Will Brehm  0:00
Anthony Welch, welcome to FreshEd.

Tony Welch  1:00
Thank you, Will. It’s great to be here.

Will Brehm  1:01
So, I want to start by asking about Australian higher education. And earlier this year, a couple months ago, Australia made sort of international news, headline news, when they announced caps on international students studying at its universities. Can you tell me what exactly happened and transpired, and what the government, the Albanese government, was actually proposing?

Tony Welch  1:24
Okay, so the pressure to introduce student caps, which is the proposal at the moment, was something that the federal government, in a sense, responded to pressure around migration and the post COVID surge of enrollments that happened. As we know, international enrollments collapsed during COVID, not just in Australia, but elsewhere. And the post COVID surge was huge, as happened in a few other places too, like Canada and so on. And that then led to a great deal of pressure on the part of the opposition and some elements in the media. So, the rather abrupt response by the government was to introduce student caps.

Will Brehm  2:11
So, it’s an issue of post COVID massive migration, that migration sort of gets politicized domestically around this global trend that we’re seeing in sort of democracies, of sort of ethnonationalism. So, that’s sort of how this sort of came about in Australia?

Tony Welch  2:30
Yes, but again, somewhat like Canada, there was, as you say, politicization of the issue, but particularly around overall migration numbers, which surged. The particular element that was a bit distinctive in the Australian case is that international students were something like half of net overseas migration -really high, comparatively- and associated concerns around cost of living. So, housing and cost of services and so on. That all became politicized, including in some major elements of the media, as though it was kind of international students that were the cause of this terrible cost of living problem. You know, house prices were going up, rental prices were going up, cost of living and so on. It wasn’t the fault of international students. They were a relatively minor piece in that puzzle. Nonetheless, the opposition and some parts of the media, were fairly effective in pointing to them.

Will Brehm  3:25
So, they became the scapegoat. You know, in a way, that’s why this sort of policy came about and when. How will this cap, or these caps -because my understanding is different universities have different caps that the government has sort of imposed. How would this actually impact universities?

Tony Welch  3:44
So, one of the other features of this scenario is the distribution of international students across the country. So, it turns out that something like 40% of all international students enroll in what we call the Go8 (Group of Eight) universities. These are the eight most research-intensive universities of our 40 or so overall. If you like, the structural equivalent of the Russell Group or the Association of American Universities. So, they are our most research intensive. They are also in our big capital cities, and that’s where most international students want to study. So, if you’re a small regional university in the boondocks, relatively speaking, it’s hard to recruit. So, the response of the government was to say, well, we’ll try and fix that. That was one of the aims. We’ll try and rebalance the system to try and get more international students to enroll regionally. And we’ll have individual caps for individual universities. So, some would be hit more than others, and some would even have their quota increased. The problem with that is, of course, it takes no account of student choices. You know, you can make all the regional places available that you like, but unless students actually want to go there, it’s not going to make any difference.

Will Brehm  4:58
Yeah. It’s like international students aren’t necessarily fungible and be sort of, you know, mixed and matched accordingly, like that. They are individual humans that have desires and, you know, naturally, living in a bigger city probably is much more attractive.

Tony Welch  5:11
There’s a lot more folks like you around, and you can, you know, live a lifestyle that’s more, you know, in tune. And we’re not a command economy, so we can’t send them to the countryside.

Will Brehm  5:19
Right. So, the logic here that the government used when trying to balance out this distribution you think is a bit faulty?

Tony Welch  5:21
Yes, it is. And I think many universities have submitted that their particular target is, is not correct. It’s not based on good evidence and so on. It. The whole proposal was rushed, responding to that political pressure that we talked about. And of course, the legislation has stalled in Parliament, so it hasn’t actually passed, which is likely to mean that unless that is resolved, and there’s no sign that it will be, yet, it will be up to the minister, and the minister can still make those determinations through what’s called ministerial direction, and that may be the recourse.

Will Brehm  6:02
Right. And then even beyond that, even if there’s not policy enacted, the rhetoric and all the news media is already out there, which could impact what international students decide to even do with applying to Australia.

Tony Welch  6:16
Yes, that’s interesting, too. And again, it’s differential, because when you look at the most recent data, you would say, okay, so international students have seen this stuff, and they’re not going to come. The evidence is Chinese applications are as strong as ever, but there’s been a significant fall off from other places, including South Asia, India and Nepal. And I mean another piece of this puzzle which contributed to that political pressure we talked about before is there was a significant scandal over the last couple of years in relation to our visa system, and that tended to be more evident among applications from South Asia, particularly Nepal. So, we’ve had a significant growth in international enrolments from the subcontinent. India is not hard to explain. It’s a huge population. There’s a swiftly growing middle class who can now afford to send their children abroad and pay the fancy prices that are commanded, including in Australia. Nepal is harder to understand, right? You’re talking about a system of where a US dollar GDP per capita is around 1,000, and it’s small. It’s not a huge population, a very small middle class. So, how is it that suddenly tens of 1,000s of Nepalese students were flooding into the Australian system? And the answer is, frankly, corruption.

