A highly-regulated 'free market': Commonwealth policies on private overseas students from 1974 to 2005.

This article traces the evolution of Commonwealth policies on private overseas students from the 1970s to the present, emphasising the Commonwealth government's role in the creation of an international education market. It will be argued that while neoliberal 'market forces' rhetoric has been a key feature of its international education policies since the 1980s, the Commonwealth has shown by its actions that it fears the consequences of a truly free market in international education services.

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In just eighteen years, the total number of private overseas students enrolled for onshore study in Australian educational institutions rose from 22,487 in 1986 to roughly 320,000 in 2004 (Australian Education International, 2005; Department of Education, 1987). This increase was largely the result of Commonwealth policies which created and facilitated an international education market. This article traces the development of Commonwealth policies towards private overseas students from the 1970s to the present day. It will be argued that while neoliberal notions of untrammelled free market forces, competition and small government have driven much of the Commonwealth government's international education agenda, the government has had to increasingly play an interventionist role to protect the legitimacy of its 'free market' reforms. The paper examines and discusses the major political interventions in international education--marketing, consumer protection and immigration control--stressing the importance of crises in determining the nature of government intervention in the international education market over the last two decades.

International student policy prior to the 'free market'

After World War II, international students--predominantly from Asia--began arriving in Australia in unprecedented numbers. By the mid to late 1960s, there were approximately 10,000 private overseas students enrolled in Australian educational institutions at any given time (Department of Education, 1985, 1986, 1987; Department of Education, Training and Youth Affairs, 2000; Department of Employment, Education and Training [DEET], 1992, 1995; Department of Employment, Education, Training and Youth Affairs [DEETYA], 1998, 1999; National Archives of Australia, n.d.). The Commonwealth government assumed that private international students, like overseas students sponsored by the government, were studying to improve the economic and social development of their homelands (Back, 1994; Lakshmana Rao, 1979). Like domestic private students, private international students in the 1950s and 1960s paid tuition fees that covered ten to fifteen per cent of the total cost of a higher education degree, the rest of the cost being paid by the Commonwealth and the states (Jolley, 1997). This subsidisation of private overseas students was mainly seen by the Commonwealth as part of its wider effort to secure good diplomatic relationships with countries in the Asia-Pacific region (Goldring, 1984).

Between 1972 and 1975 the Whitlam Labor government introduced changes to Commonwealth education policy which affected private overseas students in Australia.

First, in 1974 Whitlam abolished tuition fees for both local and international students studying at tertiary level (Williams, 1989b). This meant that private overseas students were having their education fully subsidised by the Commonwealth.

Next, the Commonwealth took over all financial responsibility for universities and Colleges of Advanced Education. Prior to 1974, the states and territories had played a major role in funding the higher education sector with increasing Commonwealth assistance; after 1974, as an unintended consequence of the Commonwealth becoming the sole funding body, the tertiary sector became a key target for federal cutbacks throughout the rest of the 1970s (Smart, 1986). Nevertheless, the expense to the Commonwealth of subsidising international students was an issue that was overshadowed for a time by concerns about overseas students migrating to Australia.

During Malcolm Fraser's time as Liberal Prime Minister, from 1975 to 1983, the chief overseas student policy issue was the problem of backdoor migration. Approximately seventy-five per cent of private overseas students were granted permanent residence in Australia during the 1970s, despite the fact that the official program was designed to cater only for bona fide students, not potential migrants (Goldring, 1984).

In 1979, the Commonwealth solved the problem of backdoor migration by compelling private overseas students to return home for two years before being eligible to apply for immigration to Australia. This practice resulted in a huge drop in private students being granted permanent residence, from seventy-five per cent in the 1970s to roughly ten per cent in 1983. The government also announced that an Overseas Student Charge (OSC) representing approximately a quarter of the average costs of an Australian university degree would be imposed on all private overseas students from 1980 onwards. The OSC charge was initially $1,500 to $2,500 depending on the type of course. Students were compelled to pay the OSC before they were issued visas. From August 1981, private students from Papua New Guinea and the South Pacific had their OSCs paid for out of the aid budget, highlighting the persistent Commonwealth attachment to notions of diplomatic goodwill regarding the private overseas student program (Andressen, 1997; Goldring, 1984;Williams, 1989a, 1989b).

