalisation of the student body brings issues of concern for universities, students and Australian society at large. Loss of diversity in the classroom, and on campus, can compromise the tertiary experience for all. The critical nature of a university education is becoming secondary to the pursuit of employment-related outcomes. This is being partly driven by institutions catering for international students who are intending to apply for permanent residency. Unfortunately, these aims appear to be leading to negligible success for international students in the pursuit of careers. It follows that neither universities, nor students, appear to benefit from rapid, unrestrained internationalisation: other than the gaining of a qualification, and the chance for permanent residency.

But if a higher degree or a trade qualification is no more than a ticket into Australia, it is fool’s gold.

Tertiary education in Australia should be disengaged from the principal aim of obtaining permanent residency. This will enable students who genuinely wish to study here to do so. With the link between permanent residency and tertiary qualifications weakened, we may see more international students on campus genuinely committed to their chosen studies, and, I suspect, a resulting increase in the number of local students. This will improve the classroom experience. Employment opportunities for those with a genuine facility in the required employment-related language skills will increase. The country will, in time, gain better, and more successful, migrants. These benefits will be benefits for all.

There is no suggestion in any of the above that international students are not welcome additions to our universities. They provide diversity and alternative perspectives. Financially, they underwrite the tertiary education system at a time when the government is unable, or unwilling, to do so. Many international students are intelligent and dedicated, and many will make excellent migrants. However, the expectation that studying in Australia results in de facto migration brings problems on many fronts. Unfettered allocation of permanent residency visas to all and sundry runs the risk of devaluing both the education system and the worth of Australian residency. Too much of a good thing does not make a good thing better. Indeed, it may result in a decline in some of the things about Australia that all of us cherish.

* Since this paper was written, the realignment has begun. On February 8, Senator Chris Evans, Minister for Immigration and Citizenship, made a press release announcing the following immediate changes to immigration policy: (1) 20,000 would-be migrants would have their applications for residency cancelled; (2) The Migrant Occupations in Demand List and current Critical Skills List would be revoked with a new Skills Occupation List to come in effect by mid-2010; (3) The points test used to assess qualifications, English literacy and work-related skills would be reviewed in order to ensure that “an overseas student with a short-term vocational qualification gained in Australia [will not be] put ahead of a Harvard-educated environmental scientist”; (4) Caps will be introduced to ensure “the Skills Migration Program is not dominated by handful of occupations”.

Dr Martin Davies is the Acting Director of the Teaching and Learning Unit in the Faculty of Business and Economics at the University of Melbourne, and an Honorary Research Fellow in the Department of Economics. He is a philosopher now working on topics related to higher education.


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