THE IMPACT OF THE 'HANSON' EFFECT AND THE ASIAN CURRENCY CRISIS ON EDUCATION EXPORTS 

Ian R. Dobson, Lesleyanne Hawthorne and Bob Birrell 

Statements by Pauline Hanson about Asian immigration have not affected enrolments of Asian students in Australian educational institutions. Indeed, enrolments grew from 1996 to 1997. In contrast, the Asian currency crisis has reduced enrolments, especially in short-term language courses. Enrolments in higher education are much less affected. 

The export of education to international students provides an important boost to Australia's balance of trade. Students, principally from Asia and the Pacific, are willing to incur the high costs of fees and substantial living expenses while studying in this country. Further, university administrators argue that the export of educational services provides the vanguard for our trade and cultural links with Asia. 

Over the past eighteen months discussion of Australia's Asian student markets have been variously dominated by the alleged impact of the so-called 'Hanson' effect, and the implications of the current Asian currency crisis. Each of these issues has caused anticipatory panic in the Australian media, government and tertiary institutions -- prompting a flurry of initiatives, including the dispatch of a tertiary education delegation led by Victoria's Minister of Education to reassure key Asian markets.¹ In the material which follows, we put these concerns to the test by examining relevant Department of Employment, Education, Training & Youth Affairs (DEETYA) higher education statistics and student visa data from the Department of Immigration & Multicultural Affairs (DIMA). 

THE 'HANSON' EFFECT

Ever since the independent Federal MP Pauline Hanson hit the media spotlight there has been concern that her criticism of the Asian presence in Australia might harm the international student market. Her prominence, it will be recalled, stemmed from her critical comments, made during her September 1996 maiden speech to the Federal Parliament. In the debate which ensued, it was repeatedly asserted that prospective Asian students would be discouraged from applying to study in Australia.

These concerns gain credibility from reports that Ms Hanson's views are being given prominence in the Asian press. Indeed, one study of Asian press comment has revealed that between September 1996 and August 1997 there were some 2,000 separate articles on racism in Australia published in key Asian newspapers.² In addition, the frantic response of many Australian intellectuals (and worried university officials) to Ms Hanson, including claims that she was awakening barely suppressed 'White Australia' sentiments have helped create a public affairs climate conducive to beliefs that Asian students really are at risk in Australia. Such responses, when publicised in Asia, could help to dissuade Asian students from coming here -- thus generating a self- fulfilling prophecy. Some commentators aired their concerns directly in Asia. For example, sociologist Professor Andrew Jakubowicz, told a luncheon of the Australia- Indonesia Institute in Jakarta on 12 June 1997 that,

Racial differences are deeply embedded in the cultural landscape of contemporary Australia. It is part of the childhood of every adult raised there.... The current atmosphere in Australia [which by implication prospective Asian students faced] is terrifying.³

Closer to home, RMIT's Professor Des Cahill was reported in The Age (4 December 1997) as saying that the Hanson phenomenon had brought Australia to a dangerous crossroads and had had a direct impact on the international student industry. He claimed that 'Our friendly, multicultural image is in great danger of being repainted as the racist, White Australia, colonialist country of yesteryear'.⁴

Those worried that Australia was being seen in an unflattering light would have had their fears about a flow-on into depressed application rates confirmed by a report published in September 1997 by the Australian universities' international student marketing arm, IDP Australia. This concluded, on the basis of an opinion survey of prospective Asian students, that in the case of Malaysian students (though not those surveyed in Hong Kong or Thailand):

in relation to racism, there is a clear perception in the Malaysian market that Australia has significantly higher levels of racial discrimination than all other destination countries.⁵

The Sydney Morning Herald noted that the results of the survey had alarmed university administrators. The essence of the study according to the Herald, was that:

Many Asian students are being dissuaded from coming to study at Australian universities and colleges because they believe racial discrimination is a major problem.⁶

Given this environment, it is hardly surprising that the concerns outlined translated into more or less explicit statements that student enrolments had in fact declined since Mrs Hanson's maiden speech. For example, in an article published in The Australian of 5 August 1997 it was claimed that:

Dramatic falls in Asian student enrolments in the past six months are the first conclusive evidence that the Pauline Hanson inspired race debate is hitting business to Australia from the region.⁷

Though the figures cited implied that the problem was more a decline in the rate of growth in enrolments than an absolute decline, the article nevertheless asserted that visas from Hong Kong fell by two per cent in 1996-97 relative to 1995-96 and from Singapore by 11 per cent. The Deputy Vice-Chancellor of the University of New South Wales, Professor Chris Fell, was quoted as saying that the flattening in the growth rate of overseas student numbers was 'a direct consequence of the Hanson factor'.