The introduction of the Overseas Student Charge in 1980 was designed to act as a migration deterrent, with revenue-raising concerns coming a poor second. The projected savings of $6 million per annum on international student costs were hardly a bonanza at a time when the Fraser government was spending close to $500 million on the overseas aid budget (de Silva, 2000; Goldring, 1984). As the 1980s progressed, however, Australia's economic climate became harsher: the desirability of subsidising private overseas student education began to be seriously questioned by an economically-minded government.

International students and the impact of neoliberalism under Hawke

In March 1983, the Hawke Labor government came into office, and it held power until 1991. Like its approach to many other public policy issues, the Australian Labor Party's administration's attitudes towards overseas students proved to be increasingly influenced by neoliberal economic and social ideals imported by treasury officials from the United Kingdom's Thatcher government and the United States' Reagan government of the early 1980s. Neoliberals drew their inspiration from the post-war theories of Austrian theorist Friedrich A Hayek and US economist Milton Friedman, who argued that individual competition was the way in which humanity progressed as a species. Consequently, all impediments to free market competition, such as government regulation and public enterprise, should be removed, and the individual would decide which 'product', including education, for example, was best for him or her to consume. The proper role of a neoliberal government was to facilitate the creation of a free world market and to allow collective human progress and values to work themselves out by individual choice rather than through government intervention (Connell, 2004; Marginson, 2004; Stilwell, 2000).

The Hawke government's adoption of neoliberal ideals was a pragmatic response to declining economic conditions in Australia. During the mid 1980s, manufacturing and primary sector exports declined sharply, affecting the balance of trade. Imports outweighed exports during this period, which had serious implications for the future Australian standard of living (Smart, 1986). According to Australian Research on International Education Services, if a nation relies too heavily on imports, 'this translates to higher prices for groceries, petrol and household goods, as well as limited access to new technology and information through lack of money' (Australian Research on International Education Services, 2001, p. 18). The neoliberal philosophy, with its emphasis on free market forces rather than government spending, was thus very appealing to a cash-strapped government.

International education was seen by the Hawke government as a potential export market which would help improve the balance of payment figures. It also conformed to the neoliberal ideal of 'small government': treating education as a commodity was a potential means of funding the tertiary sector without requiring increased government spending. Ironically, however, this example of 'small government' ideology in action was partly inspired by the consequences of Labor's 'big government' spending on schools and vocational training.

Having committed itself in 1984 to a fifty per cent rise in Commonwealth funding to state schools, the Hawke administration was reluctant to increase funding to higher education. Labor's support for the school system helped increase the levels of students completing Year Twelve from thirty-five per cent in 1983 to more than fifty per cent in 1986, an outcome the government hoped would reduce the then high levels of youth unemployment.

The greater numbers of students fully completing secondary school naturally increased the demand for tertiary training. Government funding for higher education, however, had dropped in real terms by eight per cent in the ten years since 1976-77. Labor was unwilling to reverse the trend. This was partly a result of hostility towards the tertiary sector: the Minister for Education Senator Susan Ryan was known to refer to universities as 'bastions of privilege'. In any case, the government saw the school system and vocational training as the predominant means of securing higher youth employment (Smart, Scott, Murphy, & Dudley, 1986).

Labor's increasingly neoliberal attitude towards private overseas student policy was influenced by recommendations offered by the Committee to Review the Australian Overseas Aid Program (1984). Headed by Gordon Jackson, the committee comprised three businessmen and three economists with a strong attraction to the 'belief that economic growth is most effectively ... achieved through the unfettered market' (Stent, 1985, p. 33). The Jackson Committee emphasised the 'national interest' aspect of bilateral education aid, recommending that Australia provide technical assistance to the Asia-Pacific region while simultaneously encouraging Australian educators to market their services within developing countries (Committee to Review the Australian Overseas Aid Program, 1984).

