1. Introduction

1.1Australia is a global leader in international education, with over 3.5 million current and former international students studying in Australia between 2002 and 2021.[1] In 2020, 10 per cent of international tertiary students around the world studied with Australian providers.[2]

1.2International education showcases Australia to the world as an attractive destination for people to live, study, work, invest and travel. Through international education Australia can elevate broader engagement to support global and regional democratic development, human rights and economic stability. Australia’s continued commitment to international education, training and research is central to Australia’s soft power. These influential linkages forged through students, alumni and education providers support and develop Australia's capacity to build stronger partnerships with countries in the region and around the world. Improving partnerships and connections is strategically important for Australia in the Indo-Pacific region.

1.3Australia has a lot to gain from international students choosing to live and study here. The delivery of a world class education to future leaders of countries, primarily in our own region, creates future goodwill, social licence and trade opportunities. In addition it plays a significant role in reinforcing the importance of strengthening democracy and the rule of law in our region.

1.4Alongside connecting Australia with the rest of the world, the revenue generated from international education makes a significant contribution to Australia’s economy. In 2019, international students contributed $40.3 billion to the Australian economy, including through education related travel, tuition fees and living expenses. The pandemic saw this number almost halve to $22.5 billion in 2021. Since the international borders re-opened in December 2021, there have been signs of gradual recovery towards pre-pandemic levels of enrolments and commencements.[3]

1.5Many international students contribute to Australia’s workforce by supplementing study with part-time work. Students as a young highly educated group may choose to stay on to work as graduates on temporary work visas, with some progressing along permanent skilled migration pathways to make Australia home, contributing over a lifetime to Australia’s prosperity and alleviating issues of an aging population.

1.6Australia’s commitment to research and innovation greatly benefits from international students and graduates. This in turn creates and sustains Australia as an attractive research and study destination for the very best and brightest students from around the world. In 2020, Australia was the third most popular study destination for international students, after the United States (US) and the United Kingdom (UK). International students are integral to higher education’s contribution to Australian society, bringing significant economic, cultural and community benefits.[4]

Impacts of COVID-19

1.7The pandemic exposed how vulnerable Australia’s education sector is to the loss of international students. Covid-19 highlighted how research funding across the board and the financial health of some education institutions were dependent on international student fee revenue. The pandemic demonstrated how many Australian businesses struggled to stay open without a ready supply of students as workers.

1.8The University of Canberra commented ‘In 2020 universities saw some drops in commencing international enrolments. In 2021 these were even more pronounced, sending economic shockwaves through a sector that had become dependent on fees from international students.’[5]

In 2018 and 2019, ‘international education services’ was the largest export for the Australian Capital Territory (ACT), worth over $1 billion a year directly to the local economy. By 2021 its value had halved.[6]

1.9There has been a drive to regain lost ground since the borders re-opened, but this space presents a unique opportunity to consider what is needed to create a sustainable, stable international education sector and ensure resilience, competitiveness, and integrity over the long term. The future of Australia’s international education sector will be increasingly important in ensuring a pipeline of high quality graduates to help fill Australia’s critical skills shortages.

1.10Education agents are a key part of the international education sector that operate within Australia as well as offshore. The growth of education agents within Australia has resulted in fierce competition for international students within Australia (states and territories) as well as competing internationally with countries such as the United Kingdom (UK), Canada and the United States (US).

1.11Fierce global competition, changes in source countries’ economies, rising costs of living, negative student experience and poor graduate work outcomes continue to be significant factors impacting on future students' choice of study destination. These factors and others are changing the shape of international education.

1.12Education that is delivered by reputable providers and backed by strong regulatory oversight has a direct impact on Australia’s reputation to provide a high-quality education and qualified graduates. A robust education system acts on unscrupulous practices which undermine academic standards and jeopardises the global brand of Australian education. Maleficence in the international education sector is morally wrong, harms individuals and also carries national security risks, exposing employed graduates who may go on to hold sensitive positions to blackmail by foreign governments, rival corporations or criminal syndicates.[7]

1.13Effective measures to ensure a quality international education sector and a positive international student experience can help deliver valuable skilled workers critical to Australia’s future.

A sustainable international education sector

1.14The Department of Education highlighted the importance of fostering a positive international student experience and enduring connections between alumni and Australia for sustainable growth of the sector.[8]

1.15Austrade stated that ‘the two primary drivers of study destination choice are perceived quality of education and employment outcomes, followed closely by safety.’[9]

1.16The University of Canberra suggested that a sustainable sector is one better prepared for market shocks. The pandemic and consequent border closures had a devastating effect on international education in Australia sending economic shockwaves through a sector that had become dependent on fees from international students.[10]

1.17The COVID-19 pandemic revealed the reliance some institutions have on a small number of countries when sourcing international students. The top five student source markets (China, India, Nepal, Vietnam and Colombia) represented 59 per cent of enrolments across the international education sector in 2021 and the two largest countries alone made up almost half of all international enrolments. This figure is higher in public universities, with the top five student source markets representing 72 per cent of international enrolments in 2021, and the largest source market representing almost half of all international enrolments.[11] The Committee will continue to take evidence in its further site visits and hearings in regional Australia.