Even if enrolments from Asia had declined for the 1997 academic year, factors other than any 'Hanson' effect would also need to be considered. One such factor is that there appears to have been a slowing in the overall rate of growth in the international student market. Two- thirds of the international student market goes to the US and UK, including students with the greatest financial capacity. The US has reportedly been slowing for a period of seven years, however -- without any Hanson effect (and well in advance of any impact from the Asian currency crisis). In 1997 international student numbers there rose by just 0.9 per cent, 'continuing a seven year slow growth trend'.⁸ In analysing reasons for this, factors intrinsic to source countries are a critical issue -- regardless of recent developments. Reductions in student numbers from Hong Kong were expected following the political handover to China. The Malaysian government had embarked upon a process of intercepting student flows abroad while positioning itself as a regional higher education provider well prior to the economic crisis -- an event which has conveniently sanctioned the imposition of punitive taxes on families who send their children to study abroad, and the cancellation of 20,000 students on government-sponsored scholarships.⁹

It is clearly not a simple matter to establish the causal factors behind international student movements. The inquiry is further complicated when there is uncertainty about what is to be explained. In what follows, we examine whether there was any downturn in Australian enrolments before the Asian financial crisis of late 1997, that is, whether there is a 'Hanson' effect to be explained. We also explore recent visa-issued data, in order to assess the impact to date of the Asian currency situation.

OVERSEAS STUDENTS AND THE 'HANSON' EFFECT

There are two discrete data sources relevant to the student enrolment situation. The level of student demand is best indicated by the numbers of international students actually commencing Australian courses. However, consistent and uniform statistics are available only for the higher education sector, these being reported annually (as at March 31) by universities to DEETYA. Consistent enrolment data for schools, ELICOS (English-language short courses), and TAFE (Technical and Further Education) and so on are less readily available. The only alternative source is the visa-issued statistics collected by DIMA and reported on a monthly basis. These give an up-to-date picture of overseas student demand, since in order to study in Australia, students must first acquire a student visa.

From the point of view of individual universities the first test of a 'Hanson' effect was their own enrolments. A comparison of March 31 1996 and March 31 1997 enrolment statistics is shown in Table 1.

The overall growth rate between 1996 and 1997, was just over 18 per cent, which compared favourably with growth rates of 15 per cent, 13 per cent and nine per cent in the three earlier years. In addition the growth rate for commencing students was 20 per cent in 1997 suggesting that the higher-education sector had not only weathered the alleged Hanson storm, but had flourished. Provided students who have commenced courses do not return home mid-course, continued growth in overall overseas student numbers would seem assured. It must also be noted that some of the absolute growth relates to enrolments off-shore. However, a comparison of 1996 and 1997 off-shore enrolments ( that is students who were attending Australian university campuses in their home countries) showed that there had been little proportionate change. In 1996, these off-shore enrolments in Malaysia, Singapore and Hong Kong had been 12 per cent, 16 per cent and 21 per cent of the respective total enrolments from these countries, compared with 12 per cent, 15 per cent and 17 per cent in 1997. The 'all countries' average for off-shore enrolments in 1997 was nine per cent of all enrolments.

The second test for a 'Hanson' effect is visa-issued numbers, which are shown in Table 2 for 1995-96 and 1996-97. As was the case with DEETYA enrolment data, it is clear that there was very strong growth in all student categories, including from the Central and East Asia Region. The importance of the Asia region is immediately obvious, especially when it is realised that the visas issued on-shore ('Australia' in Table 2) are also predominantly for students from Asia. Because 'visa-issued' data are rapidly made available on a monthly basis, university marketeers and other commentators had been in a position since early 1997 to use the visa data to explore the 'Hanson' effect. For the universities, the first indication of any regional decline would have been evident with enrolment applications in the peak period of November/December 1996 and January 1997, since this is when most overseas students apply for entry to courses, and once approved (usually within a week or so) apply for a visa (which DIMA also issues within a few days if the enrolment documentation is in order).

Though no public statements were forthcoming, Australia's Vice-chancellors were told by IDP Australia in June 1997 that the season had been a good one. IDP reported that its 'snapshot research' published in May 1997 showed a 17.3 per cent growth in the number of international students in Australian universities between 1996 and 1997. According to IDP, this 17 per cent increase represented the latest hard data available (from DIMA).

