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Graduates in limbo: International student visa pathways after graduation

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Grattan Institute Report No. 2023-09, October 2023
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This report was written by Brendan Coates, Trent Wiltshire, and Tyler
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Grattan Institute 2023

We would like to thank Mark Cully, Nicole Kirkwood, Jeff Borland,Peter Varela, Jon Chew, Manorani Guy, George Tan, Andrew Norton,Peter Mares and Lachlan Vass, as well as government officials andothers, for their comments on this report. We would also like to thankthe Australian Association of Graduate Employers for surveying theirmembers. The opinions in this report are solely those of the authors.
The authors are responsible for any errors or omissions.
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This report may be cited as: Coates, B., Wiltshire, T., and Reysenbach, T. (2023).
Graduates in limbo: International student visa pathways after graduation. Grattan
Institute.
ISBN: 978-0-6457978-0-0
All material published or otherwise created by Grattan Institute is licensed under aCreative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

2Graduates in limbo: International student visa pathways after graduation

Overview
Australia is in a global arms race to attract the best international
students to study and stay permanently in Australia. But the post-study
work rights we offer are too generous, offering false hope to many
international graduates and adding to population pressures.
Many Temporary Graduate visa-holders struggle to pursue theirchosen careers in Australia: only half secure full-time employment;
most work in low-skilled jobs; and half earn less than $53,300 a year,
compared to just one third of all graduates. A new Grattan Institutesurvey, conducted for this report, shows employers are reluctant to hireinternational graduates, especially because of uncertainty regarding
their visa pathways once their Temporary Graduate visa expires.
Many international graduates are stuck in visa limbo: less than one
third of Temporary Graduate visa-holders now transition to permanent
residency when their visa expires, down from two thirds in 2014.
One-in-three return to further study here once their visa expires, mostly
for vocational courses, to prolong their stay in Australia.
Federal government policy is moving in the wrong direction. Recent
decisions to make post-study work rights even more generous
could result in the number of Temporary Graduate visa-holders inAustralia almost doubling to about 370,000 by 2030, leaving many
more graduates in limbo with even worse prospects of ever securingpermanent residency.
Encouraging so many international graduates to stay and struggle
in Australia is in no one’s interests. It damages the reputation of ourinternational higher education sector and erodes public trust in our
migration program. It hurts the long-term prospects of those graduates
who do stay permanently. It adds to population pressures in areas likehousing, for little gain. And it’s unfair to those graduates who invest
years in Australia with little prospect of securing permanent residency.
Grattan Institute 2023

The government should overhaul visa pathways for international
graduates to reduce the number of graduates struggling in Australia
and better identify the best graduates to stay permanently.
First, Australia should offer shorter post-study work visas tointernational graduates. Visa extensions for graduates with degrees
in nominated areas of shortage, and for living in the regions, should be
scrapped. Instead, graduates should be eligible for an extension to theirvisa only if they earn at least $70,000 a year. And a new ExceptionallyTalented Graduate permanent visa should be offered to the mosttalented international students immediately upon graduation.
Second, Australia should reform existing skilled visas to encourage
talented graduates to stay, and to encourage employers to hire them.
Employers should be able to sponsor graduates earning more than
$70,000 a year for a temporary visa, and those earning more than$85,000 a year for a permanent visa. Points-tested visas should bereformed to only offer points for characteristics that suggest applicants
will succeed in Australia.
Third, Australia should do more to help international graduates thrive
here. The government should launch a campaign designed to change
employer attitudes about new graduates, and public sector graduate
programs should accept international graduates. Universities should
give more support to international graduates to help them build careersin Australia. And the fortnightly cap on international students’ work
hours should be replaced with an annual cap, to make it easier for
students to gain valuable work experience while studying.
These reforms would ensure Australia continues to attract the bestinternational students, and help the best graduates to stay permanently– while reducing the number of graduates we leave in limbo.
3

Graduates in limbo: International student visa pathways after graduation

Recommendations
Reform graduate visas
1. Rename the Temporary Graduate visa the ‘Post-Study Work’ visa.
2. Create a ‘University Graduate’ visa stream to replace the ‘PostStudy Work’ stream that is available to all tertiary graduates, witha duration of two years for Bachelor and Masters-by-courseworkdegrees, three years for Masters-by-research degrees, and four
years for PhD holders.
∙ Scrap the two-year extension to work rights for graduateswith tertiary degrees in nominated areas of shortage.
∙ Scrap the one-to-two-year extension to work rights forgraduates who study and work in the regions.

6. Raise the English language standard for Temporary Graduatevisa-holders from International English Language Testing System(IELTS) 6 to IELTS 6.5.
7. Automatically provide a Post-Study Work visa upon completion of
study.
8. Establish a new Exceptionally Talented Graduate permanentvisa, to be offered to the most talented international students
immediately upon graduation. Eligibility should be determined by
an expert panel set up by the Department of Home Affairs andbased on criteria such as grades, awards, publications, and othermeasures of academic excellence. Students would have to be
nominated by their university in the final year of their studies.
Reform temporary and permanent skilled visas

3. Replace the ‘Graduate Work’ visa stream with a ‘Vocational Work’stream for vocational graduates who have studied to qualify for askilled occupation listed on the Medium- and Long-term Strategic
Skills List. The visa should last for two years, or longer at thediscretion of the Department of Home Affairs if the course of study
and work to qualify for a skills assessment exceeds that period.
4. Make Post-Study Work visa-holders who hold a full-time job
earning more than $70,000 a year eligible for a two-year extension
to their visa.
5. Limit Temporary Graduate visas to people younger than 35 (downfrom 50 now).
Grattan Institute 2023

9. Allow employers to sponsor workers in any occupation for a
temporary skilled visa, provided the job has a salary of morethan $70,000 a year, and abolish labour-market testing, as
recommended in Grattan Institute’s 2022 report, Fixing temporary
skilled migration after the pandemic.
10. Allow employers to sponsor workers in any occupation for apermanent skilled visa, provided the job has a salary of morethan $85,000 a year, as recommended in Grattan Institute’s 2021
report, Rethinking permanent skilled migration.
11. Replace separate permanent points-tested visas for skilledindependent, state-nominated, and regional visas with a single,
universal points-tested visa that targets younger, higher-skilled
4Graduates in limbo: International student visa pathways after graduation

workers, as recommended in Grattan Institute’s 2021 report,
Rethinking permanent skilled migration.
Help international graduates get a foothold in the labour market
12. The federal government should conduct a campaign to educate
employers about international graduates’ work rights, and the visa
options available to graduates when their Temporary Graduate
visa expires.
13. Universities should provide better settlement and support services
to international graduates.
14. The federal government should regularly publish a detailed league
table of the employment outcomes of international graduates,
including their earnings, for each course of study offered byAustralian higher education providers.
15. Federal, state, and territory governments should remove
requirements for permanent residency for public sector graduate
jobs.
16. The federal government should replace the fortnightly cap on
working hours for international students with an annual cap of
1,560 hours (on average 30 hours a week).

Grattan Institute 2023

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Graduates in limbo: International student visa pathways after graduation

Table of contents

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Grattan Institute 2023

1

A growing number of international graduates struggle . . . . . . 7

2Leaving so many international graduates in limbo is in no
one’s interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

3

Reform graduate visas . . . . . . . . . . . . . . . . . . . . . . . 34

4

Reform skilled visas . . . . . . . . . . . . . . . . . . . . . . . . . 46

5

Help international graduates to succeed in the labour market . . 52

6

Graduates in limbo: International student visa pathways after graduation

1

A growing number of international graduates struggle

Offering graduating students the chance to stay and work in Australia
helps us identify which students should be offered permanent
residency, and also makes Australia a more attractive destination
for international students. But the post-study work rights we offer
international students are too generous, adding to population pressuresin Australia and leaving a growing number of graduates in limbo.

