Albanese Government still pushing to mend Coalition's student visa mess

From 1 July 2023, the Albanese Government belatedly started tightening the student visa policy it inherited from the Coalition. Was it having any discernible effect as at end November 2023?

After the Coalition Government dramatically loosened student visa policy both during COVID and in the months after international borders re-opened (such as fee-free applications), both education providers and education/migration agents understandably cranked up their recruitment activities. There was so much easy money to be made while leaving the immigration system (or the taxpayer) to deal with the consequences.

With record offshore student visa applications right through 2022 and Treasury forecasting a major deterioration in the labour market in 2023 (one that did not happen), I thought the Albanese Government would act quickly to tighten student visa policy and temper the boom in net migration.

Surprisingly, it did not start to act until 1 July 2023 when it overturned former Immigration Minister Alex Hawke’s appalling decision to provide unlimited student work rights and began restoring the immigration compliance function that had been run down by the Coalition Government (largely through ministerial neglect).

Two further tranches of student visa policy tightening were announced in September 2023, plus closure of the COVID visa stream which was drawing students away from study to full-time work and into long-term immigration limbo.

Management of student visas has Government in a pickle

While the Albanese Government has done its best to amend the visa system chaos left by the Coalition, student visa numbers have resulted in more work to be done.

The new migration strategy announced in December 2023 also included further measures to tighten student visa policy. That strategy promises net migration will fall to pre-pandemic levels by 2024-25 with an interim fall to 375,000 in 2023-24 largely through student visa tightening. Achieving the reduction in 2023-24 will be difficult given data for the first four months of the 2023-24 financial year shows net migration continuing to be strong.

Contrary to reporting in the Murdoch press, these measures will reduce demand for student visas but that will take time given the enormous momentum built up by the policy stimulation introduced by the Coalition Government and the time it will take to recruit and train staff to implement the Albanese Government measures.

The Murdoch press largely avoids mentioning the Coalition Government’s student visa policy stimulation in the context of the net migration boom which the Murdoch press happily criticises. It also favours use of nonsensical caps on student visas without giving any thought to the legal or practical difficulties involved and the chaos that would ensue.

But it is also likely that further measures will be needed to bring net migration down to the levels the migration strategy proposes (without a major downturn in the labour market).

Decline in students in Australia in November 2023

After the most rapid increase in student numbers in Australia’s history when international borders opened in early 2022, the number of student visa holders in Australia fell from a record 664,178 at end September 2023 to 612,099 at end November 2023.

The bulk of this decline is likely to be students either going home for the end of the academic year (before many return in January/February 2024) or students applying for a further student visa or a temporary graduate visa and are now showing up in the stock of bridging visa holders.

That would mean the decline in student numbers in Australia during November may have minimal impact on reducing net migration.

Labor tightens further batch of student visa policy

The Albanese Government has announced a further batch of changes to student visa policies to target rorts and abuse.

Offshore student visas

The key to better management of student visas is better control over the level of offshore student visa applications — this was the lesson the Hawke/Keating Governments learned in the early 1990s.

In November 2023, there were 35,397 offshore student visa applications, setting another new November record surpassing the November record of 33,216 set in November 2022 (see Chart 1). As expected, this was well above October 2023 applications of 27,163 (which were nevertheless also an all-time October record).

The leading source nations for offshore student visa applications in November 2023 were:

China — 7,991 compared to 5,488 in November 2022;
India — 4,141 compared to 4,355 in November 2022;
Nepal — 1,197 compared to 1,757 in November 2022;
Colombia — 1,434 compared to 1,924 in November 2022;
Bhutan — 1,434 compared to 1,066 in November 2022;
Philippines — 1,603 compared to 1,826 in November 2022;
Vietnam — 1,798 compared to 1,293 in November 2022;
Pakistan — 1,043 compared to 913 in November 2022;
Bangladesh — 818 compared to 560 in November 2022; and
Sri Lanka — 899 compared to 677 in November 2022

The major source nations to experience a decline in offshore student applications were India, Nepal, the Philippines, Colombia, Pakistan, Bangladesh and Sri Lanka. The major increases were from China, Vietnam and Bhutan. The strong demand from China and Vietnam may have continued in December 2023 ahead of the Government's plans to increase English language requirements. Stronger English language requirements may impact the Chinese and Vietnamese markets most significantly depending on how widely these are implemented.

