A learning experience

Published 15 April 2010 06:34, Updated 15 April 2010 07:42

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Australia’s overseas education sector, one of the most lucrative businesses in the country, is emerging largely intact but certainly the wiser from a difficult 12 months.

Attacks on students from India received unwelcome headlines around the world. And a spate of highly publicised failures of private colleges meant 6000 students had to fall back on the government-backed Overseas Student Tuition Assurance Scheme, which guarantees students can finish courses if their schools fail.

Finally the federal government stepped in to scrap the links between vocational courses and the skilled migrant program – often seen as a back door to a permanent residency visa.

Almost a year later, providers have not noticed any drop in demand despite some gloomy predictions, although some colleges faced a squeeze to fit in students displaced by collapses. The sector remains Australia’s fourth largest export industry after resources, manufacturing and rural, worth $17 billion last financial year, after surging by 23 per cent.

“The industry has had 14 years of boom,” says Alan Manly, chief executive of Group Colleges Australia, sitting in his office in the former TNT twin towers next to Sydney’s Redfern station.

Manly’s story is typical of many of the long-term education providers in the industry. In 1988 he bought into a small computing college in Sydney’s inner west, and two years later decided to visit China to look into the possibility of offering courses to Chinese students.

Manly had little idea how successful his company and the education industry overall would become.

By picking locations close to universities, and taking a cautious approach to growth, Manly gradually expanded the business, to the point where he now employs more than 100 tutors, lecturers and other staff to provide courses in English and business studies to more than 4000 students.

There are about 700 private colleges in Australia offering academic and vocational courses. Export revenue earned by the education sector has grown at 10 per cent or more a year for nine of the past 10 years, and student numbers have expanded accordingly.

However, in July 2009 the crisis in the sector was coming to a head. The college failures, the violence against Indian students in Melbourne and Newcastle, and bad publicity over the permanent residency issue forced education minister Julia Gillard to call industry heads to Canberra for a meeting.

One government official suggested cancelling student visas and calling a moratorium on any new ones until the problems could be fixed. But then the group had a look at the numbers.

In 2009 Australia hosted, fed, educated and entertained about 751,000 international students, including 430,000 in private institutions – the rest attended public high schools and universities.

An Access Economics report commissioned by the Australian Council for Private Education and Training (ACPET), the peak industry body, shows the sector contributes more than $14 billion to the economy each year, (based on 2007-08 figures). Course spending comprised $6.4 billion, while the rest went on food, accommodation, travel, entertainment and services. All this extra demand led to the creation of more than 122,000 full-time positions – 33,500 in private education and the rest in the public sector. And for every $1 that overseas students spend directly on education, they spend a further $1.90 elsewhere.

The government quickly went into damage control with the Indian media and government, and appointed former federal member of parliament Bruce Baird to review the industry and the legislation that regulates it.

Despite predictions that the kerfuffle would lead to a fall in student numbers, demand for education services has hardly skipped a beat.

The Baird recommendations call for more support for international students, the creation of stronger consumer protection rules and improved regulation of the sector, all measures welcomed by industry.

The chief executive of ACPET, Andrew Smith, says the report gives an accurate reflection of the experience of students in Australia in recognising good and bad service providers, although he rejects Baird’s speculation that up to 20 per cent of private providers are visa factories rather than legitimate providers.

“Much work is already under way to address issues raised in the report, including the re-registration of all Commonwealth Register of Institutions and Courses for Overseas Students providers, increased regulatory scrutiny of new applicants, a strengthening of education standards frameworks and a risk-based approach to monitoring,” Smith says.

Smith says that the industry is conscious that all Australian schools trade under a single brand Australia banner, and had created mechanisms to defend the brand and maintain the standards of the courses on offer before last year’s crisis.

ACPET was founded in 1992, after a group of colleges got together in a bid to make sure that students would not be left out of pocket in the event that a college closed down.

In 2000 the system was formalised into the overseas student tuition assurance scheme. Participation in the scheme became mandatory after the federal government passed the Education Services for Overseas Students Act.

“In 2009 the scheme has ensured that over 5000 students affected by school closures could be relocated in order to complete their courses in an alternative college. And while the number looks large, it represents less than 1 per cent of students who come to Australia to study,” Smith says.

“In the present climate it is safe to assume there will be further closures and that where the closure arises from poor business practice the industry will ultimately be stronger. What is important is that government, the industry and other stakeholders work together to support affected students and to rebuild confidence in Australia’s international education industry.”

Although the overall demand for education services remains strong, there are signs that the bubble of demand for vocational courses for Indian students may have burst.

IBISWorld says the number of Indian students enrolled in vocational courses in Australia jumped from 1600 in 2004 when they made up only 2.8 per cent of international students, to 79,000 in 2009 by which time they represented 34 per cent of vocational students.

Angela Kidson, lead education analyst for IBISWorld, says it’s still too early to determine how legislative changes, and the fallout from bad publicity in India, will affect the sector.

“International student numbers grew 25 per cent in the last 12 months, and we can expect to see a softening of that growth in the next six months, but demand for education services is still strong around the world,” Kidson says.

With a few exceptions the industry remains bullish on growth. During the height of the crisis last year the share price of the one listed education services provider, Navitas, dipped briefly, but quickly recovered, and most college owners remain confident the market will continue to expand in coming years.

“Indian students have taught us a lot,” Manly says. “It’s the first time we’ve taken large numbers of students from a functioning democracy where the press is free and the students know how to protest and express themselves. But we’re learning, and the government is learning, and I’m sure we’ll still be here years from now.”

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