1.18Different institutions are reliant on it for different reasons. Some institutions, such as Federation University, were incredibly reliant on international student fee income to subsidise their domestic teaching and research that was undertaken. Other institutions, such as Melbourne University and University of Sydney rely on the international student fee income, but they rely on it primarily to drive their research areas and to increase their private investment portfolios.[12]

What that means is that we've got universities, for various reasons, inherently over reliant upon a high-risk source of income. When you drill down into it, it's only three major countries who are the suppliers of most of our international student fees.[13]

1.19Beyond straight revenue recovery, post COVID-19 recovery is a unique opportunity to consider a different reset on Australia’s international education sector. By developing a more measured approach focused on sustainability and stability, this has the potential for the international education sector to make a significant contribution to Australia’s foreign policy objectives[14] over the mid to long term.

1.20This more measured approach has potential to mitigate some of the serious problems in the sector, that have been driven by a race for sheer student numbers. A situation which has contributed to a dominance of education agents in international student recruitment, introduced points of ineffective regulation, opened up vulnerable points of exploitation of education and the migration system and cultivated a potentially unhealthy competition between providers and state and territory governments.

1.21Austrade highlighted the severe impact COVID-19 had on the International education trade, halving its value from $40.3 billion in 2019 (pre-pandemic) down to $20.2 billion in the year ending June 2022. [15] Although there has been a rapid rebound fuelled by pent-up demand, Department of Foreign Affairs and Trade commented that closed borders saw a reduction in student numbers, from 510,463 commencements in 2019 to 284,024 commencements in 2021.[16] Current data for 2022 shows a 20 per cent increase on 2021 levels, but rebuilding the pipeline of international students will take a number of years to return to past levels.[17]

1.22The National Tertiary Education Union (NTEU), voiced concerns that even leaving aside the impact of an international pandemic, the reality is that governments and the education sector do not have control over the fluctuations that are in built within the international education market, which may be the result of rising/falling currencies, negative media coverage, increased competition from other countries with education service industries, or changes in the education opportunities available to students in their home countries. While international pandemic is arguably at the extreme end of risks for the sector, the NTEU considers the reality is that the sector will always be at risk.[18]

1.23The NTEU stated that pre-Covid university providers had become heavily dependent on international student fee income. This discretionary revenue, derived from a largely unconstrained market, was used by providers to subsidise their domestic teaching and primarily research. The NTEU shared that the University of Sydney, for example, generated 38 per cent of its’ income from international student fees in 2021, more than it received from any other source, including federal government funding.[19]

1.24University of Wollongong (UoW) commented that universities' balance sheets have taken the biggest hit ever in their entire history. University of Wollongong, shared that they had to sell student accommodation to ameliorate UoW’s financial situation.[20]

1.25The NTEU cautioned against a return to overreliance by university providers on international student fee income. The NTEU felt that this approach is an inherently high-risk business model and is subject to uncontrollable market forces. The NTEU suggested that cuts to domestic funding of up to 14 per cent via the Jobs-Ready Graduate Package in 2020 had exacerbated this reliance. The NTEU considered that such policy drivers have encouraged a profit driven corporatised culture to grow in universities, and that the principles of education being a public good are now secondary to the revenue that international education generates.

1.26Research by the Australia Institute found that universities subjected to market pressures have re-constituted in corporate like forms, increasing prices wherever possible and prioritising cost saving measures. The corporatisation of universities has led to over-reliance on international student fees, the rise of casual employment and short-term contracts for university workers, with the focus on university administrators on their institutions’ ‘profitability’ has subordinated the public service of providing quality higher education to a commercial vision.[21]

1.27While there are healthy signs that the international education sector is gradually recovering from the COVID-19 downturn, the lessons learnt from the over-reliance of Australia’s university sector on the international education sector should not be lost. As such, COVID-19 exposed the unsustainability of a model whereby Australia’s universities are reliant on international student revenue to subsidise the cost of funding research, the conduct of which is a legal obligation to maintain the status of ‘university’.[22]

