Overseas student reforms bad for higher ed market design

Declining international student numbers prompted the government to commission a report from former NSW politician Michael Knight, and his report was released today. The government has accepted his recommendations.

Most of Knight’s recommendations are sensible. But his report would also lead to a visa system that is biased in favour of universities at both ends of the course of study: in a easier process for getting a student visa, and for a new two-year work right after completing the course. This would put non-university providers at a significant disadvantage.

Coming on top of the government’s decision to uncap Commonwealth-supported places for public universities, letting them compete more strongly against private providers and TAFEs offering degrees, and to lift the FEE-HELP debt surcharge from 20% to 25% for undergraduate courses, I could see why the non-university higher education sector could come to the conclusion that the government is trying to put them out of business.

I don’t think the government is trying to wipe out the non-university higher education sector; rather this situation is the result of an ad hoc approach to policymaking, with decisions made without adequate consideration of their systemic consequences.

Though Knight correctly observes that there have been more migration-related problems in the vocational sector than in the universities, I could not find any evidence that the non-university higher education institutions were particularly prone to taking students who broke visa conditions (especially compared to the universities at the cheap end of the market, attracting students from poor countries with the strongest reasons to want to stay in Australia). There was a discussion of the difficulties in setting rules institution by institution, but not for different classes of institution.

An effectively functioning higher education market in Australia requires – to use the now cliched metaphor – a more level playing field. International students are important to building economies of scale in the non-university sector, and making those institutions more able to take on the universities in the domestic market. So Knight’s recommendations, and the government’s apparent acceptance of them, are a setback to good market design in both domestic and international markets.

  1. Typo — “with adequate” should be “without adequate”?

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