Immigration News

Student Visa Review

Friday, April 29, 2011
The Minister for Immigration and Citizenship and the Minister for Tertiary Education, Skills, Jobs and Workplace Relations have jointly appointed the Hon Michael Knight AO  to conduct an independent strategic Review of Australia’s student visa program.

This is the first independent Review of the student visa program.

Submissions to the review close 15th April with recommendations to Government  from the Review due by mid 2011.

All migration professionals should be actively making recommendations either to Migration Institute of Australia and Law Council of Australia or directly to the Knight Review.

The student visa system needs changing. All would agree. DIAC, agents, clients, education providers and especially overseas parents wishing to invest hard earned money in Australian education for their children’s future.  Economists would surely agree too. An $18 Billion export earning industry is in peril.  Net Overseas Migration  levels are growing at their slowest pace in 4 years. Labour markets are threatening wage rises which in turn threaten inflation rises and place interest rate rises on the horizon for the mortgages of all electorates – especially the marginal ones.

We also all agree on the need for urgent change.

The terms of reference for the Review outline the key areas that need change and I would suggest that most stakeholders agree with the areas identified.  However, not everyone agrees or knows how to change the student visa programme.

Unlike other discussion papers put forward in the past, what is most encouraging is the fact that Mr Knight has clearly stated that his discussion paper is not a foreshadowing of his intended recommendations. The opportunity to engage and provide solutions is there. Most likely because there is also a degree of uncertainty within government on how best to manage the balancing act of change. 


The Terms of Reference for the Review are as follows:

1. An effective partnership framework that considers the respective roles and responsibilities of key stakeholders, including education providers, the Department of Immigration and Citizenship (DIAC), the Department of Education, Employment and Workplace Relations, and state and territory education departments.

2. The appropriateness of existing threshold requirements for Student visa applicants including English language proficiency, financial capacity and educational qualifications.

3. Approaches to more effectively gauge and manage immigration risk in the Student visa caseload, including considering the suitability of the Assessment Level model.

4. Approaches, including compliance measures, to prevent misuse of the program and deter breaches of visa conditions.

5. The suitability of separate visas for Schools, Vocational Education and Training (VET), Higher Education, Postgraduate Research, AusAid or Defence, Non-award and Student Guardians.


The Review will take into account:

               • student visa programs in comparable countries

• relevant reviews and inquiries

• global trends in the international education market

• the objectives of Australia’s demand-driven Skilled Migration program

• best practice data management, exchange and analysis, with regard to privacy principles.


While there is a lot of territory to cover within the Review, my intention here is to provide commentary on the 3 key areas I believe warrant the greatest attention: effective partnership model for all key stakeholders to engage in; reform of the unrealistic threshold requirements for a visa, especially financial; better integration into a demand driven skilled migration program.


An effective partnership framework that considers the respective roles and responsibilities of key stakeholders


This area has been a complete basket case for as long as we have had an international education sector.


Issue number one has been the failure for key federal government departments to communicate and work together. 


Issue number two has been the failure of State and Territories government agencies and Federal  Government agencies to work together.


Issue number three the failure of skills assessment agencies to set correct benchmarks in their assessment of  Australian qualifications for effective employable outcomes.


The lack of a coordinated approach left the system open for inconsistencies in quality and loopholes wider than the Grand Canyon. With such inviting loopholes, the cowboys rode into town. The Skilled Occupation List (SOL) was turned into a shopping list for permanent residency and to-date no one in government is clear on who or what decided that 900 hours voluntary experience and a Certificate III was equivalent to a 4 year apprenticeship when assessing tradespersons.


While all the inconsistencies were repeatedly pointed out by DIMA/DIMIA/DIAC to DEST and DEWR and then DEEWR, it seemed that change was being pushed and pulled every which way but loose by its various stakeholders in the trade unions, the private vocational sector, Universities Australia, the State Governments (remember that education became Victoria’s number one export earner) and employer groups. Employers in certain industries loved that students were willing to work for 1 year for below minimum wage or no wage at all. Employers in other industries were rapidly employing more Australians as their businesses expanded.