Australia nearly doubling again to about 370,000 by 2030, further
increasing competition for the limited number of permanent skilled visas
available each year.

Many Temporary Graduate visa-holders struggle to pursue their chosen
careers in Australia: only half secure full-time employment; most workin low-skilled jobs; and half earn less than $53,300 a year, compared tojust one third of all graduates. In fact Temporary Graduate visa-holders
earn less on average than working holiday-makers.

Australia has one of the largest international higher education
sectors in the world. International education services were Australia’s
fourth-largest export before COVID, worth about $40 billion annually.2
Australia’s international education sector offers big benefits to Australia,
largely via student tuition fees which typically fund public research.
But the sector also adds to population pressures through higher rents(Box 1).

A new Grattan Institute survey of graduate employers, conducted forthis report, shows many are reluctant to hire international graduates,
especially because of uncertainty regarding their visa pathways once
their Temporary Graduate visa expires. Other evidence suggests thatpoor English language skills, weaker local networks, and discrimination
are also important factors.
Fewer international graduates1 are transitioning to permanent
residency. One-in-three recent Temporary Graduate visa-holders returnto further study here after their visa expires. But while most Temporary
Graduate visa-holders initially studied a university-level qualification,
most who return to study choose a cheaper VET-level course.
Government policy is moving in the wrong direction. Temporary
Graduate visa numbers have doubled to nearly 200,000 since 2019.
Recent decisions to make post-study work rights even more generous
could result in the number of Temporary Graduate visa-holders in
1.

In this report, ‘international graduates’ are graduates who studied at an Australian
institution on a student visa. It does not refer to graduates who studied abroad.

Grattan Institute 2023

1.1

Australia has more international students per capita thancomparable countries

Australia’s international student numbers have grown rapidly in recent
years. As of July 2023, there were 654,870 student visa-holders inAustralia. This is higher than the pre-COVID peak of 634,000, anddouble the level of a decade ago.3 The rapid rebound in international
students post-COVID is partly the effect of pandemic-era policies,
which encouraged non-genuine students to come to Australia to work
after borders opened.4
2.
3.
4.

Higher education exports typically account for about two-thirds of total education
exports: Department of Foreign Affairs and Trade (2022).
Department of Home Affairs (2023a).
For example, the cap on student work hours was removed during the pandemic,
allowing students to work as many hours as they wanted. It was re-introduced asof 1 July 2023, allowing students to work 48 hours in a fortnight: Department ofHome Affairs (2023b). And the 408 COVID-19 pandemic visa, which was originallydesigned to give international students who couldn’t return home during the
pandemic the ability to work full-time, was instead used by some non-genuine
students, who enrolled in a short course to come to Australia and then transferred
to a 408 visa soon after: Dodd (2023) and Hare (2023a). The government7

Graduates in limbo: International student visa pathways after graduation

Box 1: The impact on Australia of our international education exports
Exports of international education services were Australia’s
fourth-largest export pre-COVID, worth about $40 billion annually,of which higher education exports accounted for two-thirds. These
exports include ‘direct exports’, predominately in the form of tuition
fees, and ‘indirect’ exports, in the form of other goods and services
that international students buy while residing in Australia. And Australia
benefits from stronger ties with nations whose students who have apositive experience while studying in Australia.
Tuition fees paid by international students totalled $17 billion in 2019,
including $10 billion in fees paid to Australian universities.a They
accounted for 27 per cent of total university revenue in 2019, up from
17 per cent in 2011.b These tuition fees largely support university
research, accounting for an estimated 35-to-40 per cent of total
research funding.c University research may also generate broader
economic benefits via research and productivity spillovers.d
Yet Australian governments otherwise benefit comparatively little
from international student fees, since universities do not pay income
tax and education is GST-free, but governments incur the additional
infrastructure costs that arise from a larger population.e
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.

International education also provides ‘indirect’ economic benefits
to local businesses that supply goods and services to international
students who live in Australia – although some (but not all) of thatspending is funded by income that students earn by working while
here.f While there is limited evidence that international students
working in Australia ‘take jobs’ or otherwise harm the employment
opportunities of Australian workers,g international students can have an
out-sized impact on the wages and employment prospects of younger
local workers in sectors such as hospitality where many international
students are employed,h especially since international students are also
more likely to be underpaid than other workers.i

International students increase demand for housing which, given
constraints on supply, pushes up rents.j The rents paid by international
students, compared to if that housing was otherwise rented locally,
boosts national income. But higher rents increase inequality in Australia
because they benefit older, wealthier Australians, who tend to own
housing, at the expense of younger, poorer Australians, who tend to
rent.

Grozinger and Parsons (2019, p. 39); Ferguson and H. Spinks (2021, Table 6).
Ferguson and H. Spinks (ibid, Table 6).
See Norton et al (2018) and Parkinson et al (2023, Figure 34).
For example: Kantor and Whalley (2014).
Infrastructure Victoria estimated the capital costs of infrastructure for a new home to be about $150,000. See Infrastructure Victoria (2019, Table 4).
Coates et al (2021, Figure 3.3). Spending by students in Australia is considered an export, even if the student pays for that spending out of income earned in Australia. This isbecause students are deemed residents of their home economies for the duration of their study. See: Babones (2019, p. 5).
Coates et al (2022b, Box 4).
Ballantyne et al (2022) and Borland and Coelli (2021).
Coates et al (2023, Chapter 1).
Tulip and Saunders (2019, pp. 27–28).

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Graduates in limbo: International student visa pathways after graduation

Australia has more international students, per head of population, thansimilar English-speaking countries (Figure 1.1). In 2019, there were 20
international students per 1,000 people in Australia, compared to 11 forevery 1,000 people in New Zealand, 7 in Canada and the UK, and 3 in
the US.5
There has been a big increase in international enrolments in high-cost
Masters-by-coursework degrees in recent years. In 2019, 202,000
international students were enrolled in Masters-by-coursework degrees,
which was 42 per cent of all international student higher education
enrolments (Figure 1.2).6 This is a large rise from about 25-to-30 per
cent of international student enrolments in the early 2010s, reflecting
in part a shift in university offerings towards Masters programs thatoffer undergraduate-level training. However, many more international
students than domestic students study Masters-by-courseworkdegrees: just 19 per cent of domestic students were enrolled in a
Masters-by-coursework degree in 2019.
1.2

Australia offers international graduates some of the mostgenerous work rights in the world

Figure 1.1: There are a lot of international students in Australia
International students per 1,000 population, 2019
25

20

15

10

5

0
Australia

Australia’s Temporary Graduate visa offers international graduates who
have studied in Australia the opportunity to test their skills in the labour
market. Allowing international students to stay and work in Australia
after graduating helps Australia to identify which international students
are the best prospects for permanent residency. Many international
students are also attracted by the prospect of working in Australia after
they graduate.

5.
6.

New Zealand

CanadaUK

US

Notes: Includes students undertaking a Diploma (or equivalent) or higher. Selected
English-speaking OECD countries shown.
Source: OECD (2023a).

announced the phased ending of this visa in August 2023. The visa will be closed
to all applicants by February 2024: Department of Home Affairs (2023c).
Grattan analysis of OECD (2023a).
Department of Education (2022a).