1.28Property development, investments, international student fees, and commercially oriented research income have become core revenue sources for universities. Since 1995, these private sources of revenue have doubled as a share of total university income: increasing from 21.7 per cent to a high of 43 per cent in 2019. As of 2023 international student fees make up 22 per cent of total revenue, investment income makes up a further 8.4 per cent, and donations, bequests, non-government grants, and disposal of property make up 5 per cent.[23]

1.29This growing commodification has not been lost on international students themselves, which will have a fundamental effect on prospective student choices on where to study and has a potentially serious impacts on the mental health and student experience of students who have chosen Australia. The Council of International Students Australia (CISA) summed it up:

…some of the people working in the international education sector have the mindset of treating us, international students like a product instead of people who are coming here to study. I think that's something fundamentally that affects lots of people's decisions, and also organisations as well.[24]

Current Government Reviews

1.30The Committee is cognisant of Government work currently underway that have significant implications for Australia's international education sector and student visa and graduate visa policies and processes. The most significant reviews included The Migration Review, The Australian Universities Accord and ESOS Review, and the Rapid Review of Australia’s Visa Systems.

The Migration Review

1.31On 2 September 2022, the Minister for Home Affairs, the Hon. Clare O'Neil MP, announced a comprehensive review of Australia's migration system to ensure it better meets existing challenges and sets a clear direction for the coming decades.

1.32The Migration Review[25] intends to improve the job readiness and outcomes of international students by:

• Providing faster pathways to permanent residence for the skilled graduates Australia needs.
• Recognising Australia's place as a destination of choice for international students, the Review will consider how to ensure that all international students are genuinely in Australia to study, including by tightening requirements and by strengthening the quality assurance of education providers.
• Reducing time international students spend on bridging visas by easing the path to graduate visas.
  33. The Migration Review report was finalised in March 2023 and released for publication on 7 June 2023.
  34. One of the main announcements that had bearing on this report related to the Temporary Skilled Migration Threshold. The Government announced an increase to the Temporary Skilled Migration Threshold (TSMIT) from $53,900 to $70,000 from 1 July 2023, as it was found that the previously low minimum income threshold paved the way for worker exploitation, including exploitation of international students and graduates.[26]

The Australian Universities Accord

1.35In November 2022 the Minister for Education announced details of the Australian Universities Accord (the Accord). It was established to consider a range of issues across teaching and learning, funding and regulatory settings, strengthening engagement between the higher education and vocational education and training sectors, research and international education. An interim report was tabled in July 2023, with a final report expected to be delivered in December 2023.

1.36The Accord will review the challenges faced by international students and will examine how to support a competitive and resilient international student sector, reflecting the important role that international students play in our society and economy and international partnerships.[27]

Education Services for Overseas Students (ESOS) Framework

1.37Education Services for overseas Students (ESOS) legislation makes sure training providers meet nationally consistent standards in education delivery, facilities and services, and provides tuition fee protection for international students.

1.38The Department of Education is responsible for ensuring that the ESOS Act is up-to-date. The Department of Education is overseeing changes to various aspects of the legislative framework for overseas students.[28]

Rapid Review of Australia’s Visa System

1.39The rapid review is a separate investigation headed by Ms Christine Nixon AO, APM into exploitation of Australia’s visa system including student visas. Media reports indicate worrying findings regarding the behaviour of disreputable agents and providers in the international education sector and misuse of the visa system. The Government is currently considering the recommendations.

About the inquiry

Objectives and scope

1.40On the 11 October 2022, the Minister for Trade and Tourism, Senator the Hon Don Farrell, requested the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT), through its Trade Subcommittee, to inquire into Australia’s tourism and international education sectors.

1.41As part of the inquiry the committee decided to table an interim report that focuses on the challenges and opportunities presented to the international education sector since the reopening of Australia’s borders. More specifically the Committee examined:

• challenges associated with the loss of international student numbers as aresult of the significant disruption caused by the COVID-19 pandemic and effectivemeasures to attract and retain students to Australia
• online innovationsin educationdelivery and potential opportunitiestostrengthen the sector's resilience
• initiativestoensurepositiveinternationalstudentexperienceandsupport pathways to buildtheirskillsandcontributetoAustralia's prosperity
• opportunitiesforinternationaleducation tosupportstrategicand foreignpolicy objectives.
  42. The purpose of this interim report is to produce a timely report on the international education sector. Whilst acknowledging that there is an intersection between tourism and international education as Australia rebuilds these sectors post-COVID, the Committee was focused on making specific recommendations to Government in a timely manner on international education. The Committee was mindful of the Government’s interest in this topic and the intersections it has with the Migration Review report published in July 2023 and the Universities Accord report due to be published in December 2023.
  43. The Committee will continue to hear from stakeholders nationally and internationally for this inquiry, including groups such as the National Union of Students (NUS) and the Association of Southeast Asian Nations (ASEAN).

