Australia’s International Education Sector: From Boom to Bust
Australia’s international education sector is undergoing radical changes in order to preserve its 30-year reputation as a quality higher education destination amid increased global competition for China’s international student market, writes Sophie Loras.
In 2009, in the midst of the global financial crisis, there was one sector the Australian government remained confident would not be affected by a global recession. Australia’s international education market – specifically, the market of students coming to Australia from China – represented it seemed, a golden goose that kept on laying. Unlike other markets, Chinese international students and their families represented a unique demographic – they came from a country, that even throughout the GFC, continued to experience close to 10 percent growth. China’s middle-class has continued to grow at a staggering rate, providing a never-ending source of affluent families eager to give their one child the best career start in life. And while China continues to grow its domestic tertiary education sector, it is still struggling to place the millions of Chinese students each year seeking a higher education.
Chinese Ministry of Education figures show that while higher education places in China are likely to increase 16 percent over the next 10 years to 35 million – it will create an average annual increase of just 1.5 percent new places. The number of students leaving China to study overseas continues to increase by 20 percent or more year-on-year.
Despite all the optimism however, the Australian international education sector began to experience its first cracks in 2009 when Chinese and Indian students living in Australia became targets in unrelated attacks and the closure of debt-ridden private colleges in 2009 and 2010 left thousands of students, many of them international students, in limbo as they faced the prospect of not being able to complete their studies, nor in some cases, their pathway to permanent residency. China’s Ministry of Education issued warnings to Chinese parents to be diligent when choosing schools or colleges for their children in Australia. Overseas agents and tertiary institutions also began complaining about long and complex visa procedures for international students applying to study in Australia and changes last year to the Graduate Skilled Migration List and Skilled Occupations List – making the pathway to permanent residency through education more difficult.
Education services is Australia’s largest services export industry. Total education exports in 2010 totalled A$19.1 billion, of which Austrade estimates $4.5 billion (or 24 percent) came from Chinese students.
To combat challenges related to visa and immigration issues, the Australian government last December commissioned Michael Knight, a former NSW Olympics minister, to undertake a review of student immigration policy. His report, in which Australian education providers and industry stakeholders were invited to participate, will be released mid-year.
Changes made in 2010 to permanent residency requirements is seen as one of the main reasons student numbers from China have dropped this year for the first time in 20 years.
Added to this is increased competition from other English-speaking markets – especially the United States, which since the global financial crisis has opened up its higher education market by offering more competitive visa processing options and less demanding financial requirements from international applicants.
While there is a perception that the rising Australian dollar does not affect the Chinese market (that Chinese parents put quality over cost) it does mean today, studying and living in America at the current exchange rate costs the same as an Australian education.
Iain Watt, Minister Counsellor (Education) Beijing, AEI says China’s recent release of its National Plan for Medium and Long Term Education Reform and Development (2010-2020), which covers every aspect of education, still should give Australia reason to be optimistic. To combat lack of tertiary places, China is heavily promoting the value of internationalisation and cooperation with world-class schools, universities and research organisations and is encouraging local education providers to engage with institutions overseas.
“This commits to further strengthening government programs supporting sending students and researchers overseas,” Mr Watt told a March education briefing.
China has also reiterated its commitment for the policy of supporting students to study abroad, encouraging them to return upon finishing their studies, and allowing them to come and go freely.
Mr Watt says it is important to dispel the notion that China is seeking to compete as an education hub.
“There is little appetite in China for the development of an education export industry,” Mr Watt says.
“China sees the benefits from foreign students in China as being very much about improving and broadening the education experience of local students.”
However Mr Watt says Australia’s education sector needs to understand the resources countries like the US, the UK and Europe are investing into their education relationships with China, citing heavy marketing and promotional campaigns as well as strengthening government-to-government relationships.
In May 2010 the US and China signed a MoU establishing consultation on people-to-people exchange. China plans to sign a similar agreement with the European Union.
“We have already noticed that Ministry of Education officials are spending a substantially increased proportion of their time on US visits, trips, delegations and agreements. This results in less access for us and eventually less influence,” says Mr Watt.
“Our status in China as a key education partner can be expected to diminish.”
Melbourne-based immigration lawyer, Maria Jockel, a Principal with law firm Russell Kennedy, says many prospective students have a poor understanding of Australia’s educational system and the student visa process.
“As the Australian Government has made clear, studying in Australia does not mean then getting residency in Australia,” says Ms Jockel.