Fortified by the Jackson Committee recommendations, the Commonwealth instituted a new Overseas Student Policy in 1985. The key feature of the new policy was the introduction of a category of full-fee-paying international students at publicly-funded higher education institutions from 1 January, 1986. The subsidised category of overseas student, who paid a contribution to his or her education via the Overseas Student Charge, was initially to continue on a strict quota of 3,500 new students per annum, but was to be phased out. The OSC was substantially increased, and from 1987, subsidised private overseas students at high schools and Technical and Further Education (TAFE) colleges also had to pay the charge (Department of Education, 1987; Hudson, 1990).

The new policy encouraged the creation of a competitive education industry based on the recruitment of overseas students. The rules governing the entry of private overseas students into Australia were accordingly relaxed in order to facilitate market growth. Immigration requirements were streamlined. Unlike the subsidised private overseas student category, for instance, full-fee-paying students were not subject to a quota. Further, before 1986, private overseas students had to prove that the courses they proposed to undertake in Australia could not be studied in their own country; after 1986, private students could enrol in any course and gain entry into Australia so long as they could prove that they had been accepted in a government-accredited institution and had paid the required fees. Initially one year's fees were to be paid in advance, but the government backed down after industry pressure and allowed institutions to stipulate the prepaid amount they deemed appropriate (Back, Davis, & Olsen, 1996; Industry Assistance Commission, 1989).

All administrative responsibility for private overseas students was transferred in the mid 1980s from the Department of Immigration and Ethnic Affairs to the Department of Education: the government saw no need under the new framework to compel immigration authorities to routinely scrutinise the credentials of private overseas students. In 1985, the Department of Education established an Overseas Student Office to administer the private overseas student program. A key feature of the Overseas Student Office was the marketing of Australian education overseas through information and publicity. The Overseas Student Office was also charged with the responsibility of assisting with policy formulation, necessitating the creation of a rapidly computerised information and statistical database on international students (Department of Education, 1985, 1987; Industry Commission, 1991).

Under the new policy, tertiary institutions wanting to market courses to full-fee-paying students needed first to seek approval from the Commonwealth Tertiary Education Commission. The institution then had to be registered with the Overseas Student Office. In sharp contrast with the market-forces rhetoric it now expressed about international education, the government enforced strict guidelines for universities and colleges setting international student fees. Full cost recovery was the absolute minimum standard (Bureau of Industry Economics, 1989; Department of Education, 1986).

The tertiary sector had strong incentives to comply with the Commonwealth push for education institutions to create their own individual markets for full-fee-paying private overseas students. Significantly, institutions were allowed under the new policy to retain most--and, from 1988, the whole--of the fees generated by private student income. At a time when the Commonwealth was not prepared to spend more money on higher education despite increased demand, international students were a relatively untapped source of revenue (Department of Education, 1986; Nicholls, 1987, p. 45;Williams, 1989b).

The growth of full-fee-paying international students was dramatic. There were 2,330 international students paying full tuition costs in 1986; by 1990 the number had increased to 44,000. The biggest growth area proved to be the English Language Intensive Courses for Overseas Students (ELICOS) centres. The total number of students in the ELICOS subsector, including partially subsidised, sponsored, and full-fee-paying students, rose from 2,500 in 1986 to 25,000 in 1990 (DEET, 1990; Denham, 1989; Nesdale, Simkin, Sang, Burke, & Fraser, 1995).

Deregulation followed by re-regulation: International education's teething problems

As we have seen, the Commonwealth took a highly interventionist role in encouraging tertiary institutions to be more market-driven in their attitudes towards international students. Perhaps most crucially, in 1989 the government decided to reduce significantly its financial contributions to higher education to encourage the sector to recruit further overseas students for revenue purposes (Burke, 1989; Gan, 1994). Despite having virtually created the international student market in Australia, the Commonwealth apparently hoped to leave most of the details of international student policy and administration to the educational institutions themselves. A Department of Employment, Education and Training spokesman explained the government's view:

   It is they [international education providers] who will be
   increasingly responsible for the promotion of Australian education
   abroad, they who will most directly undertake the recruitment of
   students ... and they who will play a critical part in the
   provision of welfare and support services needed by overseas
   students (Buckingham, 1989, p. 62).

