Universities caught in the war on migration

Ninety minutes into his appearance at the National Press Club on Wednesday, the shadow treasurer, Angus Taylor, was getting decidedly testy.

Already he had been asked essentially the same question by three different journalists, and now the Nine Network’s national affairs editor, Andrew Probyn, was asking it again: how much would a Coalition government cut net migration to Australia?

In his preamble, Probyn anticipated he risked “really annoying” Taylor by raising the matter again, but said “there seems to be quite a bit of confusion driven by the fact that your numbers don’t seem to stack up with Peter Dutton’s”.

Taylor snapped back: “I have already answered that question. I’m not going to answer it again and I have been clear about it.”

Taylor had been anything but clear and Probyn was right: the shadow treasurer’s answers at the National Press Club contradicted what had previously been said by the opposition leader.

In his speech in reply to the budget last week, Dutton assailed the government over the high numbers of migrants who had come in to Australia since the borders reopened following the Covid-19 restrictions. He noted the government’s budget forecast of 185,000 permanent migrants in the coming financial year, 2024-25, and said a Coalition government would cut that figure 25 per cent more, to 140,000.

Permanent migration is only part of the intake, however, and it has not been the really problematic part over the past couple of years. The big issue has been temporary migration, mostly driven by a surge of almost 265,000 overseas students in 2022-23, which drove total migration – so-called net overseas migration, or NOM – to well over half a million that year.

Dutton’s address in reply said nothing about the net figure. The next day, however, via the friendly outlet of Sydney’s Radio 2GB, he did talk about it.

“The government’s predicting 528,000 this year,” he told shock jock Ben Fordham.

This was wrong. That was the actual number for last year. The budget forecast for NOM this year is 395,000, falling further to 260,000 for next year, beginning in July.

Dutton said the Coalition would cut it to 160,000.

“So ours is 100,000 less…” he told Fordham.

At the press club, however, Taylor was insistent NOM would be cut 25 per cent, which equates to 65,000 people – a difference of some 35,000 from what Dutton told Fordham.

Despite repeated questions, Taylor refused to acknowledge any discrepancy.

“It’s not different. Don’t confuse permanent migration with NOM,” he counselled the third of his questioners, although that appeared to be exactly what he was doing.

One might have thought he would have been better prepared for the questions, given the response over preceding days to Dutton’s 2GB comments. Migration experts, representatives of Australia’s tertiary education institutions and – most importantly for the party of business – employer organisations had all expressed alarm at Dutton’s promise to slash numbers.

The Australian Chamber of Commerce, Business Council of Australia, Australian Industry Group and National Farmers’ Federation all had gone public with dire warnings of the economic harm that would be done – the shortages of engineers, nurses and other care workers, teachers, hospitality staff and farm workers that would be exacerbated by Dutton’s plan.

This would have come as no surprise to Dutton. In fact, he predicted it in his budget reply speech, saying he expected “the usual CEOs and big businesses” to object.

“But my priority is restoring the dream of home ownership.”

He claimed that by “rebalancing the migration program … the Coalition would free up almost 40,000 additional homes in the first year. And well over 100,000 homes in the next five years.”

How this number was calculated, he didn’t say. It appeared all the more dubious given his Fordham interview suggested Dutton did not know which migration numbers applied to which year, and given the big discrepancy between him and his treasury spokesman over the size of the cuts.

There is, in any case, reason to question the extent to which migration numbers affect the cost of buying or renting a home. During the Covid lockdowns, when Australia’s borders were closed and net migrant numbers fell to zero, prices continued to rise rapidly.

According to modelling from the Grattan Institute, high migration does have some effect on housing costs. For every 100,000 above the long-term average, rents rise about 1 per cent. Thus last year, by this estimate, Australia’s record number of migrants probably pushed them up about 3 per cent.

But, says Trent Wiltshire, Grattan’s deputy director of migration and labour markets, “asking rents have been rising 10 per cent a year. So it’s a factor, but certainly not the driving factor.”

Migrants bring economic benefits as well as costs. Based on the rather sketchy information provided by Dutton, says Wiltshire, “it looks like there would be a decline in skilled migration of around 135,000 over the next four years, compared to the existing skilled migration intake.