Ms Jockel believes Chinese students will continue to be a significant part of the student visa program given China is Australia’s largest trading partner and that Australia remains to be seen as an attractive study destination.
One of the hardest hit sectors by declining international student numbers is the Vocational Education and Training sector.
Claire Field, the Chief Executive Officer for the Australian Council for Private Education and Training, says industry growth has not been matched by the hallmarks of a sustainable maturing industry. She concedes changes to the industry needed to be made and some government responses have helped lift the bar in terms of quality and re-registration processes for all providers, but other changes have come too fast and too soon.
“We’ve seen some government changes and some of the responses have been overly heavy handed and gone too far,” says Ms Field.
Ms Field says that as a result of the closure of several high profile private colleges in 2009 and 2010, the reputations of all Australian vocational colleges have been tarnished, but rushed changes to government visa and immigration regulations has not helped the sector.
“Over the last 12 months there have been more than 10 changes to policy and regulation which has created confusion and concern and has made Australia a much less attractive destination for international students,” says Ms Field.
Ms Field says ACPET has welcomed the government’s Knight review.
“We’ve been very pleased that the issues the paper raises and the questions it asks shows they have identified the issues that need resolution,” says Ms Field.
ACPET’s most serious concerns include the way DIAC risk assessment levels are made and radical changes to immigration and skilled migration lists.
Ms Field also believes long delays in visa processing and other heavy handed regulatory changes in 2010 have left international students with the impression they are not welcome in Australia.
Feedback from one Chinese student at a Victorian university told administrators “I really feel like I have to prove why I want to come here.”
“Students, parents and the agents are wondering if the Australian government will make more changes while their visa is being processed – which leaves a lot of uncertainty,” Ms Field says.
Ms Field says Australia needs a more cohesive marketing strategy.
“We want to see the government working with the sector and peak bodies and providers around the marketing and promotion of Australia as a destination for International students.”
In efforts to preserve Australia’s reputation for quality education, ACPET has also taken the decision to tighten its code of ethics for members, introducing stringent membership protocols, including financial accountability.
Scott Sheppard, Deputy Vice Chancellor of International Development, QUT and also on the Universities Australia, Deputy Vice-Chancellor International Group’s executive group, says Australia needs to face up to the reality that the international education sector is more competitive than it has been for the last 20 years.
“By competitive we mean many more opportunities for students from all over the world, including for students from China,” says Mr Sheppard.
He cites a high Australian dollar, outside competition – particularly from the US in its recently relaxed visas process for Chinese undergraduate students, high tuition rates in Australia and the way visa and risk assessments are made, as some of the biggest challenges for Australia’s international education sector.
Mr Sheppard says the key message is ensuring the international student experience is a positive one.
“Australia has always had a wonderful history welcoming hundreds and thousands of international students and has had a fundamentally big impact changing the lives of some of those students,” says Mr Sheppard.
QUT has experienced some of the downward trends of other Australian education institutions but does have a high level of diversity in its international student body.
Mr Sheppard says 15 percent of QUT’s student population is international, with 20 percent of those students coming from China and the rest from more than 90 different countries.
“Diversity for us though is more about student experience. We invest pretty heavily in that diversity and we think we’ve got a pretty good balance,” he says.
QUT is pushing the student experience and encourages its international and domestic students to work together. It offers scholarship arrangements for students from Asia and offers graduates assistance with their search for on shore and off shore employment. It is also working to keep fees down in the current environment.
Austrade, which last year took over the marketing and promotional activities for Australia’s international education sector from Australian Education International, (AEI) is marketing Australia under the Australia’s new brand, Australia Unlimited. This will be messaged via five key points.
Firstly, by promoting Australia as a consistent and high quality education.
“Australia commits to deliver high quality education to international students under Australian Qualification Framework and provides international students with the most rigorous consumer protection in the world,” says Austrade’s Beijing-based Trade Commissioner, Jane Wallis.
Since the introduction of the Education Services for Overseas Students in 2000, all Australian institutions must first meet requirements for registration in order to enroll international students.
Australia’s reputation as a high quality education destination is reinforced by the 18 percent of Australian universities ranked in the world’s top 200 according to the London Times HES ranking of world universities 2010.
“Very few countries has such a high proportion of its universities ranked as highly and this reflects the strength across the whole Australian university system,” says Ms Wallis.
