In this article, Adam Creighton contextualises and disseminates the findings of the IPA’s research into immigration.
If you’ve ever had the awkward experience of being driven around in an Uber by a South Asian with a PhD or masters degree, you might’ve wondered why these hardworking foreign graduates had forked out tens of thousands of dollars a year for their degrees.
The answer has little to do with academic ambition or a thirst for learning. It’s for the right to work, ideally permanently, in Australia – which, even in relatively low-skilled jobs, delivers a better living standard than professional jobs available in their home countries.
Australia’s higher education sector has a real shot at a medal in the ticket-clipping Olympics, siphoning off tens of billions of dollars in revenue from foreign students who, in truth, would never pay the fees charged were it not for the right to work and the possibility of residency.
A new report by Jobs and Skills Australia, published in August, perhaps unintentionally bells the cat on this racket. “More than 50 per cent of international graduates working in Australia are employed well below their skill level and many are working outside the field of their qualification,” the report found. One anonymous engineering employer, who had recently hired a foreign student, candidly told the department: “A lot of his (student) mates just come here to earn the money, drive the Uber.”
The report also made plain that migration – not education – drives enrolments. “Nearly 70 per cent of international higher education students reported that the possibility to migrate was a reason for choosing to study in Australia, rising to 77 per cent of Indian and 79 per cent of Nepali higher education students.” For these cohorts, the degree is merely the ticket (an expensive one) to live and work in a rich country.
Yet for all the hype, the economic return for these students is dismal. International graduates in business and management, the most popular areas of study, were earning just $57,000 a year in 2022 compared to $115,000 for equivalently qualified domestic students.
In engineering and computing, foreign graduates were earning $40,000 a year less than locals. It’s a startling gap. They are, in effect, a source of cheap (yet highly educated) low-skilled labour, holding down wages in food, accommodation, retail, ride-sharing and point-to-point delivery sectors.
“Over 90 per cent of Indian and nearly 96 per cent of Nepali higher education students cited the ability to work while studying as one of the reasons they chose Australia,” the report noted. Consider the US comparison. There, foreign students are effectively barred from low-skilled jobs. They can work only on campus during their studies, for no more than 20 hours a week, and do not have automatic access to post-study work rights. Australia, by contrast, hands out the Temporary Graduate visa almost as a matter of course.
Our universities and vocational colleges have been milking this discrepancy royally: enrolments surged to 787,000 in 2023, up from just over 410,000 a decade earlier. The US, with 13 times Australia’s population, had just 1.1 million international students in 2024.
The motives are even more plain in the vocational sector. It is telling that the average age of foreign students enrolled in VET courses – the ones that require little preparation – is three years older than that of international university students. These courses in cookery, business and marketing are less about education than immigration pathways.
“Graduates’ persistence means they have become an important feeder group to Australia’s permanent migration program,” the Jobs and Skills report noted, pointing out that 40 per cent of international students who began courses in the early 2010s had become permanent residents within a decade. Many had to churn through “five or six different visas before being granted permanent residence”.
All this is expensive, time-consuming and degrading for the foreign students themselves. They have become so numerous they often struggle to socialise with native Australians at all. Even the English proficiency, once a selling point of Australian education, is now being undermined by sheer numbers.
It’s not clear that the system helps their home countries much either. Nations such as India and Nepal are effectively deprived of bright young people so they can deliver food to Sydney and Melbourne’s middle and upper classes.
If we are going to persist with this charade, we should at least be more honest and efficient about it. One obvious solution would be to establish a new visa – call it the Cheap Foreign Workers Subclass 650 – with a much higher application fee, and cut out the higher education sector entirely. This would allow our universities, where foreign students now make up close to half of all enrolments, to shrink back to their core, original purpose: educating Australians.
The institutions would howl, of course, because they have become addicted to the billions from international fees. They constantly boast that foreign students generate a $51bn “export industry”. But this is highly misleading. For a start, the estimated $US9bn ($13.6bn) in cash remittances sent home every year should be deducted. This headline number also conflates tuition fees with spending on rent and groceries.
In fact, the size of this supposedly “fourth-largest export industry” is more akin to what the federal government could collect directly if it charged these hardworking young foreigners for the right to live and work in Australia. At least then taxpayers would be getting something back, which governments could spend on infrastructure for all rather than new university buildings and armies of overpaid university bureaucrats.
The costs and benefits would be clear. Right now, the universities are clipping the ticket, the students are driving Ubers, and the public is told it’s all an “export miracle”. It is nothing of the sort.