Will Brehm  7:37
So how does that work?

Tony Welch  7:38
Here’s exactly how it works; So, there were a small number of unscrupulous education agents, some of whom were Nepalese and some of whom worked in Nepal, some of whom worked in Australia. And it’s also important to say that in the Australian system, education agents don’t have to be registered, unlike migration agents. So, as one witness to a parliamentary inquiry said last year, and I quote, “My dog, could be an education agent”. So, what was happening was these small proportion of unscrupulous education agents, they would contact people in Nepal, let’s say, as a case study, arrange a place in a reputable university in Australia, then switch them without them even having studied at this reputable university at all much. Switch them to a marginal or dodgy vocational provider from whom they got a much higher commission, as high, sometimes as 40% of the student fee. And then the student often didn’t always study at that institution, either, because their real target was the workforce. So, they just melted into the workforce.

Will Brehm  8:47
And these commissions -the university or the technical institute- they’re paying the agent, okay? I mean, and I guess this is what’s so fascinating is, you know, we talked a little bit about the politics of this policy and what this means in Australia, but the economics of it is so fascinating from that angle, but also from the university angle of they’re so reliant on these students. So, you know, talk me through the sheer sort of importance of international students economically for universities in Australia.

Tony Welch  9:17
So, the Australian system does use agents to a substantial extent. Even, you know, the regular university system, not just all the dodgy providers. But they pay a small commission. It might be 15% or something like that. Nonetheless, we’re talking about Australia’s fourth largest industry in total, and largest service sector export industry, which now is worth at least 27 billion US dollars to the economy, you know. So, that’s substantial. And again, because of what we talked about before, it’s not evenly distributed. So, a small regional university, for example, might only have 1,000 or so international students, they’re not raking in huge amounts of money. The Go8 is far more dependent on that international student income, to the point where one university last year earned half of its entire income from international student fees to the tune of 1.4 billion Australian dollars. So, yes, it’s huge, and this move to cap enrollments, of course, makes all Vice Chancellors nervous, but the Go8 ones particularly nervous.

Will Brehm  10:25
Because it actually will hurt their bottom line and to the point where they might have to close schools, fire faculty. So, 50% of a budget is enormous, but if you start losing a percentage of that like, will that have material impact on, you know, university life on the ground?

Tony Welch  10:40
Already, Vice Chancellors around the country have signaled cuts to funding. So, it’ll be building programs, even if they are underway, it’ll be staffing and a whole range of other things. So, there’ll be budget cuts across institutions and across the country.

Will Brehm  10:57
It seems like in some cases, then, there’s an overreliance on international students. And so, is there an argument to be made that the government’s policy that they’re implementing, although responding to sort of, contemporary politics and the election coming up next year -but is there a bigger argument that could be made that maybe things have gotten a little bit of out of balance in universities, and particularly some universities where they’ve been so reliant on these international students?

Tony Welch  11:26
That’s another distinctive element in the Australian system. Of all systems that attract international students, and particularly among Anglophone systems, which tend to still attract large proportions and numbers, the Australian system still stands out. You know, across the board, it’s at least 25% of total enrollments are international. And at my university, the University of Sydney, we have -just to give you an example, because China is the obvious case. We have 30,000 Chinese students. How many students’ international students are enrolled across Germany -36,000. How many students from China study in France -25,000. So, that gives you some idea of the distortion, if you like, that you were talking about. We are so heavily dependent on that tsunami of international students and the fees that come with it.

Will Brehm  12:20
So, maybe there’s a course correction underway.

Tony Welch  12:23
I think there is. And again, like we were saying, this is to some extent international, and it has to do with some immediate events. Like in Canada, there was also a post COVID migration surge, and Canada has now cut its international enrollments by 35%.

Will Brehm  12:39
So, they also did a cap instituted in a similar way by university to university, or just overall?

Tony Welch  12:44
It’s different in the Canadian system, because it’s so provincial. Certain provinces, Ontario and so on, that had a lot of the students, they will be particularly impacted. They’re federal, like we are, but the balance of powers between the provinces and the national is a bit different in each case. The UK also tried to respond, but differently. So, what they did was to introduce measures that said international students could still enroll, but they were no longer able to bring their family. That’s also led to a substantial fall in international enrollment. So, it seems like there’s this wave of migration internationally, which we know about, but it’s caught everyone off guard, and there have been these rather abrupt and politically motivated responses.