Grattan Institute 2023

9

Graduates in limbo: International student visa pathways after graduation

Recent changes to the Temporary Graduate visa mean Australia now
offers some of the most generous post-study work rights in the world.
There are now almost 200,000 Temporary Graduate visa-holders inAustralia, double the number in 2019, and that number could grow toalmost 400,000 by the end of the decade.
Many students are attracted to Australia by the prospect of working,and possibly migrating, after they graduate
International students coming to Australia are attracted by the safety,
quality of education, opportunity to learn English, and lifestyle offeredby Australia.7 According to the OECD, Australia is the fifth-mostattractive destination for international students.8 Australian cities
are highly rated by international students. In the latest Best Student
Cities rankings, Melbourne was rated the fourth-best and Sydney theseventh-best.9

Figure 1.2: A much higher proportion of international students thandomestic students study Masters-by-coursework degrees
Student enrolments in 2019, proportion of total enrolments
80%
70%
60%

Domestic

50%
International
40%
30%
20%

Post-study work rights and the possibility of migrating to Australia
permanently are also important factors in international students’decision to choose Australia as their study destination.10 In a surveyof 1,156 international graduates, 76 per cent of respondents said theavailability of the Temporary Graduate visa was an important factor in
their decision to study in Australia.11
A growing number of students also appear to be attracted by theprospect of working in Australia during their studies, especially following

10%0%

Bachelor

Masters bycoursework

Postgraduate
research

Other

Notes: Masters-by-coursework also includes Doctorate by coursework and Masters(Extended). Total enrolments do not include VET enrolments. Other includes: enablingcourses, non-award courses, undergraduate other.
Source: Department of Education (2022a).

7.
8.

Quality Indicators for Learning and Teaching (2023a, Table 15).
The most attractive is the US, followed by Germany, the UK, and Norway: OECD
(2023b, p. 9).
9. QS (2023).
10. Tran et al (2019); and Tran et al (2020).
11. Tran et al (2019). In another survey, the possibility of migrating to Australia wascited by 70 per cent of undergraduate international students as a reason forchoosing to study in Australia: Quality Indicators for Learning and Teaching(2023a, Table 15).

Grattan Institute 2023

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Graduates in limbo: International student visa pathways after graduation

the relaxation of caps on student work hours during the pandemic.12
Uncapped working hours may also dilute the quality of higher educationin Australia, because non-genuine students may enrol in poor-quality
courses or struggle to complete their course due to working too many
hours. However, these issues are unlikely to explain trends we see inthis report, since the uncapping of student work rights only occurredin 2021. Most issues with non-genuine students appear to relate tostudent visa-holders in cheaper courses in the VET sector, who are
typically ineligible for the Temporary Graduate visa (Table 1.1).
Post-study work rights help Australia identify the best students toprogress to permanent residency
Since the introduction of the Temporary Graduate visa in 2013, many
international students have used it as a stepping stone to permanent
residency. Getting the best international students to stay offers big
benefits to Australia (Box 2).
About one third of all recent permanent skilled visas, and one-in-fivepermanent family visas, were issued to migrants who first arrived inAustralia on a student visa.13
Of the international higher education students who go on to receive
permanent residency, about 60 per cent held a Temporary Graduate
visa at some point. This is much higher for students who received a

12. The relaxation of work rights during the pandemic, and then the complete
uncapping in January 2022, coincided with a big jump in student visa lodgements
and a decline in the proportion of visa applications granted. See: Coates et al(2023, pp. 35–36). There is also evidence that non-genuine students came toAustralia to take advantage of the 408 COVID-19 pandemic event visa, whichallows the holder up to 12 months of unlimited work rights by switching to a
subclass 408 after arriving on a student visa and enrolling in a short course: Nixon(2023).
13. Varela et al (2021, Chart 4).

Grattan Institute 2023

Box 2: The biggest benefits from international education
come from getting the best students to stay permanently
While there are significant short-term benefits for Australia frominternational students (Box 1), the biggest benefits come fromattracting the best students to study here and stay permanently.
High-performing international students who settle permanently
offer an enormous fiscal dividend to Australia, because they areyoung and pay more in taxes than they cost in public services,transfers, and infrastructure investments. On average, eachprimary permanent employer-sponsored visa-holder offers alifetime fiscal dividend to the Australian community of $560,000,
and $390,000 for each Skilled Independent (i.e. points-tested)permanent visa-holder.a The cohort of international students whoarrive in Australia this year and eventually take up permanent
residency will provide a fiscal dividend of up to $12 billion overtheir lifetimes in Australia.b That’s much larger than the estimated$5.6 billion channelled from international student tuition fees into
university research each year.c
Getting the most talented international students to remain
in Australia could also boost productivity growth. A growinginternational evidence base suggests migrants can create
productivity spillovers via innovation.d In total, permanent skilledmigrants, including those students who secure a permanentskilled visas, will contribute around $3 million to the Australianeconomy over their working lives.e
a.
b.
c.
d.
e.

Ibid (Chart 4).
Grattan analysis of Varela et al (ibid) and Department of Home Affairs(2023d).
Updated from Parkinson et al (2023, Figure 34). Students offer no net fiscal
dividend beyond the tuition fees they pay: Varela et al (2021, Table B2).
See Coates et al (2022b, Section 2.4) and OECD (forthcoming).
Parkinson et al (2023, Figure 23).

11

Graduates in limbo: International student visa pathways after graduation

permanent skilled visa: about 80 per cent of those students held a
Temporary Graduate visa before obtaining permanent residency.14
Australia’s post-study work rights are generous and becoming more so
The Temporary Graduate visa, introduced in 2013 after the Knight
Review of the student visa program, followed other countries thatstarted offering more generous post-study work rights in the 2010s(Box 3).15
The Temporary Graduate visa allows international students to test
themselves in the Australian labour market after they graduate, helping
them to develop experience that they can use at home or to seek
permanent residency in Australia via skilled migration.
Australia currently offers post-study work rights to international student
graduates via the subclass 485 Temporary Graduate visa (Table 1.1).
There are two main streams:∙ the post-study work stream, available to university graduates; and∙ the graduate work stream, available to selected VET and university
graduates (including holders of some university-level diplomas).

A second post-study work stream visa is also available for international
graduates who have lived, worked, and/or studied in a designatedregional area for more than two years and who have held a post-study
work stream visa (Table 1.1).

Box 3: The Knight Review of the student visa program in 2011
recommended universal post-study work rights
Before 2010, many international students could attain permanent
residency in Australia if they enrolled in a course of study which
would qualify them for an occupation deemed to be in national
shortage. This led to a concentration of overseas students inthe vocational education sector. After the direct pathway topermanency was removed, international student numbers fell.a
In response, the government commissioned the Knight Review ofthe student visa program, released in 2011, which recommended
introducing a temporary graduate visa available to all university
graduates. The Review found that the ‘absence of a clearly
defined post-study work rights entitlement puts Australian
universities at a very serious disadvantage compared to someof our major competitor countries’.b The government created the
Temporary Graduate visa in March 2013.c
The Knight Review’s recommendations on work rights after
graduation focused on attracting students but were ‘not intended
to provide a defined pathway to migration’.d However, at thetime, some analysts warned that using a temporary visa toboost university enrolments could lead to a large number of‘permanently temporary’ migrants.e
a.

b.
c.

14. Students are classified into higher education based on the first student visa
granted.
15. Tran et al (2020).

Grattan Institute 2023d.
e.

This fall was also driven by the Global Financial Crisis, the high Australian
dollar, attacks on Indian students, and permanent visa reforms: C. Spinks(2016).
Knight (2011).
It replaced the Skilled Graduate visa, which offered graduates withqualifications that related to an occupation on the skilled occupation list
18 months of work rights: Department of Immigration and Citizenship (2013,
pp. 71–72).
Knight (2011).
Mares (2011).

