AUSTRALIA: Has the great Indian bubble burst?

At their best, universities play a vital role in society. They lie at the centre of a competitive, knowledge-based economy. They are responsible for the education of our leaders, innovators, creators and highly skilled workforce.

In a memo to Melbourne University staff after a recent visit to India by a delegation of senior Australian academics, Vice-chancellor Professor Glyn Davis said it was impossible to miss the anger in the media.

"Indeed, it was sobering to watch graphic TV footage and reporting of attacks on members of the Indian community at Epping while waiting at Delhi Airport," Davis said. "Victimisation of Indian students may be the action of a tiny minority but it is important to understand the depth of concern. The impact of extensive media coverage was much evident."

Reaction from Canberra to the prospect of a market collapse was swift: a stream of politicians, including the ministers for education, immigration and foreign affairs, headed to India to try to assure the government and the populace the situation was being addressed.

Prime Minister Kevin Rudd followed their efforts with his own visit last week. Rudd had already met his Indian counterpart Manmohan Singh at the G20 summit in the US where they discussed the attacks against students and Rudd tried to assure him Australia was taking swift action.

But attempts by the politicians have not been helped by subsequent stories of crooked vocational colleges ripping off students and offering illegal access to permanent residency visas for high fees. Or the sudden forced closure of half a dozen private colleges in Melbourne and Sydney after audits found they were operating with inadequate facilities and unqualified teachers.

Those shut-downs and last week's collapse of nine other colleges in the two cities left nearly 5,000 students part-way through courses that could not be completed.

The first signs of an unexpected downturn in what had become a booming market occurred in August when two universities in Melbourne reported signs of a fall in demand from India. The nation's biggest recruitment agency, IDP Education Australia, then announced it had experienced an 80% drop in appointments by students seeking visas at its 14 offices in India.

Yet factors other than bashed Indian students are having a more profound impact on the overall education export market. Critics of the flood of Indian and Chinese students in the past two years say the sole reason most are here is to gain permanent residency. The huge rise in the number of colleges offering vocational courses, and the increasing use by students of illegal means to gain residency visas, is a direct result of the demand.

Changes to Australia's skilled migration programme, which has cut out hairdressing and cooking as skills in demand, has already led to a decline in enrolments as students in India and China realise they will not be able to gain permanent residency.

Take that lure away and the main reason why tens of thousands are prepared to take out high-interest loans, or borrow $20,000 or more from friends and relatives, or pay large sums to obtain false documentation disappears.

Yet it is the ease with which foreign students could formerly remain permanently in Australia after completing their courses that resulted in a vast increase in the number of potential migrants from the two big source countries of India and China.

Student numbers from India beginning new courses in Australian education institutions rocketed from fewer than 5,400 in 2002 to more than 60,000 last year. That rise, coupled with an overall doubling in commencements by all nationalities to almost 325,000, led to a massive rise in the number of vocational education colleges offering quick-fix ways of gaining residency, with claims of a thriving black market in forged English language test results, bogus courses and even sham marriages.

Migration agents in the Punjab in India, where a majority of Indian students in the vocational education colleges come from, were said to be providing fake bank documents to meet Australian Immigration Department requirements, false results for students undertaking the International English Language Test System, and even arranged 'marriages' so aspiring immigrants can enter the country as a partner to a student who has passed the mandatory English test.

Although most media attention had previously focused on the vocational colleges where a huge expansion in student numbers has occurred, universities are not immune to the crackdown by state and federal governments alarmed at the battering Australia's education reputation was experiencing.

Many of the colleges are linked to universities and provide a feeder system direct into higher education courses. Under this arrangement, foreign students do not need to sit for an English test, although they must reach a relatively high level to obtain residency.

Changes to the immigration rules last December now make it almost impossible for students undertaking hospitality and hairdressing courses in colleges to remain permanently after completing their courses. Cooks and hairdressers are no longer listed as 'critical skills' by the Immigration Department although accounting is and that means many students enrolled in university business courses can still apply for residency.

Dr Bob Birrell, a noted critic of Australia's lax immigration rules, says the Immigration Department had to cut the number of visas issued to former foreign students with cooking, hairdressing and accounting credentials.