The advice the Commonwealth received from the Industries Assistance Commission in 1989 was that self-regulation of the education export industry would work efficiently because private firms would recognise the connection between institutional reputation and long-term financial viability (Industries Assistance Commission, 1989). As events turned out, however, the early years of the international student market were marked by the rapid re-assertion of Commonwealth legislative authority over areas which it had trusted would be adequately dealt with by market forces and industry self-regulation. In leaving large chunks of international student policy to market forces, the government had underestimated the extent to which a widely expanded overseas student population could create diplomatic headaches.

The biggest foreign affairs issue of the early years of the international student market was the problem of overseas students overstaying their visas after the completion of their courses. A large proportion of students were using short-term English language courses as a stepping stone to obtaining permanent residence. In June 1989, forty-five per cent of ELICOS students were estimated to be in Australia after their visas had run out (Mazzarol & Soutar, 1999; Nesdale, Simkin, Sang, Burke, & Fraser, 1995).

The highest category of students overstaying the visas were ELICOS students from the People's Republic of China (PRC). The number of PRC full-fee-paying students rose from ninety-four in 1986 to a peak of 15,568 in 1990 (Mazzarol & Soutar, 1999). Chinese students were attracted to Australia in the late 1980s because the government allowed private overseas students to engage in part-time work on higher wages than were available in China. In this way, PRC students could repay their heavy student loans. The political instability of China at this time was an added incentive for many PRC students to overstay their visas. By 1989, forty per cent of former PRC students were remaining illegally in Australia ('Australia: Brave New World of Educational Opportunities', 1988, pp. 24-25; Gan, 1994; Nesdale, Simkin, Sang, Burke, & Fraser, 1995).

The Commonwealth government was aware of the problem of non-genuine Chinese students as early as 1987, but was concerned that federal action might lead to charges of racism and the loss of market income. In June 1987, the Commonwealth began cautiously to address the illegal immigration issue by compelling Chinese ELICOS students to prepay all course fees before being issued with a visa. They saw this as a means of preventing non-serious student applicants. The government subsequently announced in July 1988 that full-fee-paying students of all nationalities had to pay fees for short courses upfront, or to pay one full semester's tuition for a more long-term course (Industry Commission, 1991; McKnight, 1987; Preston, 1989).

The greater prepayment of fees did not act as a deterrent to overstayers. The number of students overstaying their visas was swelled in response to the Tienanmen Square Massacre of 4 June, 1989. Subsequently, on humanitarian grounds, the Commonwealth gave four years' temporary residence to nearly 20,000 PRC students in Australia. These students were subsequently allowed to apply for permanent resident status (Gan, 1994; Nesdale, Simkin, Sang, Burke, & Fraser, 1995).

In the wake of the Tienanmen massacre, the Commonwealth government was keen to prevent further unplanned PRC student immigration. In August 1989, the government stipulated that student applicants from countries assessed as having a high overstay risk were to be subject to stricter processing by the Overseas Student Office. Students from China and other high-risk countries had to have qualifications equal to Australian senior secondary school level, could not be aged over thirty-five, and had to apply for a course which was connected to future employment opportunities (Industry Commission, 1991).

This restrictive legislation disadvantaged 25,000 Chinese students who had paid $6,000 in tuition fees and living costs but could not secure a visa because of the new regulations. Over the next few months, the Overseas Student Office processed these applicants, accepting sixty-five per cent of the applications (the maximum allowed by the government). Despite being asked not to recruit further Chinese students until the 25,000 students caught out by the legislative changes were assessed, English colleges accepted prepayments from a further 11,500 PRC students in the latter half of 1989, of which only forty-five per cent were allowed to enter Australia after government assessment. By mid 1990, ninety-four per cent of PRC student applications did not proceed to the visa stage (Industry Commission, 1991; Maslen, 1990).