While all these issues were repeatedly raised, reported and bemoaned, change was slow and dysfunctional and at best, impossibly coordinated. The GFC came right in the middle of the arguments for change. The bitter pill of change would have closed a vast swathe of private colleges rapidly as their business plans evaporated. With a keen eye on the politics of unemployment rates, changes were slow, piecemeal and too late.


That’s the story of the last ten years. If the key stakeholders can’t coordinate better there will not be a story to tell five years from now.


Appropriateness of the threshold visa criteria


AKA the infamous Schedule 5A criteria. Schedule 5A underpins the student visa regulations and the definition of a “genuine student”. It defines English language, financial and educational requirements for all the various subclasses of visa according to the assessment level of nationality – a complex matrix not for the faint-hearted agent.


Schedule 5A was born in 2001. It created a highly objective way for student visas to be assessed in high risk countries. When mixed with Assessment levels, potential applicants could effectively rule themselves in or out regarding eligibility for a student visa. Prior to this, English was commonly assessed over the counter in a five  question ‘interview’ conducted in many instances by locally engaged staff who were not native English language speakers. Finance was assessed on an even vaguer criteria and the opportunity for inconsistency and subjectivity across the student visa program was enormous. Schedule 5A laid subjectivity to rest, effectively removed any case officer discretion in decision making and brought a highly objective assessment tool into being. Strong and sustainable growth in student visas and consistency in decision making was achieved in the years 2001 to 2006 especially. These are key years as DIMA had introduced a system that allowed for effective screening in high risk countries during the same period other key competitor markets had all but closed their doors on international students in the aftermath of September 11. That there have been no discernible threats to Australia’s national security from international students during this same period of growth indicates that the functional nature of assessment that Schedule 5A and an Assessment Level regime had brought was a success. That was of course, until the demand for student visas ran too high (2006 – 2008) and the overreliance on bank statements and savings histories created an entire industry itself in offshore fake bank statements and fraud within banks in certain key markets. DIACs resources and training in such matters were well behind the sophisticated methods available to unscrupulous operators beyond jurisdiction.


It’s hard enough for a DIAC case officer based overseas to assess the myriad of banks and banking products available in countries with populations ranging from 100 million to 1 billion or more. Imagine the work of an Australian based case officer assessing the same documents for visa extension purposes. At least the offshore case officer can be trained on a single country’s banks. On any given day case officers in Sydney may be reviewing bank statements from Brazil to Bangladesh, Moldova to Mongolia or Libya to Lithuania.


Our criteria is far too complex and fails to serve its intended use. As a Continuing Professional Development  presenter on student visas I can attest to the look of fear on the face of both lawyers and agents when we move to this topic. We need simplification. We need common-sense.


The Review poses the question “Should DIAC officers have more discretion when assessing student visa applications?”  While migration agents generally regard such a move with angst,  DIAC does need to provide greater discretion to case officers, especially onshore. The policy guidelines on such a measure must however be transparent and the underpinning objective must be limited to the need for discretion when a case officer can clearly identify a genuine student based on other indicators the applicant onshore can demonstrate. These indicators may be previous visa compliance, quality of study plan and education provider, obvious financial stability in meeting previous living and education costs while onshore. The one size fits all financial assessment does not work.


Having said that, DIAC  also needs to be very careful about how case officers employ existing discretionary powers where the discretion to refuse already exists under Schedule 2 of the Migration Regulations and the “other relevant matters” criteria. This was used as a panic button in India in late 2009 to much detrimental effect on that particular market, the long term consequences are on-going.


Here’s how ridiculous the system is now and why we fail to attract the highest grade students to our university courses in the highest areas of skills shortages.


An Assessment Level 4 applicant for a 4 year Bachelor of Civil Engineering at UNSW  would need approximately $144,000 AUD in liquid cash assets which have been held as the minimum account balance for the immediate 6 months prior to application in order to apply for a student visa. Alternatively, their asset wealthy parents could opt for an Education bank loan if offered in their country of origin for the same amount and then incur interest payments as well.