12

Graduates in limbo: International student visa pathways after graduation

Table 1.1: The Temporary Graduate visa offers generous post-study work rights to international graduates
Temporary Graduate visa details
Visa stream

Post-study work

Second post-study work

Graduate work

Qualification

•
•

•

•

Accredited Australian degree
At least two academic years

Lived, worked, and/or studied in designatedregional areas for at least two years•

Duration of post-study
work rights•••

PhD: six years•
Masters by coursework or research: three
years or five years for degrees in nominatedareas of shortage•
Bachelor: two years or four years fordegrees in nominated areas of shortage•

Accredited Australian degree, diploma, ortrade qualification
At least two academic years

Category 2 regions (cities and major
regional centres excluding Sydney,
Melbourne, and Brisbane): one year
Category 3 regions (regional centres andother regional areas): two years
If studied or lived in a combination of
category 1 and category 2 regions: one
year•

Usually 18 months, temporarily increased to
24 months

Cost•$1,895•$745•$1,895Visa grants 2022-23•

118,907

•

6,183

•

53,926Other••

No field requirement for degree of study
English language: IELTS overall score of atleast six with a minimum score of five foreach of the four parts in the last three years
Under 50 years of age•

Must have held a Temporary Graduate visa
in the Post-Study Work stream and thismust have been granted for a degree frominstitution in a regional area
Under 50 years of age
Started 20 January 2021•

Must hold qualification related to skilledoccupation from the Medium- and Longterm Strategic Skills List and have applied
for skills assessment (waived in 2022-23)
English language: IELTS overall score of atleast six with a minimum score of five foreach of the four parts in the last three years
Under 50 years of age

•

•
•

•
•

Notes: IELTS = International English Language Testing System. Nominated areas of shortage are predominately in the health, IT, engineering, and education sectors: Department of
Education (2023a). A Replacement stream visa is also available to current and former Temporary Graduate visa-holders who lost time on their original visa due to COVID-19 travel
restrictions. This visa is available until 1 January 2027, and the applicant must have held a relevant Temporary Graduate visa that was granted before 15 December 2021. A person can
only be granted one Temporary Graduate visa as a primary visa-holder (with the exception of the Second post-study work visa).
Source: Department of Home Affairs (2023e).

Grattan Institute 2023

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Graduates in limbo: International student visa pathways after graduation

Recent changes have made Australia’s post-study work rights moregenerous. Since 1 July 2023, the duration of post-study work rights has
been extended by two years for Bachelor and Masters degrees thatare in areas the government has identified as in shortage. Standard
work rights have also been extended for all PhD students (from four
years to six years). In 2021, post-study work rights were extended for
Masters-by-coursework students (from two years to three years), andfor the Graduate Work stream (temporary extension from 18 months to
two years).16
Australia’s post-study work rights are now clearly more generous thanother countries (Table 1.2). For university graduates, Canada, New
Zealand, and the UK offer between two and three years dependingon the length or level of their study.17 The US offers one year, with anadditional year available for STEM (science, technology, engineering,and maths) graduates.18 For VET courses, Canada and New Zealandoffer post-study work rights of the same length as the course. In New
Zealand, only a limited number of courses are eligible for post-study
work rights. The US offers one month for every four months of study.
The UK offers no work rights for VET graduates.19
The Post-study Work Rights Working Group Report in 2022 concluded
that, ‘Australia’s current [Temporary Graduate visa] settings are moregenerous than those currently offered by competitors, both in terms of
maximum length of stay and wide availability to graduates’.20
16. Tudge and Hawke (2021).
17. Canada offers three years if the length of study was more than two years. The UK
offers three years for PhD students and two years otherwise: Post-Study Work
Rights Working Group (2022). New Zealand offers three years for Masters and
PhD students and a visa length equivalent to the length of the study for courses
below the Masters level, up to three years: New Zealand Immigration (2023a).
18. Post-Study Work Rights Working Group (2022).
19. New Zealand Immigration (2023b) and Post-Study Work Rights Working Group(2022).
20. Ibid (p. 21).

Grattan Institute 2023

Table 1.2: Recent extensions make Australia’s post-study work rights
much more generous than our competitors’
Australia

CanadaNZ

UK

US

Bachelor

Two years, withextensions for:• Study a degree
in shortage:
two years• Regional study:
one-to-two
years

Three
years

Three
years

Two years

One year, withextensions for:• STEMdegree: one
year

Masters

Three years, withextensions for:• Study a degree
in shortage:
two years• Regional study:
one-to-two
years

Same
time asstudy(one-totwo
years)

Three
years

Three
years

One year, withextensions for:• STEMdegree: one
year

PhDs

Six years, withextensions for:• Regional study:
one-to-two
years

Three
years

Three
years

Three
years

One year, withextensions for:• STEMdegree: one
year

Length18 months(temporarily two
years)

SameamountascourseSameamountascourseNone

One month forevery fourmonths of thecourseEligibility

Only courses in
occupations inshortage-

LimitedNonenumber ofcourseseligible

VET-

Only two-year
courses

Sources: Post-Study Work Rights Working Group (2022) and New Zealand Immigration(2023a).

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Graduates in limbo: International student visa pathways after graduation

The Temporary Graduate visa is becoming more popular
Many international students remain in Australia after their studies bytransitioning to the Temporary Graduate visa. As at June 2023, there
were 199,772 Temporary Graduate visa-holders in Australia, up from90,000 in June 2019 (Figure 1.3).21
Three-quarters of these Temporary Graduate visa-holders were on the
Post-Study Work visa, a slightly lower proportion than pre-pandemic(Figure 1.3). As at June 2023, citizens of India and Nepal accounted for
52 per cent of all Temporary Graduate visa-holders in Australia.
According to the Post-Study Work Rights Working Group, over the
past five years about 30 per cent of international students whocomplete their qualification in any field of study and go on to apply fora Temporary Graduate visa.22 Take up of the Temporary Graduate visa
has also grown modestly. 25 per cent of higher education students
who received their student visa in 2013 took up the Temporary
Graduate visa, compared to 30 per cent of 2017 student visa recipients(Figure 1.4).23 A further 10 per cent of those who received a higher
education student visa in 2018 were still on a student visa as of 31
December 2021, some of whom may also transition to a Temporary
Graduate visa once they graduate.

21. The Replacement stream offered a new visa to current and former Temporary
Graduate visa-holders who lost time on their original visa due to COVID-19
travel restrictions. This visa is available until 1 January 2027, and the applicant
must have held a relevant Temporary Graduate visa that was granted before 15
December 2021: Department of Home Affairs (2023f).
22. Post-Study Work Rights Working Group (2022, p. 38).
23. More recent data points to a growing proportion of students moving onto a
Temporary Graduate visa. In 2016-17, only 20 per cent of students who stayed in
the country went on to a Temporary Graduate visa, whereas in 2021-22 more than
40 per cent went on to a Temporary Graduate visa: Department of Home Affairs(2023g). Between 35 per cent and 40 per cent of students leave the country. This
has remained stable over the years: Grattan analysis of ABS (2021a).

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Figure 1.3: The number of Temporary Graduate visa-holders in Australia
is growing
Temporary Graduate visas
Number of visa-holders,Visa grants,
as at financial year end
financial year ending
200k
200k
Second poststudy work
Post-study work
replacement
150k
150k
Post-study work
100k

100k

Graduate
work
50k

50k

0k

0k

2014 2016 2018 2020 2022

2014 2016 2018 2020 2022

Notes: There were 604 Graduate work replacement stream visas granted in 2022-23(included in Graduate work visa total). In the number of visa-holders data, the visa
sub-type detail is not available, and Graduate work includes a small number of Skilled
Graduate and Temporary Resident – Other visas.
Sources: Department of Home Affairs (2023g) and Department of Home Affairs(2023a).