There were only 26,300 offshore student visas granted in November 2023 compared to 29,788 in November 2022. In other words, despite record offshore student visa applications in October and November 2023, over 3,000 fewer offshore student visa applications were granted in November 2023 compared to November 2022.

The overall grant rate in November 2023 was 80.5% compared to 81.2% in November 2022. The very small decline in the grant rate suggests the lower number of visa grants were achieved more through slower visa processing and the build-up of an offshore student visa backlog. Overseas posts may be setting aside offshore student visa applications destined for refusal to be finalised when the current surge in offshore student visa applications subsides. The other explanation is that despite the Albanese Government allocating additional resources for visa processing, overseas posts are at this stage unable to keep up with demand.

Albanese Government taking steps to avoid student visa crash

The Federal Government is currently facing challenges that could see a crash in student visa numbers, resulting in a costly aftermath.

Either way, the current offshore student visa application rate cannot be managed through a high refusal rate and/or slower visa processing. Both are unsustainable. The Government must find a way to reduce demand, particularly from low-performing students who are destined for immigration limbo in Australia.

While the planned increase in English language requirements will dampen demand somewhat, this effect may be temporary as students improve their English language skills and re-sit English language tests, particularly as IELTS now allows students to re-sit a single skill element rather than re-sitting the whole test.

Onshore student visas

The Government has announced as part of its migration strategy that it will also apply greater scrutiny to onshore student visa applications, particularly students who may be applying for further student visas simply to extend their stay and access work rights. We should start to see the impact of that policy from early 2024 although the workload and training implications of such a policy may result in substantial delay.

In the meantime, it is worth noting that onshore student visa applications in November 2023 were 12,408 compared to 10,204 in November 2022. The onshore student visa grant rate in November 2023 was 90.1% compared to an astonishing 99.6% in November 2022.

The very high grant rate in November 2022 was due to pressure to clear the large onshore backlog of student visa applications that had built up under the Coalition Government. There seemed to be a perception under the Coalition that not processing visas and allowing massive backlogs to build up, particularly for onshore visas, was good practice. All it really did was enable people who may have had few onshore visa options to delay departure and/or enable unscrupulous agents/lawyers to exploit the visa system.

More than cash cows: Overseas students key to migration program

Universities should encourage overseas students to do courses in health and education, and TAFEs should offer overseas students more traditional trade courses.

Onshore student visas granted in November 2022 were an extraordinary 29,887 compared to just 9,559 in November 2023. The November 2022 result should be viewed as a “once-off” and the November 2023 grant rate is more normal. However, increasing onshore student visa refusal rates much above the November 2023 rate will be challenging and will also require a substantial increase in immigration compliance efforts to locate and remove onshore students who are refused but do not depart.

Some will seek to apply for asylum as their only way to further delay departure. This is where the Albanese Government’s recently announced asylum seeker strategy will be critical.

With the re-introduction of restrictions on student work rights and a modest restoration of immigration compliance funding, we should also see some increase in student visa cancellations due to students working too many hours and some increase in location and detention of students who have had their visas cancelled and awaiting removal.

These cancellations would mainly use the s116 (general cancellation power) of the Migration Act. Visa cancellation using s116 fell away dramatically during the pandemic. There were 6,752 s116 cancellations in 2018-19; 4,149 in 2019-20; 1,197 in 2020-21; and 924 in 2021-22.

For 2022-23, these increased to 1,884 cancellations. That was a period when students had unlimited work rights and the immigration compliance function was still at a historic low. In 2023-24, we should see a further significant increase in student visa cancellations using s116 and associated student departures and removals. But this may be limited by a lack of immigration compliance resources.

The immigration compliance aspect of the Government’s new migration strategy will be challenging, especially as the partial restoration of immigration compliance funding that had run down under the Coalition Government will be well short of what is required.

In addition to a mechanism to better manage demand for offshore student visas (using the overseas equivalent of ATAR scores), the Albanese Government must urgently re-visit funding for immigration compliance.

Dr Abul Rizvi is an Independent Australia columnist and a former Deputy Secretary of the Department of Immigration. You can follow Abul on Twitter @RizviAbul.