We conclude that there was no 'Hanson' effect to explain at all, unless the education industry had been expecting even higher growth levels over this period. That this information does not appear to have been communicated to the media is curious, given the concerns described above. It was not until December 1997 that the IDP, recanting on its earlier dire predictions, released a report declaring international student enrolments had in fact risen 22 per cent over the previous 12 months, 'defying predictions of a Pauline Hanson backlash'.¹¹

THE ASIAN CURRENCY CRISIS

Concerns about threats to Australia's education-export industry increased again from July 1997 due to speculation about the impact of the Asian currency crisis. By October 1997 key ASEAN currencies had devalued by 25 to 35 per cent -- a fact seen as certain to diminish the affordability of overseas private study, plus national funding of external scholarships (for example through the Malay and Thai governments). Though Thailand, Indonesia and Malaysia were most immediately affected, South Korea and Hong Kong were affected soon after with both suffering severe declines in share and other asset prices. Within two months of the start of the crisis for instance, the Indonesian government had called in the International Monetary Fund in an attempt to avert financial catastrophe; the rupiah had declined in value by at least a third; fear was mounting of an inability to repay the estimated $US110 billion in foreign debt; 35 per cent had been wiped off the value of shares; banks had collapsed and corporate bankruptcies were mounting; and inflation was rising to a degree seen as directly jeopardising the stability of the Soeharto government.¹²

In the months that followed Australian newspapers predicted dire consequences for the Asian student market, including: disproportionate slumps in key markets; reduced rate of growth expectations; students going home early; and the need to provide student loans to Asian students.

DIMA visa-issued statistics provide the principal source of data for assessing the effects of the currency crisis on Australia's education exports. But though DIMA statistics provide an 'early warning', they have their limitations. In particular, the figures include dependents as well as principal applicants. Since the former account for five to ten per cent of the total visa numbers for higher education students, all DIMA figures need to be discounted by this percentage from the point of view of their ultimate enrolment implications.

Monthly data up to and including January 1998 were utilised in this analysis. They provide an indication of the likely impact of the currency crisis on 1998 higher education enrolments, because December and January are peak visa-issue months for students starting in 1998. In order to get a student visa the applicant must have an official acceptance letter from an Australian institution. Most universities also require a substantial deposit, though this is usually refunded if the student decides not to enrol.

Results have to be interpreted carefully because as was noted in Table 2 (above), about 42 per cent of visas are issued in Australia. Most of these are issued to students who originally came to Australia as ELICOS or school students and who need to obtain a new visa prior to enrolling in another course. No data are available on the country of origin of these students. Also some higher education students may switch to new courses or post-graduate courses which also require new visas, issued in Australia. This situation applies in particular to students from the so-called 'non-gazetted' countries, where DIMA officials consider there is a risk of students over-staying visas.

THE VISA-ISSUED PATTERN

The key period for most categories of student visas is November to January. The overall outcome since July 1995 is shown in Figure 1. What the chart conceals is the series of almost compensating increases and decreases. The biggest 'losers', comparing the last two years' data (year ending January) were ELICOS (about 5,000 fewer), School (over 1,000 down) and Ausaid (1,400 down). These declines were offset by TAFE/Other (up nearly 4,000) and higher education (up nearly 700). The decline in Ausaid numbers can be explained by a policy change which saw a change of emphasis from individual student scholarships, to 'projects' which had a focus on overall training. Some of the Ausaid decline will have shown itself in increases in visas issued for students to undertake 'TAFE/Other' programs. The influence of the Asian currency situation can be seen most obviously in the case of ELICOS visas, particularly for Korea, where visa numbers fell from 998 in January 1997 to only 276 in January 1998. Japan and Indonesia (the next two largest providers of ELICOS students), each declined by over 30 per cent in the same period.

Figure 1: Visas issued, all posts and student categories

Table 3 looks at the high volume time of the year for applications for visas to study in Australia, from all regions, and from the Central and East Asia region. Although applications for visas to undertake ELICOS courses tend to be more spread through the year (because the courses undertaken are much shorter), most students apply for visas at times consistent with the Australian academic year. There has been considerable turnaround in most visa categories, with an overall decline of 10 per cent in the 1997-98 period compared with a year ago. School and ELICOS student categories are the severest hit, with little overall change in the higher education market.