In 2001 the Australian Dollar was at 49c to the USD, It is now $1.03 and moving higher. The average tuition fee for Engineering students was $16000 p.a in 2001. Now it’s between $22000 and $30000. Obviously the higher the price the higher the quality. The real increase in costs to an overseas parent in a market where the local currency has tended to move in concert with changes to the USD is massive. The only variable on the financial equation is tuition. Living and travel costs are fixed. This has eroded the higher education sector for years as genuine applicants were forced to choose the cheapest course in order to meet Schedule 5A criteria. The fact that the parents may have had adequate cash flow to continually support their fee obligations when due (semester by semester) was not considered. Cash up front for the full course and living costs for 3 years is currently required. No other country requires this. If all of this is demonstrated, discretion to refuse still exists. However if they fall short of the financial equation or the currency rate moves more than 10% during the potential 2- 3 month visa assessment period, there is no discretion under law to approve what would for sense and purpose still be a completely genuine applicant. 


The fact that they never needed to send the funds, they just needed to show them in bank statements has made a mockery of the student visa program and created a huge business in fake bank statements and quasi fake ones (real documents issued by corrupted bank managers). A parent is hardly likely to send their child off to Australia without financial support if the chosen education provider is a 4 year engineering degree at $25000 per year. They are if the chosen course is only $5000 to $10000 per year.


We need a system that achieves both the initial objectives that Schedule 5A brought with it – that being transparent and objective assessment criteria, with a real world common-sense approach.


How? To coin the phrase from Jerry McGuire: “Show me the money”….. after you have transferred a significant amount to an Australian-based trust account!


Not all of it. That is unrealistic. The first 12 months would be sufficient.  Migrant banking services at most major Australian banks already allow overseas students, 457 visa holders or new migrants the ability to set up online a new account and transfer funds from overseas. Onshore they are required to undergo the usual identity checks to finalise opening the account and access their funds. The systems are available commercially already.


Funds payable on a semester by semester basis could be held in a DIAC/DEEWR or ACPET/Universities Australia controlled trust account with PRISMS functionality extended to allow overview authorisation of provider payments. Concerns over money laundering would be limited if the funds were being cleared by the Central banks in both countries. If the funds are monitored through AUSTRAC and it was clear to all parties that this was the case, the likelihood of terrorists or criminal organisations using the student visa program as a conduit for their laundry would be minimal.  Students arriving in Australia could access their living costs by way of a monthly allowance draw down facility and could nominate any bank they wished to as the nominated account. Whether they could access the full living costs up front may require additional scrutiny. In some cases they need more than the allowance (they may wish to buy a car, pay a bond , take a holiday or buy a plasma TV). In other cases their sponsor overseas may not want the whole amount being bet on red late at night at Star City.  


This idea is not new. It has floated in the halls of DIAC for some years but never seen the light of day. Discussions I’ve had in the past on this subject with DIAC indicate that it fell into a “too hard basket” or the particular driver of the argument moved to another area etc. New Zealand has taken it and is currently piloting a version of it. The kiwis are taking our ideas and making them their own! What’s going on?


The benefits would potentially free up massive backlog and resources in the student visa case load by negating integrity checks on funds and income sources overseas. This would create faster processing, competitiveness, allow genuine students seeking the highest quality education to access it and draw real foreign investment funds in Australia. It would also help further avert Trans-Tasman losses.


The objectives of Australia’s demand-driven Skilled Migration program


Realigning General Skilled Migration policy with the student visa programme rather than becoming fixated with the headline grabbing rhetoric of “breaking the nexus” is crucial to fixing core issues. If done with better planning consultation and sustainable policies Australia can achieve the above flow-on benefits and be a market leader in international education.


The blame for the current 130,000 backlog in GSM has been squarely aimed at “non-genuine students” who were “facilitated by some agents and institutions whose business practices were highly dubious, sometimes illegal.”


We are at great risk of throwing the baby out with the bathwater on this issue and have lost sight of the real objectives of Government  and the Skilled Migration Program.


In 2001 the then Immigration  Minister Phillip Ruddock introduced for the first time regulations that permitted international students to apply onshore for permanent residency visas on completion of studies that lead to skills assessments in key occupations in high demand by the Australian economy.  