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Graduates in limbo: International student visa pathways after graduation

The recent spike in Temporary Graduate visa-holders in Australia partly
reflects the overhang from pandemic-era border closures and visa
policy decisions. In particular, recent graduates who were granted a
Temporary Graduate visa but were overseas and unable to return toAustralia were granted an extension to their visa. Departmental delays
in processing visas once Australia’s border reopened also led to a delay
in processing Temporary Graduate visa applications, contributing to
the spike in visa grants in the past year as that backlog was cleared.
Further, requirements that applicants for the Graduate Work stream
hold a qualification in an occupation deemed to be in shortage andhave applied for a skills assessment were waived in 2022-23, resulting
in a spike of applications for that stream in the past year, including from
graduates of vocational courses who would not normally have been
eligible for a graduate visa (Figure 1.3).24
The number of people on the Temporary Graduate visa is likely to growsubstantially in coming years
Under current policy settings, the number of people on the Temporary
Graduate visa is likely to grow significantly over the next few years. This
increase reflects a number of factors:∙ The growing proportion of international students coming fromsouth Asia, who are more likely than other international students
to take up the Temporary Graduate visa upon graduation.25∙ The longer duration of the Temporary Graduate visa offered for
Masters by coursework, as well as the two-year extension of theduration of Temporary Graduate visas for selected degrees in

Figure 1.4: More students are taking up the Temporary Graduate visa
Next visa granted after first student visa for each visa cohort
Higher education
sectorVocational
education andtraining sector

100%

No substantive
subsequent visa
75%

50%

Other temporary
visa
Permanent

Student
Temporary
SkilledTemporary
Graduate visa
Still on student
0%2010 2012 2014 2016 2018 2010 2012 2014 2016 2018 visa
Year student visa granted

25%

Notes: Sector based on the course level of first student visa. Visas where the student
does not change provider or course level are not counted as a new student visa. ‘No
substantive subsequent visa’ includes people who left Australia or are on a bridging
visa awaiting a decision about a future visa. ‘Still on student visa’ calculated based on
who still had a valid graduate visa as at 30 December 2021. Primary visa-holders only.
Source: Grattan analysis of ABS (2021a).

24. Vocational graduates who studied courses ineligible for a skills assessment in an
occupation on the Medium- and Long-term Strategic Skills List (MLTSSL) were
historically ineligible for a Temporary Graduate visa.
25. Doshi (2023).

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16

Graduates in limbo: International student visa pathways after graduation

areas of shortage,26 which means many Temporary Graduatevisa-holders will be in Australia for longer on average.
In addition, the number of Temporary Graduate visa-holders in Australia
could grow as students change their course to one that is eligible forthe longer post-study work rights,27 or because additional international
students choose to study in Australia due to the extended graduate
work rights on offer.28

Figure 1.5: Under current policy settings, the number of Temporary
Graduate visa-holders in Australia could grow to about 370,000
Projected number of Temporary Graduate visa-holders in Australia, financial
year ending

Grattan Institute modelling incorporating these factors suggests that the
number of Temporary Graduate visa-holders in Australia is on track toalmost double to about 370,000 by 2030 (Figure 1.5).29

350,000

These reforms will also mean that there are many international
graduates who are here for an extended period before they either
leave or receive permanent residency.30 This runs counter to thegovernment’s stated objective of ending ‘permanent temporariness’.31

250,000

400,000

Projection
300,000

200,000
150,000
Actual100,000
50,00026. Mainly in engineering, science, health, education, and IT: Department of
Education (2023a). The federal government expects about 220,000 enrolments
across 500 qualifications will be eligible for the extended Temporary Graduate visa
over the next two years: Post-Study Work Rights Working Group (2022, p. 3).
27. Ibid (p. 38).
28. Ibid (p. 38).
29. Changes to migration policy as part of the Australia-India Comprehensive
Economic Cooperation Agreement may also result in more Indian students coming
to Australia and progressing to a Temporary Graduate visa at the end of theirstudies. Changes include a pilot scheme for Indian graduates and early career
professionals to be able to work and stay in Australia for up to two years without
requiring a sponsoring employer: Tillett (2023).
30. For example, a Bachelor’s student who studied in an area of shortage in a regional
university could be in Australia for nine years on a temporary visa.
31. O’Neil (2023).

Grattan Institute 2023

0
2015

2018

2021

2024

2027

2030

Notes: Assumes a larger behavioural response to recent changes to post-study work
rights. This scenario assumes that: 45 per cent of graduates are eligible for longer
post-study work rights (as degrees that offer extended work rights become more
popular); the proportion of university students that transition to a Temporary Graduate
visa after graduation grows to 40 per cent by 2027; and international student university
completions grow at 4 per cent per year (and VET completions at 3 per cent per year),reflecting increased demand due to the more generous post-study work rights on offer
in Australia. Includes primary and secondary visa-holders.
Sources: Grattan analysis; Department of Home Affairs (2023a).

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Graduates in limbo: International student visa pathways after graduation

1.3

Many Temporary Graduate visa-holders struggle to find workin Australia

Many Temporary Graduate visa-holders struggle to find employment inAustralia, especially in their chosen career. Half of Temporary Graduatevisa-holders earn less than $53,300 a year, most work in low-skilledjobs, and just 55 per cent work full-time.
Most worryingly, one-in-three recent Temporary Graduate visa-holders
return to further study after their visa expires, typically to study a lowerlevel VET course – suggesting that the visa is not acting as a steppingstone to full-time work in their chosen profession.
Temporary Graduate visa-holders are more likely to work in less-skilledjobs
Temporary Graduate visa-holders are more likely than domestic
graduates to work in low-skill jobs.32 In 2021, 38 per cent of employedTemporary Graduate visa-holders worked in a job in the highest
occupational skill level (up from 33 per cent in 2016), compared to 58
per cent of all 20-to-29 year-olds in Australia who had a Bachelor’s
degree or higher. Only 42 per cent of employed Temporary Graduatevisa-holders worked as managers or professionals in 2021, compared
to 61 per cent of all 20-to-29 year-olds in Australia who had a
Bachelor’s degree or higher. Temporary Graduate visa-holders werealso almost twice as likely to work as labourers, the least-skilled major
occupation group.
A large number of Temporary Graduate visa-holders work in hospitality
and retail. The most common occupations among Temporary
Graduate visa-holders in 2021 were chefs and sales assistants. And

32. Tran et al (2019).

Grattan Institute 2023

in 2021, one-in-four Temporary Graduate visa-holders worked inaccommodation and food services, or retail trade.33
International graduates typically earn much less than local graduates
Temporary Graduate visa-holders typically earn much less thanequivalent local graduates.
In 2021, the typical Temporary Graduate visa-holder earned $53,300,
only slightly more than working holiday-makers ($50,700) and muchless than all 20-to-29 year-olds who had a Bachelor’s degree or higher($64,400) (Figure 1.6). In fact, Temporary Graduate visa-holders on
average earned less than working holiday-makers.34 In total, nearly
75 per cent of Temporary Graduate visa-holders earned less than the
median Australian worker in 2021.35
The difference between domestic and international graduates is mostpronounced for students with a post-graduate coursework degree(Figure 1.7). International graduates with a postgraduate courseworkdegree in business and management typically earn $58,100 a year
less than domestic graduates who hold the same degree.36 Computing
and engineering postgraduate coursework international graduates earn
about $40,000 less.
33. Grattan analysis of ABS (2021b). This is down from 2016 when one in threeworked in accommodation and food services, or retail trade: Chew (2019). Thechange is probably explained by the fact that the 2021 Census was conducted ona night when many parts of Australia were in lockdown.
34. Temporary Graduate visa-holders earned an average of $56,300 in 2021,
compared to an average of $56,600 among working holiday-makers. Grattan
analysis of ABS (2021b) and ABS (2021c).
35. The median Australian worker earned $63,041 in 2021, which includes many parttime workers, whereas 74 per cent of Temporary Graduate visa-holders earned
less than $65,000 in that year. Just 10 per cent of full-time Australian workers
earned less than $52,000 in 2021. See Coates and Moloney (2023).
36. 50 per cent of 2021 international student Masters-by-coursework commencements
were in a management and commerce degree: Department of Education (2023b).