The transition to a more restrictive legislative framework cost the government millions of dollars. While the ELICOS industry committed itself to refunding PRC students unable to undertake prepaid courses because of the changed legislation, several ELICOS colleges were unable to comply. Having relied so heavily on Chinese students for their income, the ELICOS industry experienced severe cashflow problems after the 1989 crackdown on overstayers. Many colleges shut down: by mid 1990, 5,000 students were still owed money. Disgruntled students protested violently at Australian embassies in Asia, and perhaps desiring to end the poor international publicity, Australia supplied course refunds totalling $70 million (Ellingsen, 1989; Gan, 1994; Industry Commission, 1991).

The PRC student saga heralded the end of the Commonwealth government's innocent, neoliberal faith in a relatively unregulated international student market. In its over-eagerness to leave international education to the market, the Commonwealth had Failed to monitor adequately the risks which came with aggressive student recruitment in developing countries like China where scholars had strong incentives to migrate overseas. This led directly to Australian diplomatic embarrassment and bad publicity (Millet, 1991; Preston, 1991). Subsequent Commonwealth initiatives throughout the 1990s acknowledged, sometimes with reluctance, that the state had a legitimate role in ensuring that the international reputation of Australian education remained positive.

Higher education policy and the international education market since the 1990s

Both the Labor government from 1983 to 1996 and the Liberal government from 1996 onwards remained very attached to the neoliberal notion that education was a private benefit which secured increased income and social mobility for individuals: it was not considered an activity that benefited the nation as a whole (Brennan, 2005). Consequently, the Commonwealth had few qualms about slashing higher education spending. By 1997, only fifty-four per cent of higher education funding was contributed by the federal government, compared to eighty-five per cent in 1987 (Marginson & Considine, 2000). Tertiary institutions were thus forced to become extremely entrepreneurial in order to maintain their financial and educational viability. Universities were receiving $1.8 billion from international student fees by 2000, a remarkable increase from $200 million in 1992 (Australian Bureau of Statistics, 2003; Maslen & Slattery, 1994).

The last decade of the twentieth century saw a massive growth in overseas students studying in Australia: from 61,967 in 1990 to 153,372 in 2000. Almost all of these students were full-fee-paying. By 2000, the $3.7 billion return from education exports was roughly level with wheat exports and had overtaken wool in overseas revenue generation.The higher education sector was now especially reliant on the income provided by private international students. Towards the end of the decade, Australia's overseas student enrolments stood at 12.6 per cent--a far higher proportion than, in comparison, the US' 3.2 per cent (Australian Education International--International Education Network, 2005; Department of Education, Training and Youth Affairs, 2000; Welch, 2002).

Despite its decreasing contribution to higher education funding, the Commonwealth has carved out an increasingly interventionist role for itself in the economic and consumerist aspects of the international education programmes of universities and other educational institutions which attract overseas students. The Commonwealth felt compelled to interfere with market forces when crises and other events threatened to destabilise international education in Australia. Marketing, consumer protection and immigration have all been important international education concerns affected by Commonwealth policy over the last two decades.

The Commonwealth as a market creator and facilitator

The growth in international student numbers and income during the 1990s was greatly enhanced by the Commonwealth's increasing assistance with identifying and creating markets. In 1992, for example, the Commonwealth created a new captive international student market: from March 1992, school-going dependents of overseas students became classified as full-fee-paying international students. Previously all school-aged dependents could be educated in Australia in state schools without charge. In consultation with the states and territories, the Commonwealth imposed a nationally agreed international student fee rate for primary and secondary state schools (starting at $3,500 at primary level). Being able to cover financially the school fees of dependents consequently became a condition of entry for adult international students. Children of diplomats and refugees on temporary residence visas could continue to receive free state schooling, but were now required to pay full fees if they wished to access TAFE or higher education. The government further expanded the international student market in June 1992 by allowing holders of visitor visas to enrol in courses while in Australia, whereas previously, such international visitors had to arrange study in Australia before their visit (DEET, 1992; DEET International Students Branch, 1992).

Despite creating and expanding the international student market in Australia during the 1980s and early 1990s, the Commonwealth government was at first reluctant to commit itself financially to the international promotion of Australian educational services. In 1989, the International Development Program of Australian Universities and Colleges (IDP) won a contract from the Commonwealth government to establish and run Australian Education Centres (AEC) in the Asia-Pacific region. The AECs provided counselling and information for prospective students on Australian educational opportunities, and were empowered to provide visas and collect charges on the Commonwealth's behalf. The government insisted, how-ever, that the AECs be run without federal funding; operations were to be financed by subscriptions paid by Australian international educational providers (Lazenby & Blight, 1999).