Secondly, promoting outcomes for Australian alumni. Graduates with Australian qualifications are widely recognized and welcomed by global employers and graduates in China are also supported by the recently established Australia China Alumni Association, which includes prominent alumni such as UNSW-graduate, Suntech Industries President and Founder, Dr Shi Zhengrong.
Other key marketing points include promoting Australia as a multicultural welcoming country, as a safe destination in terms of both personal safety and the environment and that studying in Australia provides a unique Australian experience in a destination with good proximity and similar time zone to China.
As competition for the Chinese market intensifies both in Australia and the world, Ms Wallis says successful Australian institutions are making in roads in China by establishing solid relationships with Chinese institutions, the Chinese government, education agents and other stakeholders, as well as strong brand positioning within China.
There has also been a trend to tap into opportunities in some of China’s less known cities.
“As the top tier cities become more competitive, and as other cities within China have grown in economic strength, institutions have recognised other opportunities out of the big cities – in second and third tier cities – and shifted part of their marketing efforts accordingly,” says Ms Wallis.
She says that as Chinese students and their parents have become increasingly sophisticated, education exhibitions are now seen more about branding than recruitment.
“Of particular importance these days, is the role of the education agent in China, and the relationship and activities that the institutions can create with their agents,” says Ms Wallis.
“Part of this involves ensuring more regular on-the-ground interaction in China; and many institutions are looking to increase their presence in China for marketing purposes.”
Australian education activities in China, however are broader than just recruitment. Many Australian institutions have also sought to establish collaborative partnerships in China and range from the exchange of students to providing in-country diplomas. It is estimated that in 2010, as many as 50,000 students were enrolled in joint programs in China.
William Angliss Institute is one such example. One of the institute’s most popular courses in China is hotel management, which it offers in China through partnerships with Shanghai University, Hangzhou’s Tourism College of Zhejiang and the Nanjing Institute of Tourism and Hospitality – China’s top vocational colleges. The courses are delivered bilingually and at the end, students receive both an Australian and Chinese qualification which students can then use as a platform for further study in Australia, the US or Europe.
“Our main purpose to come to China was to give local Chinese students the opportunity to study hospitality and get jobs here in China,” says William Angliss Institute’s Chief China Representative, Garry Dick.
“If they choose to go on to Australia that is just a bonus.”
Ms Wallis reiterates that while Australia’s market share is experiencing some competition pressures, the overall market for students studying aboard is growing which, when combined with Australia’s quality education system, provides strong prospects for the Australian education market over the medium to long term.
“China’s study abroad market is continually growing – according to the Ministry of Education, the number of Chinese students studying abroad in 2010 was 284,700 with a growth of 24 percent on 2009,” says Ms Wallis.
“Therefore, while the Australian international education sector has come under some pressure as a result of the rising value of the Australian dollar and increased competition of other destinations, the medium to long term prospects are good.”
Australia has maintained strong growth over the past ten years. In 2010, over 167,000 Chinese students had enrolled in Australian institutions, a growth of 6.9 percent compared with 2009 accounting for 27.1 percent of all international students in Australia.
“Therefore, China is still the number one source market for international students in Australia,” says Ms Wallis.
In 2010, China remained the biggest source market in higher education (39.5 percent), school (38.6 percent) and ELICOS (30.3 percent) sectors; and the second largest source country in VET (10.7percent).
“Barring the very unlikely possibilities of a complete collapse of economic growth or a political reversal of attitudes to international engagement, Australia can expect increasing numbers of Chinese students seeking to come to Australia,” says Iain Watt.
“We need to remember that despite the “perfect storm” of negative factors around Australia as a choice for international study, between 25,000 and 30,000 Chinese applied for student visas last year. As demand from Chinese students for international places increases and the pendulum inevitably swings back to a position less unfavourable for Australia, numbers can only increase. If numbers from China are not well above current levels in 2015, I will be very surprised.” ■
The 2010 National Survey of International Students Studying in Australia found:
· 84% of international students were satisfied or very satisfied with their study experience and 86% with their living experience in Australia.
· More than 85% of students were satisfied or very satisfied with the level of support they received on arrival, confirming Australia’s reputation as a country that welcomes international students.
*Pictured above left: Parliamentary Secretary for Trade, Justine Elliot, with members of the China Education team at the Austrade booth at the China International Education Exhibition Tour, Beijing in March 2011 (Courtesy Austrade)