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Graduates in limbo: International student visa pathways after graduation

For people with an undergraduate degree, the biggest differencesin earnings between international and domestic students areamong those who studied engineering and computing, where
domestic students earn about $12,000 a year more. The difference
between earnings for business graduates is about $10,000 a year.37
International graduates who studied a health-related degree reported
the highest earnings, followed by science graduates, but earnings werestill lower than domestic graduates in the same fields.

Figure 1.6: The incomes of Temporary Graduate visa-holders are closer
to working holiday-makers than domestic tertiary graduates
Total annual personal income (2021 dollars), share of employed individuals
Temporary Graduatevisa

All 20-29 year olds
with a Bacheloror higher

Workingholiday-maker$182,000 or more
$156,000-182,000

A 2022 study of PhD students also found that international graduatesfrom a non-English speaking background earn less than domestic PhD
graduates.38
International graduates’ employment prospects improve over time, but
lag those of local graduates
The Longitudinal Graduate Outcomes Survey shows that the proportionof local students who graduated from Australian universities in 2018
into full-time employment was much higher than for international
graduates immediately after graduation (Figure 1.8). The gap infull-time employment between local and international graduatescloses somewhat three years after graduation,39 although part of the
improvement probably reflects the fact that those graduates who founda good job were more likely to remain in Australia and were also more
likely to get permanent residency.40$104,000-156,000$91,000-104,000$78,000-91,000$65,000-78,000

Medianincome:$53,300$52,000-65,000

Medianincome:$64,400

Medianincome:$50,700$41,600-52,000$33,800-41,600$26,000-33,800$20,800-26,000$15,600-20,800$7,800-15,600$1-7,800

37. 43 per cent of 2021 international student Bachelor’s degree commencements werein a management and commerce degree: Department of Education (2023b).
38. Tani (2022).
39. Similarly, the 2016-to-2019 survey of 1,156 Temporary Graduate visa-holders
found that employment outcomes for graduates improved considerably after a few
years. Only 28 per cent of current holders of a Temporary Graduate visa had afull-time job in their field of study soon after graduation, but this rose to 52 per centfor past holders of a Temporary Graduate visa: Tran et al (2019, pp. 25–26).
40. Ibid (pp. 25–26).

Grattan Institute 2023

0%

15%

30%

0%

15%

30%

0%

15%

30%

Notes: The third column includes Temporary Graduate visa-holders, which are about 5
per cent of the group. Uses total personal weekly income as recorded in the Census,
which includes wages and salaries, government transfers, investment income, andbusiness income. Median assumes a uniform distribution within income buckets.
Source: Grattan analysis of ABS (2021b) and ABS (2021c).

19Graduates in limbo: International student visa pathways after graduation

Figure 1.7: There are large gaps between what domestic andinternational students earn
Difference in median salary between domestic and international students, by
field of study and course level, 2022
Undergraduate

Postgraduate coursework

Business and management
Engineering

Figure 1.8: International graduates are less likely to be employed, andmore likely to earn less, than domestic graduates
2018 international and domestic cohorts
Full-time employment rates
100%
International
Domestic
80%
60%

Computing and information systems

Science and math40%

Health services and support

20%

Humanities, culture, and social sciences0%

Nursing2019
2022
Undergraduate

Teacher education
Architecture and built environment

Creative arts
$0

2019
2022
Postgraduate
research

Median salaries of full-time workers$120k

Social work

2019
2022
Postgraduate
coursework

$100k
$20k

$40k

$0

$20k

$40k

Notes: Only a selection of fields of study included. Missing fields are: tourism,
psychology, dentistry, law, medicine, pharmacy, veterinary sciences, communications,agricultural sciences, and rehabilitation.
Source: Quality Indicators for Learning and Teaching (2023b).

$80k
$60k
$40k
$20k
$0k
2019
2022
Undergraduate

2019
2022
Postgraduate
coursework

2019
2022
Postgraduate
1
research

Notes: Nominal dollars.
Source: Grattan analysis of Quality Indicators for Learning and Teaching (2022).

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Graduates in limbo: International student visa pathways after graduation

In the longer term, international students often perform worse thanother, permanent migrants. Permanent migrants with an Australian
degree earn less than permanent migrants who did not study inAustralia. Skilled permanent migrants aged between 25-34 with anAustralian degree earned on average $78,000 a year within 18 monthsof receiving permanent residency, compared to $96,000 among those
who had an overseas qualification only.41
Forthcoming research finds that given their education, international
students do worse than expected. After taking account of age, English,
education, and other characteristics, international graduates earn
between 7 per cent and 15 per cent less than permanent migrants who
never held a temporary visa.42
1.4International graduates struggle to find well-paid jobs, forseveral reasonsInternational graduates struggle in the Australian labour market for anumber of reasons, including: employers’ reluctance to hire temporaryvisa-holders; graduates’ often-poor English language skills and weakernetworks; and discrimination.
Employers are reluctant to hire international graduates because of
uncertainty over their future visa status
The biggest reason international graduates struggle in Australia
appears to be because employers are reluctant to hire temporaryvisa-holders.43
Many leading Australian employers of skilled workers are unwilling toemploy and invest in training temporary visa-holders. Employers prefer
41. Grattan analysis of Department of Home Affairs (2021).
42. Varela and Breunig (n.d.).
43. Tran et al (2020); Navitas (2022); and Tran et al (2019).

Grattan Institute 2023

permanent visa-holders and Australian citizens, because the employer
can be confident that they can benefit long-term from the investments
they make in upskilling workers.
A Grattan Institute and Australian Association of Graduate Employers(AAGE) survey of graduate employers, conducted for this report, foundthat fewer than half considered temporary visa-holders in their current
or most recent graduate intake, and that more than one-third had neverrecruited temporary visa-holders.44 These results are consistent with a2014 survey in which 46 per cent of graduate employers said they only
employed Australian citizens or permanent residents.45
According to global education provider Navitas, ‘a large share of
employers hold a view that recruiting an employee that is anything otherthan a permanent resident or citizen is risky’.46 However, some sectors,
such as IT, appear more open to hiring international graduates.47
In our survey of graduate employers, the most common response to aquestion about the reasons temporary visa-holders were not eligible
for a graduate role was uncertainty about whether the applicant would
be eligible for a future visa after their graduate visa (Figure 1.9). One
employer told us: ‘The main concern would be they are unable toremain in the country at the end of the program.’48
44. This online survey was sent to AAGE members in July 2023. There were 87
respondents, of which 86 per cent were large firms with more than 500 employees.
Of those employers that do hire international graduates, many say doing so gives
them access to a broader talent pool or helps overcome skills shortages.
45. A survey of 638 graduate employers: Graduate Careers Australia (2016, Table
6). A recent Migrant Workers Centre survey also found that 36 per cent ofrespondents reported having been told that job applications from permanent
residents would be given priority: Migrant Workers Centre (2023).
46. Navitas (2022, p. 11).
47. Tran et al (2023) attributes this to the more diverse international backgrounds ofmanagement and because short-term contracts are common in the industry.
48. Another employer said: ‘Significant investment is made in the development
program, so weighing up the risk of temporary visas not leading to permanent21Graduates in limbo: International student visa pathways after graduation