"From 1 July 2001, successful Australian-educated overseas students with ICT and other qualifications in high demand will be allowed to apply for, and be granted, permanent residence under the Skilled-Independent and Skilled-Australian Sponsored categories without leaving Australia. This initiative builds upon previous measures designed to retain successful overseas students with qualifications that are in shortage in Australia and who are sponsored by Australian employers, including waiving work experience requirements for those who have obtained Australian qualifications in the six months prior to lodging their visa applications and giving bonus points to applicants with Australian qualifications


The Procedural Advice Manual in the current migration stack updated as recently as 2/04/11 provides the following advice to student visa case officers when assessing the genuineness of the student:


An established migration pathway allows students to transition to General Skilled Migration onshore, so officers should not draw an adverse inference should an applicant express an intention to apply for skilled migration in Australia or be seeking to take a course of study for the purpose of applying for skilled migration. Therefore, notwithstanding section 81.4 Incentives to remain in Australia an intention to apply for skilled migration upon completion of studies is not a reason to doubt the genuineness of a student visa applicant if the proposed course is consistent with the skilled migration program requirements.


So how is it that the political rhetoric is we need to break the nexus, that the students, their agents and their education providers pushed themselves upon the Skilled Migration Program and descended upon this great country as a swarming horde flailing carving knives and hair-dryers, leaving in their wake  a landscape of dodgy curries and bad hair. If the skills assessment authorities had in place consistent assessment criteria that actually required them to undertake Australian training equivalent to a 4 year apprenticeship we may have actually resolved what is still a critical skills crisis in the hospitality and hairdressing industry.


The real problems in the student visa program came about not in 2001 or the immediate years following, but in 2006 onwards once key changes in skills assessments at Trades Recognition Australia effectively steered  the overseas students Australia was targeting towards cheap and easy qualifications and skills assessments rather than keep them targeting ICT and engineering programs to name a few.


Once the option for a cheaper tuition fee and shorter duration of study was clearly outlined as what is now referred to as “an almost guaranteed pathway” to PR, the interaction of Schedule 5A in the student visa assessment tool bag became a disincentive for parents who may have genuinely wanted to send their kids for 4 years of Engineering  but instead opted for the cheap PR alternative.


Australia has a unique economic situation among the current developed economies of the world. We have a labour shortage that is becoming extreme and demand from industry is acute.


The migration industry is best placed to make recommendations that not only address front end student visa eligibility but also creates a sustainable framework where pathways for Australian trained graduates are more reliable, feed directly to employment outcomes in key skills, link to employer sponsored visas better, feed into regional areas better, and ultimately benefit the Australian economy. Whilst being vigilant on integrity.


Get it right it’s a win–win. Get it wrong it’s a lose–lose situation.


The migration industry has a vested interest in students. With 400,000 in the country they feed us all. Some need employer sponsored visas, others GSM, others family reunion. They invest, they spend, they work and they study. They get into legal problems, they get cancelled, they refer and they provide Australia with valuable links to 200 countries.


We have the opportunity to benchmark quality in the Asia pacific region and dominate this for decades to come. We have squandered our first opportunity over the past decade.


Australia’s regional partners India and China are questioning our ability to provide high quality education safeguards for personal security and financial risks and assurances that our marketing message is not false and misleading. We accuse them sometimes of falseness, non genuineness and fraud but fail to acknowledge adequately our own government and industry short comings.


Government regulators and policy makers at both federal and state level have failed abysmally over 10 years to acknowledge and fix inherent failures in the education industry (public and private sector), in the education agent and migration advice sector, in the macro policies and micro management of them.


The opportunity to address this with the current student visa program review is here. Considered recommendations need to be made to bring about appropriate regulatory changes across education and migration laws to consolidate what has been learned, solidify our 3rd largest export industry and lay a framework for sustainable growth over 30 years not just to the next election.


The terms of reference are clearly stated in the review paper. They want recommendations that cover a better framework for all key stakeholders to engage with each other to regulate and self regulate through to technical changes to student visa rules to allow better competitiveness internationally without compromising quality.

If a whole of government and a whole of industry approach can get the student visa program back on track,  the benefits a better system can bring will be the restoration and sustainability of  Australia’s reputation for quality, significant and sustainable export income for Australia, clearly defined GSM outcomes that address key skill shortages and consolidation of trade /bilateral  relationships globally and access to new markets.

By Jonathan Granger

Director of Granger Australia



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