“Such a reduction would mean the lifetime fiscal cost from these skilled migrants not being here would be $34 billion.”

With all due respect to Grattan, it is very hard to assess precisely what the economic consequences of Dutton’s proposed cuts would be, because so little detail has been provided about exactly where they would fall.

What is clear is that for more than a year, Dutton and other members of the Coalition have been fanning public concerns about the number of migrants coming to Australia, and blaming the Labor government for the influx.

This is simply not true, policy experts say. In fact, the explosion in NOM was substantially a consequence of decisions made by the previous Coalition government in response to the pandemic.

In the 2019 budget, the last before the pandemic, NOM was forecast to be about 270,000, a little above the long-term average. Instead, because of Covid, it plunged close to zero for two years.

When the borders reopened, the Morrison government made a series of panicked decisions aimed at encouraging workers, and particularly overseas students, to return.

“In 2021-22 the Coalition government introduced extraordinary policies to boost … numbers,” says Abul Rizvi, a former deputy secretary of the Department of Immigration. “Policies such as unlimited work rights for students, fee-free student and working holiday-maker applications and a special Covid visa.

“The message to industry was to go forth and expand as rapidly as possible and hang the consequences. So it did. Not only did universities go berserk recruiting as many students as they could, but private providers also boomed as the regulators were in no position to police quality. It was like an unregulated gold rush,” says Rizvi.

The changes amounted to an attempt to undo the damage caused by the Coalition government’s shabby treatment of overseas students when Covid hit, says Phil Honeywood, chief executive of the International Education Association of Australia.

In contrast with countries such as Britain and Canada, which provided support for overseas students to stay, “Scott Morrison told students to just go home,” says Honeywood.

“That caused incredible damage to Australia’s reputation as a safe, welcoming study destination country.

“Then, having closed down for two years, without any consultation with the sector, they just announced uncapped work rights. The message went out around the world: ‘Come to Australia; you can work unlimited hours.’ That led to a stampede of what we would argue were non-genuine students.”

Cheap, dodgy courses proliferated in the vocational education sector, says Honeywood. Unscrupulous education agents were earning commissions of up to 50 per cent of course costs for signing up “students”.

“They were knocking on the doors of the international students at universities, saying, ‘You want to study less? You want to work more? Have I got a deal for you.’ ”

Honeywood, a former Liberal member of the Victorian parliament, suggests this was not an unintended consequence of the Morrison government’s policy.

“Did they do it out of interest for the students? No. It was because we didn’t have enough people in Australia in the hospitality industry and tourism industry,” he says.

Whatever the motivation, the policy changes worked – rather too well. In 2022/23, says Rizvi, “students contributed an extraordinary 264,670 to net migration of 528,420”.

Of course, by then Labor had won office. As to the extent to which the new government was culpable for the unprecedented boom in numbers, it was for not moving fast enough to stop it, he says.

“Unrestricted work rights for students had to be reversed. The Covid visa [which had been accessed by some 120,000 people] had to be abolished. All that was done much too late. So Labor is to blame for that. But the initial policy was introduced by the Coalition.”

In fairness, the Albanese government went about making changes in a methodical way, by commissioning a number of expert inquiries. They painted an ugly picture of Australia’s migration regime.

“Australia’s migration program is not fit for purpose,” concluded the March 2023 review headed by Martin Parkinson, whose CV includes stints as the head of several government bodies, including Treasury and the Department of the Prime Minister and Cabinet, as well as the chancellorship of Macquarie University.

“The objectives of the program are unclear, and successive governments and policymakers have responded to challenges through piecemeal reforms which have not addressed fundamental underlying issues,” said the report.

“Australia now has a migration program that fails to attract the most highly skilled migrants and fails to enable business to efficiently access workers. At the same time, there is clear evidence of systemic exploitation and the risk of an emerging permanently temporary underclass.”

A particular concern was the booming number of small private vocational education and training (VET) providers, which charged low fees – typically $4000 to $10,000 – for certificates of dubious worth. The report identified 533 VET providers, of which more than half had fewer than 100 students.

Among them were “institutions who use the system to sell student visas as a way of accessing Australia’s labour market”.

