Despite changes to Australia's immigration rules that have slashed the number of foreign students obtaining permanent residency, enrolments continue to grow. The result is a huge number of former students hoping for a permanent visa just at a time when their chances of getting one have collapsed. A new report says the education export industry has yet to realise how serious the situation is.

Writing in the Monash University journal, People and Place, Dr Bob Birrell says more than 40,000 former overseas students applied for temporary or permanent visas over the past 12 months. But the great majority are in a permanent residency limbo, either with a temporary visa or a bridging visa pending processing.

The fact most will not get a permanent visa, although they arrived expecting they would because of what they had been told by agents, means it is unlikely they will leave Australia without a fight.

Birrell, co-director of the Centre for Urban and Population Research at Monash, says that in the meantime 40,000 students who obtained temporary visas have full work rights. They are, however, concentrated in low to semi-skilled labour markets in the eastern capital cities at a time when new entrants are also flooding on to a shrinking market.

The government is encouraging local entrants to the labour market to take on trainee positions, including in hospitality, but they are facing competition from thousands of foreign students trying to gain the 900 hours of work experience they must have to gain accreditation for immigration purposes.

Birrell says the government should act and immediately stop accepting applications for permanent visas from those whose occupations are not classified as on the "critical skills list".

It should also not permit employers to sponsor people with trade occupations who lack the skills needed. The government should also increase the minimum English language requirements for students seeking a visa to undertake a vocational course from IELTS 5 to 6.

"The international student industry must be put on a sustainable basis," Birrell says. "For this to occur, the industry must accept that things have changed... Those providers who have built their business around marketing a credential that will lead to permanent residency must refocus. They need to sell skills credentials that overseas students believe they can take back to their country of origin with profit.

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