In response to a follow-up question about what factors contributed tothis uncertainty, employers cited concerns that visa rules or skilledoccupation lists would change, or that they lacked knowledge about
how to sponsor a worker. Some also said the duration of the Temporary
Graduate visa was too short.
In principle, Temporary Graduate visa-holders in many occupations
would qualify for employer sponsorship – for either a further temporary
visa of up to four years, or for a permanent visa – provided they
were employed full-time and earned at least $53,900 a year, rising to$70,000 a year since 1 July 2023.49
Yet the cost and complexity of employer sponsorship was cited bymany employers as a barrier to employing international graduates(Figure 1.9). In particular, employers cited the complexity of visa
paperwork, ensuring compliance with visa restrictions, and a lack ofknowledge about how to sponsor a worker as factors that stopped them
employing temporary visa-holders.50 One respondent wrote that ‘thevisa process is too long and too expensive when we have Australiancandidates’.
These findings support previous studies, which also found that‘concerns about complexities and uncertainties’ relating to visas
contributed to fewer employers recruiting international graduates.51
International graduates also believe not having permanent residency
is a major barrier to getting a good job. In a 2022 survey, this was theones, we have made the decision not to extend the program to international
students.’
49. See Coates et al (2022a); Department of Home Affairs (2023h).
50. One employer told us: ‘Managing and keeping track of visa-holders...
knowledge/experience required to ensure compliance with visa restrictions, costsof visa agency support, penalties on organisations if visa requirements not met.
Very time consuming managing visas for such a small employee population.’
51. Tran et al (2020, p. 499).

Grattan Institute 2023

Figure 1.9: Uncertainty over future visa pathways, and the cost andcomplexity of sponsorship, are the main reasons employers don’t hireinternational graduates
Number of responses from graduate employers to statement about reasons for
not employing international graduates
Uncertainty about whether applicant would be
eligible for a future visa after the graduate visa

Constraints
arising fromuncertain
pathways
once TGV
expires

It’s too difficult to sponsor a graduate to obtain a
TSS or a permanent visa
It’s too expensive to sponsor a graduate toobtain a TSS or a permanent visa
Other
There were enough local applicants
The duration of a Temporary Graduate visa is
too short

Constraints
arising fromthe TGV

Applicant could not guarantee they will have avisa when the graduate program starts
Worried that the person would leave the role
early

Other reasons

Local applicants fit better with our workplaceculture

0

10

20

30

Notes: TGV = Temporary Graduate visa. TSS = Temporary Skill Shortage visa.
There were 87 respondents to our survey. Multiple responses allowed (there were
133 responses to this question). The full question was: ‘If your organisation required
applicants to be Australian citizens or permanent residents, please specify the reasons
temporary visa-holders were not eligible for your organisation’s most recent, or current,
graduate intake.’
Source: Grattan Institute and AAGE survey of graduate employers.

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Graduates in limbo: International student visa pathways after graduation

major reason international graduates cited for working a job that didn’t
fully utilise their education.52
Many employers are unfamiliar with the Temporary Graduate visa andthe work rights it offers
Many employers are unfamiliar with the Temporary Graduate visa andthe work rights it offers, which also contributes to their reluctance tohire international graduates.53
One respondent to our survey wrote: ‘We have limited understandingof requirements and obligations around working rights.’ Another wrote:‘It is hard to know if they will be successful in moving from a student
visa to a graduate visa when offering them a role.’ This is despite thefact that virtually every international student who graduates from anAustralian university is guaranteed the Temporary Graduate visa.
The ‘Temporary’ in the title of the visa also deters employers fromrecruiting international graduates.54

One respondent to our survey wrote: ‘Most students apply on a
500 [student] visa and mention their eligibility for a 485 [Temporary
Graduate visa] after graduating. Unfortunately we cannot hire them,on the basis they do not yet have a 485.’
Some international graduates have poor English and skills
Poor English language skills among some international graduates also
harms their job prospects.
In 2021, 72 per cent of Temporary Graduate visa-holders spoke only
English, or spoke English very well, compared to 89 per cent of all 2029 year-olds in Australia who held a Diploma qualification or higher.56
In our survey, some employers said poor English language skills meantsome international graduates struggled in interviews and assessment
centres during the application process. Poor English also makes it
harder for the graduate to build the social and professional networks
often needed to find a good job.57

It often takes a long time for the Temporary Graduate visa to be granted
after graduation. The 2023 Parkinson Review of Australia’s migration
system found that the processing time is typically five months but canbe up to 13 months.55

Some employers also express concern about the poor quality ofinternational graduates, which could make them unattractive toemployers. Media reports suggest some academics feel pressure topass struggling international students, especially where international
students account for a large share of course enrolments.58 Whether
soft marking exists or not, international students receive lower marks
than domestic students. International students are substantially more

52. Quality Indicators for Learning and Teaching (2023b, Table 12). About one-quartercited this as the reason. The next most common answer was that the job was acareer stepping stone.
53. According to Navitas, ‘Many employers are not aware of the program [and] have
low familiarity with its benefits’: Navitas (2022). See also Tran et al (2020).
54. Tran et al (2023) and Tran et al (2020). Before 2011, the visa was known as the
Skilled Graduate visa.
55. ‘Prospective employers often make graduate offers to students before they havecompleted their studies. This means international students are at a distinct

disadvantage at this important point of transition. Employers who are not confident
a student will have the right to remain and work in Australia take a significant
risk in making an employment offer to an international graduate’: Parkinson etal (2023, p. 116).
56. Grattan analysis of ABS (2021b) and ABS (2021c).
57. Tang et al (2022a).
58. Cook (2019). International students account for up to 50 per cent of students
at some Australian universities, and in particular faculties at other universities:
Shields (2020).

Delays in issuing the Temporary Graduate visa also harm graduates’
employment prospects

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Graduates in limbo: International student visa pathways after graduation

likely to self-report average marks below 70 per cent and were more
likely to fail subjects.59 The interim report of the Universities Accord
acknowledged concerns about the poor quality of education offered tosome graduates.60
Weaker local networks, limited experience, and discrimination all harm
graduates’ employment prospects
Unfamiliarity with Australian workplace culture has also been foundto be a barrier to employment for international graduates. In previous
surveys, employers state that international graduates can lackinterpersonal skills, or would struggle to fit in with workplace culture.61
International graduates often also lack local work experience.62 Other
barriers, notably lack of permanent residency but also restrictions on
international students’ work rights,63 often prevent the graduate fromgaining this experience.
Finally, discrimination against international graduates is also a factor.64
A recent Australian study found that job applicants with non-English
names received fewer positive responses to applications for positions.65
And earlier studies have found high levels of discrimination among
employers against minority groups, especially those from Middle
Eastern backgrounds.66

59. Norton et al (2018, pp. 30–31).
60. Department of Education and Training (2023, p. 7).
61. Tran et al (2020); and Tang et al (2022a).
62. Tran et al (2019, p. 29); and Tran et al (2023).
63. See Section 5.5 and Parkinson et al (2023, p. 112).
64. Tang et al (2022a); and Blackmore et al (2023).
65. Adamovic and Leibbrandt (2023).
66. Booth et al (2012).