Will Brehm 12:44
I have seen in like the UK, they’ve increased what they call the health care surcharge that one has to pay when applying for a visa, which, you know, it can be astronomical now. I think in Australia, they also increased the price of the visa. And just this year, right, they really made it much larger. So, you can do all these sort of covert, sort of technicalities, and you change them, and that can then sort of reduce or increase the migration levels, depending on what you’re trying to do.

Tony Welch  13:58
There are other measures that the Australian system introduced this year. So, last year they liberalized post-study work rights. This year, they’ve increased the visa fee, they’ve increased the English language proficiency threshold, and they’ve introduced other measures which will make it harder. And so, in turn, that’s led to 1,000s of people losing their right to stay and lodging objections, which then has led to a huge log jam in what we call the Administrative Appeals Tribunal. So, there are 1,000s of these cases now awaiting judgment.

Will Brehm  14:32
So, I mean the cascading effects here are just enormous. What about in Australia? Obviously, the Chinese students, like you said at the University of Sydney, are 30,000 which just dwarfs whole countries levels. Is it a possibility that we’re going to see more Chinese students deciding to just stay in China and study as the universities there are increasingly becoming globally competitive? They are increasing in the rankings left and right. So, are we just going to see -you know, even Australia might have all sorts of policy changes, but students in China might simply decide to stay in China?

Tony Welch  15:08
So, yeah, there’s quite some discussion about that, and people are saying the pattern is for a Chinese student who wants to study if they don’t get into one of the top tier Chinese universities, you know, Peking, Fudan, Tsinghua and so on, then they’ll start thinking about international universities. And of the ones who do want to study internationally, of course, the first choice is always the US. Second choice is probably the UK, and after that would be Australia and Canada and New Zealand and so on -of the Anglophones, I mean. There’s a lot of Chinese students who study elsewhere. The other thing, of course, is East Asian demographic profile. So, in Japan, Korea and Taiwan, they’re already closing private universities because of the demographic cliff. You know, they’re just out there beating the bushes to get students at all. China’s facing that and it’s imminent, so there will be a reduction in overall numbers of the student population. Nonetheless, a lot of Chinese families still want that international experience for their kids. They want the kids to learn English. They want the bi-cultural bilingual experience, and it may also be a foothold for family migration.

Will Brehm  16:27
If the middle class in China is something like 300 million, a small reduction is still overall, it’s still a lot. But, I mean, I guess also in countries like Australia and maybe the UK and US, the birth rate is also declining, isn’t it? So, like, the number of domestic students that those countries are going to have probably is making universities a bit nervous. Looking demographically, trying to think ahead, how are we going to keep the student levels, to a certain extent.

Tony Welch  16:53
And the other element in that, Will, is that significant numbers of departments depend on international students, you know, including the STEM areas and the high-tech areas that are the subject of so much debate at the moment. In the US and to a lesser extent, in Australia, they’re not getting the local enrollments, particularly the research, you know, the PhD candidates and so on. They’re not getting sufficient numbers. So, they actually do depend on international students to fill those places, and if they would suddenly disappear, that would have huge implications, not just for money, but for innovation and research.

Will Brehm  17:29
It just seems like we have lived through the last few decades where sort of the internationalization of higher education has really taken off, and now most universities are so international, right? You see people from all over the world. If you go to University of Sydney, even my university, University of Canberra, you will see that. And you know, it’s like each university has had to operate in a market trying to, you know, fight for demand of students. And so, I guess the question is; do you see something fundamentally shifting in the world of higher education today, and how we might think about internationalization of higher education? In other words, are we sort of seeing this sort of decline of the marketization of higher education, or the neoliberalization of higher education? Do you see this as like a turning point in any way?

Tony Welch  18:17
It would be nice to think so. Yeah, I do think we are at an inflection point, though, and the Australian higher ed system faces a number of challenges. One that we haven’t entirely discussed is behind some of these developments, and that is the whole issue of funding. So, if you look at OECD data, it shows that Australia’s investment in higher education, public investment, and public investment in R&D is well below the OECD average. And so, on the one hand -and this is not entirely unique to Australia, but it has some distinctive elements. On the one hand, the government wants more students in higher ed, but spiraling enrolments have not been matched by the same level of increased funding. So, the gap between enrolments and funding has continued to widen. And that’s somewhat particular to the Australian case. There’s no sign, I think, that either side of politics is committed to resolving that. So, I think we can say there might be some change at the margins, but it’s not going to change very much. And of course, that has driven this more entrepreneurial approach to international recruitment on the part of Australian universities, because they need somewhere to make up that funding, particularly the Go8 universities, because they’re the ones that want a new laboratory in photonics or some high-tech thing, and they’re very expensive. So, the money has to come from somewhere.