To its credit, the Albanese government has taken steps to limit the number of hours overseas students can work, and has threatened to deregister and prosecute shonky VET colleges.

Clearly, more major reform is needed, says Grattan’s Wiltshire, who calls for “a nuanced debate about the size of our migrant intake over the long term”, taking account “of the pros and cons and the economic consequences”.

“But at the moment the politics have taken over,” he says.

Vicki Thomson, chief executive of the Group of Eight (Go8) Australia, which comprises Australia’s leading research-intensive universities, could not agree more. In her view, both sides of politics are reacting to, and also encouraging, negative public views about migration, and particularly of overseas students.

“I think it’s a race to the bottom at the moment with both government and opposition, in terms of what looks to be pretty blunt instruments to deal with problems or challenges in the economy which are really outside of the university sector,” she says.

Her particular concern is a piece of legislation introduced by Labor last week, the Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024, which proposes far greater ministerial control over the numbers of overseas students that tertiary institutions can enrol, and the subjects they can offer.

“I’ve been around the sector for 22 years. People who’ve been around longer than me say that [this] is the most interventionist legislation that anyone has ever seen in terms of international education,” says Thomson.

“It gives the minister … incredible power, to be able go into courses, at a very granular level, and make a determination as to how many students should be in those courses.

“For example, at the University of Sydney, there’s something like 670 courses, roughly. And this legislation will give the minister of the day the authority to dive into any one of those courses and make a determination as to whether or not there should be a certain number of international students studying those courses.

“We’re certainly up for discussion with government about managing growth in the sector, we are certainly very supportive of the government’s stated aim of weeding out the shonky end of town,” she says.

Like Honeywood and Rizvi, Thomson worries the government will see tertiary education as the easy option for controlling net migration.

Honeywood says a Labor government is unlikely to cut other big components of immigration, such as family reunification, because it could impact certain marginal electorates. Nor would it cut humanitarian arrivals, because of sensitivities among Labor’s base. Nor skilled migrants, because we need them to meet labour shortages.

Conversely, the Coalition would not cut working holiday visas because the National Party’s rural constituency “is always crying out for more fruit pickers”.

Indeed, Nationals Leader David Littleproud already made clear he opposes any cuts that might affect regional Australia. Dutton has directed much of his negative commentary towards the big city rather than regional universities for enrolling too many foreigners. This is despite the fact they provide far greater overall economic benefit to the country.

There are good reasons why it would be ill-advised to slash the overseas student component of higher education, which is Australia’s third-largest export industry. Thomson ticks some off.

“Half of Australia’s GDP growth last year was on the back of international students. Sixty-nine per cent of our international tourism is on the back of international education,” she says.

The Go8 universities account for some 20 per cent of Australia’s research effort, she says, spending about $7.7 billion on it each year. That proportion has been growing, even as private-sector research and development has declined.

“Conservatively, we estimate that about half of that research is funded on the back of international fee revenue,” she says.

Despite the claims by Dutton that tertiary students are a major driver of housing shortages, research by the Property Council finds international students make up only 4 per cent of Australia’s rental market.

The big sandstone unis Thomson represents actually provide more accommodation for their students than many smaller institutions. They collectively educate about 160,000 overseas students and provide about 83,000 student beds.

Such facts are of little interest to the federal opposition, however, as it ramps up its anti-immigration rhetoric between now and the next election. As Rizvi says, Dutton would much rather buy a fight with the universities than with the Nationals.

The ABC’s Laura Tingle – who asked the first question of Taylor at the National Press Club and received the first of his incoherent answers – noted about the opposition’s attempts to pin the blame for Australia’s current economic ills, especially the housing crisis, on migrants: “It’s a shame that a hugely complex issue has been reduced to a populist and misleading piece of political mischief.”

The serious players in federal politics and the tertiary sector now are engaged in a process of nuanced negotiation aimed at fixing the very real problems with Australia’s migration and education systems.

The other side of politics, as its two most senior figures made clear this week, can’t even agree among themselves. 

RELATED READING

News

Immigration and the housing crisis

Mike Seccombe Immigration is a driver of GDP and a solution to Australia’s declining birth rate, but as housing pressures mount, polls showing strong support for reduced intake could force the government into a debate on population growth.