THE HIGHER EDUCATION SITUATION

Financially speaking, the 'top end' of the education market is higher education, and the bulk of it derives from Asia. Most students involved come to this country for a minimum of three years for a bachelor's degree, and must meet living expenses during their study. Sustained growth has been the pattern for the past couple of years, with each month exceeding that in the previous year. Recent months, however, have seen lower numbers from Asia in the off-peak months of August, September, and October. November showed a dip between 1996 and 1997, but then December presented a better result than in the previous year. It proved to be a false dawn: January 1998 visa numbers were well down on 1997. The overall result for November 1997 to January 1998 was an increase of about two per cent, but a small decrease (one per cent) in Asia.

As seen previously in Table 1, higher education enrolments are dominated by four countries: Malaysia, Singapore, Hong Kong and Indonesia. Table 4 describes the 'visa issued' situation for these countries: 

The table reveals that the relatively small decline overall masks the situation in our largest markets. Malaysia and Hong Kong in particular have shown large proportionate drops. The decline in January (the peak month) visas issued from Malaysia from 1,341 in January 1997 to 743 in January 1998, was 45 per cent. The Hong Kong situation looks less than rosy. The small number of new visas suggests that there will be a substantial fall in the number of Hong Kong students in Australia after the students in the current enrolled cohort (see Table 1) complete their courses. Though 'Other Asia' has continued to grow strongly, it represents only about 30 per cent of the total.

An area which could have been overlooked here relates again to the 'on shore' visas situation. As noted above, about 42 per cent of student visas are issued in Australia, by students changing courses or study category. Given that the bulk of Australia's overseas students emanate from Asia, these onshore applications in the main must be from Asian students. The number of visas issued in the period November 1997 to January 1998 on shore for students to undertake higher education fell from 3,311 to 2,824, more than 17 per cent, suggesting that the currency crisis was having an impact on students already in Australia. It would seem premature to predict a radical downturn in the export of higher education, but given the drop in numbers from principal markets, and a decline in the numbers of students seeking visas to continue their studies, the situation will need to be monitored closely.

CONCLUSION

Though it is too early to be precise about its dimensions, the Asian financial crisis is having a discernable impact on the numbers of visas issued to international students wishing to study in Australia. Visa numbers have declined, and in particular in Australia's largest markets. ELICOS visas have dropped more than other categories (37 per cent), and this segment of the market has been affected rather more than the higher education segment. At least in higher education, there are some new markets emerging outside the major Asian players, including the US and Europe. It needs to be noted, however, that in the case of the US, there has been an increase in 'Study Abroad' programs, where students come to this country to undertake study for only one or two semesters at an Australian university. Though increasing in number, these students do not generate a long term flow through comparable with those taking full undergraduate courses.

By contrast, there never was a 'Hanson' effect to explain. We are left to contemplate why the air of panic lasted well into 1997, long after insiders must have known there was no cause for alarm (at least until the advent of the currency crisis). There seems to have been an expectation of a 'Hanson' effect, which was not arrived at by any reference to what was happening with student numbers. As it happened, prospective overseas students were rather more sophisticated in assessing the realities of the social situation in Australia than commentators gave them credit for.

References
¹ The Age, 28 November 1997, p. A2
² P. Gale, 'Representations of Australia in East and South-East Asian Media', University of South Australia, Adelaide
³ A. Jakubowicz, 'Is Australia a racist society? Reflections on globalisation, multiculturalism and Pauline Hanson', Australia-Indonesia Institute and Australian Studies Center, University of Jakarta, 12 June 1997, unpublished
⁴ See D. Cahill, 'Has the sky fallen down? Intercultural Challenges for the International Student Support Community in Multicultural Australia, paper delivered at the Annual Conference of International Student Advisers' Network of Australia, Melbourne, December 1997.
⁵ M. Lawley and D. Blight, International Education in Two Hemispheres, IDP Education Australia, 1997, p. 19
⁶ L. Garcia, 'Students see Australia as Racist: Study', Sydney Morning Herald, 30 September 1997
⁷ The Australian, 5 August 1997
⁸ 'Slow growth in foreign students tests US unis', AFP, The Australian, 10 December 1997, p. 39
⁹ G. Scott, 'Malaysia cuts overseas study', The Times Higher Education Supplement, 16 January 1998, p. 10
¹⁰ D. Blight, undated letter to Australian university vice chancellors, IDP Australia, 1997
¹¹ D. Blight 'The international student market: research findings by IDP Education Australia', Canberra, December 1997; D. Illing, 'Foreigners flood into unis despite Hanson rap', The Australian, 20-21 December 1997, p. 7
¹² 'Trouble in our backyard: the Asian crisis', The Age, 29 November 1997, News Extra p. 2; The Australian, 10 October 1997

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