Will Australian policymakers ever accept that we have an overreliance on foreign students? There’s an awful lot of money riding on us perpetuating a system that leads to exploitation of young people from other countries, a more vulnerable higher education system and demands on an already over-burdened housing and infrastructure sector.
The latest Grattan Institute report from Brendan Coates’ team details the growing problems around temporary graduate visa holders, who struggle to find work, tend to earn well below local-born graduates in low-skilled jobs and look to cheap vocational education courses to extend their stay in Australia. The broader backdrop is of a record number of foreign students — over 650,000 — in Australia, with numbers per capita a multiple of countries such as Canada, the UK and the US.
The large number of foreign students benefits three distinct groups.
As the report shows, foreign students pay billions — $10 billion in 2019 — to universities via tuition fees, making up more than a quarter of university revenue and, by one estimate, 35-40% of research funding. While the direct beneficiaries are universities, the greater beneficiary is the federal government: under both sides of politics, universities have been starved of public funding, which remained static in real terms over the course of the 2010s, before the pandemic and tensions with China exposed how fragile our reliance on foreign students could really be.
Business is the bigger beneficiary: the bulk of the $40 billion-plus in exports generated by higher education is through goods and services sold to foreign students while here. The real benefit, however, is hundreds of thousands of younger people with, usually, lower English language skills than Australian-born workers and a more limited understanding of legal protections. Despite limitations on the amount of work they can legally undertake a week, foreign students have long been a source of easily exploitable labour for business in low-skilled, low-paid sectors like hospitality and retail.
Given the reliance of Australian businesses on wage theft in recent years, foreign students, along with other temporary visa holders, have thus been an important element in the basic business model of contemporary Australian capitalism. The longer-term cost to Australian business that this exploitation produces is too nebulous to calculate. How many foreign students return home alienated by their experience in Australia, with an entrenched dislike of Australian business?
The third, more indirect but nonetheless important beneficiaries are property owners and investors, whose assets have gained in value as a result of the additional population pressure applied by hundreds of thousands of foreign students — although, as Cameron Murray has noted, over 100,000 “beds” for foreign students are not counted in housing statistics. Property investors, in particular, have benefited from the upward pressure exerted on rental prices in areas near universities — just one of the many ways in which older generations in Australia are able to prosper off the backs of younger people courtesy of policy settings that have proved resistant to reform.
As Coates and his team report, not only is the number of foreign students at a record level, but the Albanese government has recently expanded post-study work rights for student visa holders, while the 200,000 Temporary Graduate visa holders currently in Australia is more than double the number in 2019, and may increase to more than 350,000 in the next six years.
This means further pressure on housing and capital city infrastructure beyond the “housing crisis” levels that currently preoccupy policymakers — at least to a degree, if not enough to address politically unpalatable reforms like negative gearing. However, it’s good news for business and for older housing asset owners, whose interests are still of central concern to politicians.
The Grattan team want, among other reforms, a concerted effort from the federal government to educate international graduates about their work rights, as well as the sensible reform recommended in a previous report about abolishing category-based temporary work visas with an open system for jobs paying more than $85,000 a year. They also suggest opening up public service graduate positions to foreign graduates, which might reduce the number of foreign graduates forced into low-skill jobs by their inability to find positions in their field of expertise.
But anything that might reduce our reliance on what is regarded as an endless source of free money and cheap labour looks unlikely.