Will Brehm  19:43
It’s an interesting sort of conundrum. We can sort of look back and romanticize about some past system, like you know, that we might call more welfare state sort of system. But I was at a presentation last week where Sarah Black sort of made the point that the welfare state system that we kind of romanticize existed for 30 years, whereas the neoliberal system that we sort of dislike so much has actually existed for 40 years now -if not longer, right? So, we’re sort of in this system where it’s existed for a longer period of time than this romanticized period. And most likely, whatever happens into the future is not a going backwards. It’s going to be -something new is going to come out of it. And it’s like we’re in that sort of interregnum where we don’t know exactly what’s going to be birthed out of these changes, both domestically and internationally.

Tony Welch  20:31
And in the Australian system, you can trace the beginning of that move to creating, if you like, an industry around international higher education and recruitment of international students to two key government commissioned reports of the mid 1980s. One said we should continue to take international students and give scholarships and so on. The other one said, I’m summarizing, no, let’s create an industry and let it grow, but let it be fee-based. And it was that latter one, at almost exactly the same time that has been the basis of the development of this industry, which has just mushroomed.

Will Brehm  21:06
I always find it funny. It’s actually called an export industry. It makes sense, I guess. But it’s also strange, because it’s all domestically.

Tony Welch  21:13
It’s not an import. It is an export. It does seem a little strange on the tongue.

Will Brehm  21:16
So, I guess you know to sort of begin concluding here; based on your experience looking at this sector and this export industry, as we now call it, how do you begin thinking about the future? What are you sort of most interested in now looking ahead?

Tony Welch  21:33
I think it’s possible to see some rebalancing, although I don’t think it’ll be easy. And I do think it’s important not to exempt universities from some of this criticism. Like if you look at the Australian system, and again, it’s not unique to Australia. Every Vice Chancellor wants a medical school. Every university has to have a Department of Communication/Journalism. You know, how many journalists do we actually need now? I mean, they’re sacking them faster than they are at universities, you know. But nonetheless, you have to have one, you know. So, I think universities can’t be exempt from blame in the sense that they are encouraging students to come into courses which students find desirable -I mean, who doesn’t want to be a journalist- without saying to them, Look, you know, this will give you certain kinds of skills, but your chance of getting a job in journalism is about 2 in 1,000. You may get a job in the government, or in a business or something, a PR job or something, but you won’t get a job as a journalist. Do they say that? No, they don’t. So, they have themselves to blame to some extent. The other thing, though, is that the government has pushed this, and where I think the government has done 180-degree turn is every minister of education over the last 30 or 40 years, whenever they say anything about higher education, the first sentence is always it’s a x billion-dollar industry, then they start talking about education. That’s changed. But the other thing that hasn’t changed so much is we are -like some other systems, quite a few. We are short of key skills. Many of them you don’t need to go to university for. So, part of the rebalancing that I think the government recognizes does need to occur is to get more people into the trades and vocational education and somewhat fewer, perhaps into higher ed. It doesn’t have to be the expectation for everyone.

Will Brehm  23:26
What it seems like to me is that this notion of credentialism, where, you know, to participate in the economy, you had to get higher education of any sort, and your income would go up. Your wage would be higher if you got some sort of degree. And that was basically, you know, rhetoric from the 90s and it and it was assumed, and in many ways, it still is. But I do think we’re seeing this sort of shift away. And it makes me also think about some of the stuff that Thomas Piketty talks about, where you also see this alignment between credentials and voting patterns. And I think we’re beginning to see, maybe, you know, a rebalancing there as well, like moving away from credentials and potentially moving away from universities as being seen as the progressive bastion in a society.

Tony Welch  24:09
And I think that whole push to funnel more and more students into higher ed is wrong on two counts. One, massification and almost universal higher ed is now eroding that advantage in financial terms and in other terms. But also, as you know, anytime you want a plumber or an electrician to come and visit your home, they don’t need a university degree, and they’re doing very nicely, thank you.

Will Brehm  24:32
Yes, and they’re also very smart.

Tony Welch  24:34
And you know, they’ll charge you $150 to walk in the front door. So, the income margin is much lower and, in some cases, not there at all.

Will Brehm  24:42
Well, Tony Welch, thank you so much for joining FreshEd. I think it was an absolute pleasure to talk and I don’t know where we’re going into the future, but it will be a really interesting sort of sector to follow in the weeks, months, years ahead.

Tony Welch  24:55
Thanks, Will. Yes. I think it will be an interesting time.

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