By the mid 1990s, government awareness that the international education market was increasingly multifaceted and competitive forced a rethink of its 'armslength' approach to promotion and recruitment. Malaysia, Hong Kong and Singapore were greatly expanding their educational facilities and were encouraging domestic students to study locally rather than overseas. Many Australian educational institutions consequently established overseas branches to capitalise on the push towards home-based study: by the year 2000, nineteen per cent of overseas students enrolled in Australian institutions were based in offshore locations (Australian Bureau of Statistics, 2003; Mazzarol & Soutar, 1999).

Noting the increasing complexity of the 1990s international education scene, the government was increasingly convinced that it had a role to play in protecting and fostering the international education market through coordinating promotional and research activities, often via partnerships between government and industry (DEET, 1995). The government's major initiative was to establish the Australian International Education Foundation (AIEF) to take charge of the AECs and to initiate other promotional activities related to international education in Australia. The AIEF was operated by the international division at the Department of Employment, Education and Training in conjunction with officials at diplomatic missions. The AIEF became known from 1998 as Australian Education International (AEI). Unlike the AEC network in the early 1990s, AIE receives generous government subsidies as well as funding from subscribers (any Australian education institution with an international program can apply for membership). AEI finances research on international education and since 1997 has run a successful database and website. Membership of AEI entitles subscribers to market research, distribution of the member's publicity materials to relevant markets and access to training and professional development programmes (DEET, 1995; DEETYA, 1998; Australian Research on International Education Services [ARIES], 2001; van Leest, 1998).

Commonwealth initiatives to protect the market

Having committed itself fully to the maintenance of international education market, the Commonwealth government during the 1990s and 2000s felt obliged to safeguard the prosperity of that market. It thus introduced legislation and regulations to enforce minimum education standards and protect private overseas students from being financially disadvantaged following the possible closure of an educational institution. In this way the Commonwealth hoped to ensure that the international image of Australian education remained positive.

From 1 January, 1990, state and territory authorities were made responsible for providing accreditation for institutions and courses catering for overseas students. Prior to 1990, accreditation was the responsibility of the federal Department of Employment, Education and Training (Schacht, 1994). This shifting of responsibility from the federal to the state level was a crucial aspect of the Commonwealth government's Education Service for Overseas Students (Registration of Providers and Financial Regulation) Act of 1991 (ESOS), which indicated that the states and territories would be primarily responsible for ensuring educational standards. Under the ESOS Act, all international education providers had to be registered with the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS); registration with CRICOS could only be made with the approval of the state and territory governments. The states and territories assessed applications for CRICOS registration using national minimum standards regarding student welfare, financial viability and other relevant criteria stipulated by the Commonwealth from time to time. From 1991 onwards, the states and territories have monitored CRICOS registered courses and have made recommendations to the Commonwealth to suspend or cancel CRICOS registration where necessary (DEET, 1992; DEETYA, 1999).

The ESOS Act also indicated that prepaid student fees were protected by Australian law and that educational institutions were legally obligated to guarantee that student payments could be refunded if necessary. Subsequently, the Overseas Student Tuition Assurance Levy (OSTAL) Bill 1993 required education providers to 'maintain trust accounts for prepaid funds, comply with limits on withdrawals ... and join an industry-run Tuition [Assurance] Scheme to guarantee that international students receive the courses paid for if a provider defaults' (ARIES, 2001, p. 23). Institutions receiving Commonwealth grants were exempt from these financial regulations because the government was satisfied that this category of educational providers had already made sufficient allowance for the protection of student fees (DEET, 1992).

The ESOS Act 1991 was replaced by the ESOS Act 2000, which came into force on 4 June, 2001. The 2000 legislation greatly enhanced protection of student prepaid fees. Students were further protected under the law by requiring educational providers not only to join an industry-run Tuition Assurance Scheme, but also to contribute financially to a Commonwealth-initiated ESOS Assurance Fund as an additional means of ensuring that fees were able to be promptly refunded to students (Department of Education, Science and Training [DEST], n.d.).