"This is because of mounting evidence that most students did not have the skills needed for employment in their field or, for cooks and hairdressers, were not interested in employment in these trades," Birrell says.

Birrell heads the centre for population and urban research at Monash University. He hopes the contraction of access to permanent entry visas will force Australia's overseas student industry to focus on training that students can utilise with profit in their home countries.

The federal government, however, faces a serious political issue when tens of thousands of foreign students realise they enrolled here in the now mistaken belief their courses would qualify them for residency.

They can stay on in Australia for 18 months after finishing with full work rights and can apply for a permanent entry visa. But if they are then refused, or the Immigration Department has still not processed their applications, Birrell says it is highly unlikely they will leave without a fight and that could lead to long and embarrassing court actions.

Almost 60% of India's 1.15 billion people are under the age of 25 yet there are only places for 7% of college-age students in post-secondary institutions. That is one reason why students from India now comprise the second largest number of foreigners in Australian colleges and universities.

Another could explain why more than 75,000 Indian students were undertaking courses here last year - the majority in private vocational education colleges where the main aim on completion appears to be permanent residency. Although still trailing those from China, who comprised nearly 100,000 of the 435,000 total enrolled in all institutions, students from India have been in the headlines since attacks on them began to be reported earlier this year.

This may have occurred as a result of the increasing number of Indians moving into low-cost housing areas in the western and northern suburbs of Melbourne and Sydney's south-western suburbs. There, as Birrell points out, they were competing for accommodation and living space with mostly poorer communities from other non-English speaking backgrounds.

"This has created a powder keg situation as the newcomers find themselves soft targets for youth gangs with well-established reputations for nastiness," he says. "The Indian students, quite rightly, are standing up for their rights. They are now arguing they have been exploited by the Australian education industry which, they say, is happy to take their money but, in the students' view, has shown little interest in their welfare while in Australia."

Birrell blames the federal government for creating this situation by allowing large numbers of students enrolled in vocational colleges to enter the country with the sole aim of becoming permanent residents.

Rather belatedly, and only after continuing evidence was presented to it, did the government accept that the skills foreign students possessed on completing their courses were not those required by its skilled migration programme. Even students graduating with degrees in accounting from university appear to have little success obtaining work in the field because of their relatively poor standard of English.

This led the government to announce last December that from 1 January, the Immigration Department would only process applications for permanent residency visas from foreigners with occupations on a new "critical skills list". Cooking and hairdressing - the two fields that had attracted large numbers of foreign students intent on becoming permanent residents - were not on the list and, in March, nearly all other remaining trade occupations were also removed from the list.

Despite the changes, the news appeared not to have reached foreign students overseas and more enrolled in hospitality courses in the first three months of the year than had in the same period in 2008. But since then, a sharp fall has occurred in visa applications and the first series of college collapses has begun.

Birrell estimates more than 40,000 former overseas students obtained temporary visas in 2008-09 and have full work rights for 18 months. But they are concentrated in low to semi-skilled jobs in Melbourne, Sydney and Brisbane and are competing with young Australians entering a market that is experiencing a serious employment downturn.

To place the education export industry on a sustainable basis, Birrell says the government must provide a consistent message that the institutions, migration agents, international recruiters and prospective students can understand. A key element in that message is that undertaking an education course in Australia does not automatically lead to permanent residence.

As far as I am concerned, I believe the credibility of our universities is being eroded by this ridiculous "Study/PR" scam... Too many overseas students come with the sole purpose of obtaining a dual citizenship and reap all the financial benefits that go with it. I am no racist but draw the line when our credible standing in the world is being questioned. I must admit I am very angry.

James McParland

I understand the view of the article and in light of that I do not blame the Australians for being angry towards Indians who come to Australia solely to obtain residency. Once they do, they seem either to drive a taxi or work in some fast food chain although they are a qualified accountant, businessman, economist, etc etc. The next worst thing which they do is reap the benefits of becoming an Australian citizen - money from Centrelink. The reason for not getting a job relvant to their qualification is solely to be blamed on their English proficiency.

But I see no harm in these people coming to Australia to seek a better future for their families, but not in the way they are currently doing. I blame the excessive influx of Indians into Australia for the government decision to change immigration laws.

Samir Ali