For the last decade or so, Australian universities have been funded by what has been called a reverse Colombo plan – a reference to the post-war scheme that brought thousands of Asian students to Australia on scholarships. Back then, Australians funded Asian education. Now, Asian students fund Australian education through the fees they pay. Without them, the Australian higher education system would collapse.
Obviously, students from much poorer countries than Australia like India and China – our two largest markets – are not doing this because they altruistically want to fund the human capital of middle class Australians. Many of them come here as students because they want to migrate. A 2006 survey of international students by Australian Education International found that about two-thirds of them planned to apply for permanent residence.
The ease with which international students have been able to migrate has owed much to the growth in skilled migration quotas during the Howard years (and continuing in Rudd’s first year), combined with rule changes favouring former international students. Historically, migration levels rise with employment levels, and the Howard government was no exception to this pattern.
The flipside of this, as Kevin Rudd noted on 3AW earlier in the month, is that migration levels fall as employment levels fall. In Campus Review this week, I am quoted pondering the implications of this for higher education. There could be a domino effect: higher unemployment here reduces the need for imported skills, and increases already growing public opinion against migration. This leads the government to cut the skilled migration program. This reduced opportunity to migrate leads some international students to abandon or defer their plans to study in Australia. And in the last domino fall, Australian universities hit new financial crises as a result.
This would narrow the options available to Australian policymakers. To survive on the domestic market, Australian universities need either or both of significant increases in government funding or significant fee deregulation. The previous government, and the Rudd government in its first budget, avoided both in favour of a lax migration program. Perhaps Labor will keep the migration tap open rather than reform higher education. If unemployment rises, however, the political costs of this status quo strategy will increase. Crises produce previously impossible outcomes – think bank nationalisation – so perhaps this one will do some good in higher education at least.