The Commonwealth's ESOS Act 2000 also attempted to ensure that course providers were genuine and were not just a front for backdoor migration. This was done by enforcing the digitisation of data related to overseas students for use by immigration and other federal authorities. CRICOS-registered education providers must electronically confirm tentative overseas student enrolments via the Provider Registration and International Management System (PRISMS). This program gives immigration authorities swift access to student details needed for visa assessment. Providers are also required to use PRISMS to provide the Commonwealth government with reports on students who fail to comply with visa conditions. Student attendance levels and addresses are now compulsorily detailed in electronic form by education providers. These electronic records are accessible by education and immigration authorities, thereby reducing potential student abuses such as illegal immigration (Baird, 2000; DEST, n.d.).

Electronic tracking was intended to counter the problem of bogus students, exacerbated by colleges willing to turn a blind eye. Incidences of bogus students were still occurring in 2000 and were being publicised in the media (Contractor, 2000). In one case, action could not be taken against 500 non-attending students because the college concerned could not supply specific student addresses (Clennell, 2000). The ESOS Act 2000 made these abuses less likely.

Targeted immigration

Prior to the Howard Liberal government, the Commonwealth's immigration policies towards overseas students concentrated on protecting Australia from unwanted immigration; however, as a result of the federal government's underfunding of public places for Australian undergraduates, and the limited domestic interest in taking up full-fee places, a skill shortage in some professions occurred.

The government addressed this lack by encouraging qualified overseas students to fill the gaps. In 1998, the Howard government began softening immigration requirements for overseas students who were studying in areas where there was a skills shortage, such as engineering, computing and accounting. Students in several professional areas of high Australian demand no longer had to apply for permanent residency offshore, and were not required to have occupational experience as an application prerequisite. International student enrolments increased by fifteen per cent per year between 1997 and 2003, a dramatic increase which must have been at least partially influenced by a more favourable immigration policy towards permanent residency. Between mid 2001 and January 2004, 23,000 overseas students were successful in gaining permanent residency after their study (Birrell, Edwards, Dobson, & Smith, 2005; O'Keefe, 2004).

By targeting skilled private overseas student immigrants, the Commonwealth government was able to escape some of the more negative consequences of the neoliberal view of education as a private benefit rather than a collective good. As Australian employers had access to the skills of former private overseas students for specific short-term requirements, the Commonwealth's low level of tertiary funding and its long-term domestic implications could remain relatively unquestioned. As this paper has demonstrated, both Labor and Liberal administrations have reacted to 'market failure' in international education by fixing short-term crises via strong federal intervention while paradoxically maintaining total faith in the 'free market' structure the Commonwealth itself has created.

Conclusion

Private overseas student policy since the mid 1970s has gone through three phases. The first phase, from the 1970s until 1983, largely stressed the importance of preventing unwanted student migration but also emphasised the diplomatic benefits of subsidising private overseas students. The second phase, from 1983 to 1990, was driven by the desire to create a relatively unregulated international education market to improve the position of the Australian economy. In the wake of the excesses of the relatively uncontrolled second phase, the third phase, from 1990 onwards, has seen the Commonwealth increasingly intervene in the international education market to protect and enhance Australia's reputation as an education provider and to control immigration. While the government has espoused neoliberal rhetoric of market forces, small government and individual choice, it has shown by its actions that it fears the consequences of a truly free market in international education services.

Keywords

educational marketing
higher education
educational policy
international students
globalisation
international education

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Lyndon Megarrity

Queensland's 150th Celebrations unit, Queensland Government

Dr Lyndon Megarrity studied aspects of Queensland political history for his PhD from the University of New England, completed in 2002. Between 2003 and 2005 he worked as a research associate for an Australian Research Council project on the history of international education in Australia from 1945 to 2000. He is currently a research assistant for a commemorative history of Queensland from 1859 to 2009. His historical publications include works on mining, Queensland political history and the Commonwealth's role in international education from 1945 onwards. Email [e-mail]