Inquiry conduct

1.44On 19 October 2022, the Committee issued a media release announcing the inquiry and calling for submissions. The Committee invited submissions from a variety of stakeholders including government agencies, peak travel and education industry organisations, universities, and higher education peak bodies, academics and the general public.

1.45The inquiry received 127 submissions, including a number of supplementary submissions and two exhibits, which are listed at Appendix A and B respectively. Of these submissions, at least 85 primarily focused on the international education aspect of the inquiry.

1.46The Committee held 20 public hearings as outlined in the table below. A list of witnesses and organisations who attended these public hearings is in Appendix C.

Report structure

1.47Chapter 2 examines the value of international education students with a focus on more than just the economic value these students bring to Australia. It discusses the need for Australia to refocus international education policy for students and institutions now and into the future. The importance of soft power diplomacy and workforce skills and planning is discussed.

1.48Chapter 3 discusses the changing landscape of international education. This includes how international education can leverage the sector to source the best and brightest international graduates to support solutions for Australia’s long-term skills shortages. This chapter also discusses the future of skilled work pathways including Work Integrated Learning (WIL) options available to some students.

1.49Chapter 4 focuses on the international student experience and discusses the benefits that these students bring to Australia, including the importance of their cultural diversity. This chapter also discusses the high cost of living pressures for students in Australia and looks at options for student accommodation.

1.50Chapter 5 outlines Australia’s regulatory and legislative framework in relation to international students studying with Australian providers. This chapter highlights challenges that have arisen around data sharing between agencies and organisations. It also discusses the challenges that exist for the registration of education agents and considers how the registration process could be improved.

Footnotes

[1]Department of Education, Submission 43, p. 3.

[2]OECD 2022 International Migration Outlook, p. 13.

[3]Department of Education, Submission 43, p. 3.

[4]Australian Universities Accord Discussion Paper: February 2023, www.education.gov.au/australian-universities-accord/resources/australian-universities-accord-panel-discussion-paper, viewed 21 August 2023.

[5]University of Canberra, Submission 17, p. 2.

[6]University of Canberra, Submission 17, p. 2.

[7]www.lowyinstitute.org/the-interpreter/contract-cheating-how-academic-dishonesty-could-endanger-national-security, viewed 7 July 2023.

[8]Department of Education, Submission 43, p. 22.

[9]Austrade, Submission 73, p. 28.

[10]University of Canberra, Submission 17, p. 2.

[11]Department of Education, Submission 43, p. 7.

[12]Dr Terri MacDonald, Director Public Policy, and Strategic Research, National Tertiary Education Union, Committee Hansard, Melbourne, 19 April 2023, p. 3.

[13]Dr Terri MacDonald, Director Public Policy, and Strategic Research, National Tertiary Education Union, Committee Hansard, Melbourne, 19 April 2023, p. 4.

[14]Australia’s foreign policy objectives include promoting and protecting Australia’s international interests to support our security and prosperity.

[15]Austrade, Submission 73, p. 10.

[16]DFAT, Submission 63, p. 4.

[17]DFAT, Submission 63, p. 4.

[18]National Tertiary Education Union (NTEU), Submission 28, p. 10.

[19]Mr Kieran McCarron, Policy and Research Officer, National Tertiary Education Union (NTEU) Committee Hansard, Melbourne,19 April 2023, p. 1.

[20]Professor Alex Frino, Senior Deputy Vice-Chancellor (Innovation, Enterprise and External Relations),

University of Wollongong, Committee Hansard, Sydney,2 March 2023, p .11.

[21]Public Attitudes on Issues in Higher Education (12 July 2023) The Australia institute: Centre for Future Work www.futurework.org.au/report/public-attitudes-on-issues-in-higher-education/ , viewed 19 July 2023.

[22]La Trobe University, Submission 24, p. 1.

[23]Public Attitudes on Issues in Higher Education (12 July 2023) The Australia institute: Centre for Future Work www.futurework.org.au/report/public-attitudes-on-issues-in-higher-education/ , viewed 19 July 2023.

[24]Mr Jiahao Li, National Postgraduate Officer, Council of International Students Australia, Committee Hansard, Canberra, 15 May 2023, p. 67.

[25]A Migration System for Australia’s Future (homeaffairs.gov.au), viewed 7 September 2023.

[26]www.homeaffairs.gov.au/reports-and-pubs/files/review-migration-system-final-report.pdf, viewed 18 March 2023.

[27]Review of Australia’s Higher Education System - Terms of Reference - Department of Education, Australian Government, VIEWED 7 September 2023.

[28]Education Services for Overseas Students (ESOS) Framework - Department of Education, Australian Government, viewed 7 September 2023.