How the Government crushed the education export boom: Kohler

Just when you might have thought the policy shambles that is wrecking Australia’s third biggest export industry – education – couldn’t get worse, the Immigration Minister Chris Evans has hopped on a bulldozer to finish the job.

The changes to Australia’s skilled migration program announced this week have brought such confusion to the business of student visas and occupational immigration that many operators of this $16 billion export industry are in complete despair.

It is an enduring myth that right-wing governments are xenophobic and left-wing ones are more tolerant to immigration. That is just the image they each assiduously project through high-profile actions on refugees that pander to their constituents.

In fact, the reverse is true: both the coalition and the ALP appear to use immigration as a tool of their industrial relations ideologies.

Between 2000 and 2003, when the Howard government was embroiled in controversy after controversy about asylum seekers, including the children overboard affair and riots at detention centres, it was simultaneously opening the floodgates of Australia’s skilled migration program.

Since taking power in 2007, the Rudd government has carefully crafted a softer image on asylum seekers while closing the door on skilled migrants.

Why? Well, there’s spin – being tough/soft on asylum seekers, who represent an inconsequential fraction of permanent arrivals, and then there’s reality – being soft/tough on unions.

The opening up of the education route for skilled migration in 2001 had two underlying purposes: to help offset the ageing of the population (migrants under 30 were most favoured) and to reduce the power of unions and drive down real wages by increasing the pool of non-union labour.

There’s little doubt that the changes announced this week were driven by the unions.

Immigration Minister Chris Evans had already sharply reduced the number of student visas and permanent residencies issued, resulting in the collapse of 14 private colleges over the past six months.

Some of these, it’s true, were accidents waiting to happen. But all of the legitimate education providers, including tier one universities, have seen a drastic fall in revenues and many are in trouble.

That’s been exacerbated by the spate of assaults against Indians in Melbourne. I understand applications from young Indians for student visas have basically stopped dead; Indians used to represent about 30 per cent of college revenues.

The problem for the government is that the queue for visas grew so large that it would now fill the MCG, and then some – it’s understood applications for permanent residency (PR) now total more than 100,000 and under the Howard government’s policy, all applications had to be processed, one at a time.

The particular Howard/Ruddock twist, designed to pressure the unions, was that all the applicants then got PR. The new Labor government simply started taking longer to process them and knocked a lot of them back.

Chris Evans said this week that new reforms are designed to reduced the queue.

Firstly 20,000 applicants from the Howard government years (pre-September 2007) will get their applications torn up and their money back. This is unheard of, anywhere in the world.

In addition, the ‘Migration Occupations in Demand List ‘ (MODL) of occupations has been abolished and the larger ‘Skilled Occupations List’ (SOL) will be reduced. The fact that changes to the SOL list have been flagged but not finalised has produced howls of outrage and despair from education providers, who now face months of crushing uncertainty.

To get permanent residency under the system set up by Phillip Ruddock, a ‘skilled migrant’ had to get 120 points.

Those under 30 started with 25 points, and the better your English skills, the more points you got. A qualification on the SOL list is worth 60 points.

The SOL list of occupations that are worth 60 points is huge: from accountant to zoologist, health worker, editor, singer, sculptor, gasfitter, gunsmith, gardener, vehicle trimmer, cook, hairdresser – you name it. Every possible occupation is there.

And then there was the MODL list, which was worth an extra 15 points. This was a smaller list of occupations most in demand. All of them are on the SOL, but if an applicant has one of those, they got a bonus of 15 points.

The reality was that someone looking for permanent residency couldn’t quite get across the line with just something on the SOL list unless they had fluent English and were under 30. Anyone over 30 who couldn’t rattle through The Man From Snowy River while sounding like Paul Hogan, couldn’t get enough points.

The MODL list got many of these people across the line. And the controversy has been that the occupations on the MODL don’t just include surgeons, psychiatrists, plumbers, electricians and bricklayers – skills we clearly need more of – but also hairdressing and cookery.

It is this list, and those points, plus Phillip Ruddock’s decree in 2002 that an applicant doesn’t have to go back home to apply for residency, and instead could just stay in Australia to do it, that has produced the mushrooming of Australia’s education industry.

The result was that a bunch of shonky colleges sprang up offering simply cooking and hairdressing courses that were merely designed to get the student the extra 15 MODL points. In some cases they were like Ponzi schemes, in which a constant flow of new fees were needed to pay teachers’ salaries. When Chris Evans clamped down on visas last year they quickly collapsed.

It’s also fair to say that you wouldn’t want to eat the cooking of some of their graduates or get a haircut from them: most of the alumni ended up driving taxis and cleaning houses.

In my earlier article, I described them as ‘Australia’s Mexicans’ – a reference to the illegal immigrants who clean the houses of Americans and drive their taxis.

They also seem to take jobs away from Australian unionists and tend to drive down wages – which of course was the purpose of the policy in the first place.

But as with a lot of economics, things are not always what they seem. Last year, the Australian Council of Private Education and Training commissioned a report from Access Economics on the economic impact of skilled migration.

Access found that the students spent $13.7 billion in 2007-08 and visiting friends and family spent $365.8 million, and that far from taking away jobs of Australians, they generated 122,000 extra jobs.

So the flow-on impact of the destruction of the export education industry through a combination of Labor government and union policy and racist assaults in Melbourne will be very large and very unpredictable.

This article first appeared on Business Spectator.