Australia’s international education system has become a “Ponzi scheme” in which overseas agents are paid bonuses to lure foreign students with the promise of full-time work, a parliamentary inquiry has heard.
The chief executive of the International Education Association of Australia, Phil Honeywood, on Tuesday said universities were offering bonuses to education agents on top of commissions to funnel students to their courses.
He told the inquiry that sometimes money was being “handed in an envelope under the table” to unregulated agents who directed young people into courses that didn’t suit their talents or skills.
“It’s been going on for many years,” Honeywood told the joint standing committee’s inquiry into Australia’s international education sector.
“These entrepreneurs will do anything they can to make a profit. The government has to step up. It’s high time there be a regulatory framework put in place to call out bad behaviour.”
Honeywood said the practice had been exacerbated by the previous federal government removing the cap on the number of hours international students could work. This had attracted “ballooning numbers” of “non-genuine” applications from south Asia, particularly India and Nepal, the inquiry heard.
The cap had been at 40 hours of work a fortnight, the same as in countries such as New Zealand, the US and the UK. But in early 2022 the Morrison government announced it would allow full-fee students to work full-time while studying full-time to help alleviate worker shortages after Covid-19 lockdowns.
Honeywood said the rules on work rights were providing the “wrong motivation” for students to come to Australia.
“In a global community coming out of Covid, this was … heaven for countries doing it tough in our region,” Honeywood said.
“It shocked me. We received no indication this was going to happen.
“It’s become a Ponzi scheme which is attracting the wrong motivation for young people.”
Honeywood said there were also concerns students were being exploited in the workforce. Students locked in “monocultural bubbles” were frequently deprived of award wages by employers who exploit a lack of knowledge of local work requirements, he said.
The home affairs minister, Clare O’Neil, in February announced that the these working rights would be wound back so that from July international students would be able to work 48 hours a fortnight.
But Honeywood said it would take a long time for the consequences to be reversed and there was still a message that Australia was “open slather” for visa loopholes.
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“Onshore agents going to providers and saying ‘if you want a student to transfer to your provider you’ll pay me up to 50% commission’,” he said.
“It’s a shocking situation,” he told the inquiry. “The quality of the education outcome is going to be badly compromised.”
Honeywood said he was aware of offshore agents who had partners running operations in Australia with a business model where education was a “Trojan horse” to acquire visas.
“There’s no doubt we’ve got young people here who … haven’t had the right motivation,” he said.
“It’s led to Australia having a diminished reputation as a high quality study destination country, instead reinforcing students are needed to fill labour markets.”
The acting chair of the Senate committee, Julian Hill, said people would be “rightly shocked” if they understood the extent of the profiteering occurring.
“Most agents do a terrific job … but the opportunity for profiteering here seems unconscionable,” he said.
Universities Australia’s acting chief executive, Peter Chesworth, said the sector supported the cap on working hours to ensure students received the “full benefits” of their education.
Chesworth said universities were in regular contact with the government on visas and responded to intelligence provided by the Department of Home Affairs.
“The sector is committed to ensuring visa processes are as thorough and robust as possible to maintain the integrity of our systems,” he said.
In February, the home affairs rejected 94% applications from India to study in Australia’s vocational sector, compared with less than 1% of student applications from countries including the US, the UK and France.
– with Australian Associated Press