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1.5

Fewer international graduates are now transitioning topermanent residency

Many international students are attracted to study in Australia by theprospect of obtaining permanent residency (Section 1.2). And getting
the best international students to stay offers big benefits to Australia(Box 2). But far fewer international graduates are now transitioning
to permanent residency, including among high-performing Temporary
Graduate visa-holders.
A smaller proportion of international students are transitioning topermanent residency
While the number of international students on temporary visas grewsignificantly in the decade before COVID, the number of permanent
visas did not. A lower share of international students are obtaining
permanent residency upon graduation than in the past. In the late
2000s, up to 25 per cent of student visa-holders transitioned to apermanent visa within six years of commencing study in Australia. For
more recent student cohorts that figure has halved to just 12 per cent.67
The decline in the share of international students transitioning topermanent residency reflects – at least in part – the decision taken in2010 to decouple student visas from permanent skill visas. But sincethen the growth in the number of international students and recent
graduates, combined with fewer permanent visas allocated via thepoints test, has resulted in intense competition for permanent skilledvisas among international students.
There are currently about 1.5 million temporary migrants in Australia,
whereas only 190,000 permanent visas are to be issued in 2023-24,
67. Coates et al (2022b, Figure 2.9). Older data have the historical share lower:
according to Clare and O’Neil (2022), 16 per cent of international students gain
permanent residency. This compares to 27 per cent in Canada: Navitas (2022,
p. 12)).

24

Graduates in limbo: International student visa pathways after graduationin addition to 13,750 humanitarian visas, and 3,000 new permanent
Pacific Engagement visas.68
Recent changes to permanent skilled migration enacted by the federal
government to boost the number of permanent skilled visas available– from an average of 111,000 per year in the decade to 2021-22 to
137,100 for 2023-24 – may increase graduates’ prospects of obtaining
permanent residency in the short term.69

Figure 1.10: A declining share of Temporary Graduate visa-holders
transition directly onto a permanent visa after their graduate visa
Next visa granted after Temporary Graduate visa for each visa cohort
100%

Historically, most Temporary Graduate visa-holders have transitioned toa permanent visa

75%

Permanent skilled

50%

Permanent family
Other temporary visa
Temporary skilled

Historically, most Temporary Graduate visa-holders have transitioned
directly to a permanent visa (Figure 1.10). For instance, two-thirds ofgraduates issued with a Temporary Graduate visa in 2014 transitioned
straight onto a permanent visa after their graduate visa.70
More than 80 per cent of high-performing Temporary Graduate visaholders have historically transitioned to permanent residency.71 Even amajority of Temporary Graduate visa-holders who have comparatively
low incomes have historically made the jump to permanent residency(Figure 1.11).
68. Excluding tourists and New Zealanders holding special category visas, around
1.5 million people are in Australia on a temporary vis: Department of Home Affairs(2023a).
69. The federal government increased the size of the permanent migrant intake from
160,000 in 2018-19 to 190,000 in 2023-24. Changes in the composition of theintake, including scaling down the Global Talent visa and Business Investment andInnovation Program, and re-allocating those places to additional points-tested
visas, have further increased the number of permanent visas available tointernational graduates. See Department of Home Affairs (2023d) and Coates
et al (2021).
70. ABS (2021a).
71. Of those issued a Temporary Graduate visa in 2016 and among the top 10 per
cent of income earners in their cohort, 82 per cent went on to get permanent
residency within five years of receiving their graduate visa.

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No substantive
subsequent visa

Student
25%
Still on graduate visa
0%

2014

2015

2016
2017
2018
Year graduate visa granted

Notes: Data only available up to 31 December 2021. ‘No substantive subsequent visa’
includes people who left Australia or are on a bridging visa awaiting a decision about
a future visa. ‘Still on graduate visa’ calculated based on who still had a valid graduate
visa by 31 December 2021. Primary visa-holders only.
Source: Grattan analysis of ABS (2021a).

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Graduates in limbo: International student visa pathways after graduation

Now, fewer Temporary Graduate visa-holders transition to a permanentvisa
The share of Temporary Graduate visa-holders transitioning topermanent residency is falling.
Just under 30 per cent of those issued the visa in 2018 transitioned
directly onto a permanent visa after their graduate visa (Figure 1.10).
And the share of Temporary Graduate visa-holders who had obtained apermanent skilled visa by December 2021 fell from 80 per cent among
those first awarded a Temporary Graduate visa in 2014, to just 60 per
cent among those first awarded the same visa in 2016.72
A smaller share of Temporary Graduate visa-holders transitioning
to permanent residency in itself is not a bad thing if those who don’t
make that transition are studying, gaining valuable experience in
the Australian labour market, and then returning home. But many
Temporary Graduate visa-holders are transitioning to anothertemporary visa once their graduate visa expires, most likely to prolong
their time in Australia.
In particular, a growing share of Temporary Graduate visa-holders are
returning to study when their visa expires: up from 16 per cent of those
first issued with a Temporary Graduate visa in 2014, to 32 per cent for
those issued with the visa in 2018.
A large proportion of high-performing graduates are also returning tostudy. In 2016, 20 per cent of those Temporary Graduate visa-holders
in the top three income deciles among that visa cohort returned to
study, compared to 30 per cent of those in the bottom three deciles(Figure 1.11).

72. Data only available to 2021. Transitions to permanency may increase over time,
particularly for later cohorts, as they may move onto other visas before getting
permanent residency.

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Figure 1.11: High-income graduates transition to permanent visas, butmany low-income graduates do too
Next visa granted after Temporary Graduate visa, by year when first granted a
Temporary Graduate visa and income decile within that cohort
2014

2016

2018

100%

75%

No
substantive
subsequent
visa
Other
temporaryvisa
PermanentfamilyPermanent
skilled50%

Still ongraduate visa
25%
Student
Temporaryskilled0%

LowestHighest Lowest

Highest Lowest

Income decile

Workingholiday
Highestmaker

Notes: Data only available up to 31 December 2021. Primary Temporary Graduatevisa-holders only. Income decile calculated using total income in the personal income
tax data for the first two years after receiving their graduate visa. ‘Still on graduate visa’
calculated based on who still had a valid graduate visa by 31 December 2021. Data
excludes individuals who do not submit a tax return within two years of receiving theirgraduate visa; these are likely to be disproportionately low-income earners.
Source: Grattan analysis of ABS (2021a).

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Graduates in limbo: International student visa pathways after graduation

Of those who return to study, most go on to study a VET course despite
mostly already holding a higher degree, especially if they initiallystudied a Masters-by-coursework degree (Figure 1.12).
This suggests that many international graduates are returning to study
when their Temporary Graduate visa expires in order to prolong theirtime in Australia. Graduates may be motivated by the hope of securingpermanent residency, or simply to continue to access the higher wages
offered in Australia. Either way, they are returning to study a degree
that is unlikely to boost their lifetime income or career prospects.
The Parkinson Review identified that of the 145,000 Temporary
Graduate visa-holders in Australia in December 2022, about 20,000
had been here for six or more years.73 The number of Temporary
Graduate visa-holders who become stuck in Australia for an extended
period is likely to grow further in coming years, because post-study
work rights have been extended for many graduates, and competition
for permanent places has become even more fierce (see Section 1.2).
1.6

This report shows how offering students clearer, fairer visa
pathways after graduation is in everyone’s interests

This chapter has shown how, and why, many international graduates
struggle in Australia.
The policy challenge is to offer visa certainty to talented students andgraduates, so employers can have confidence that they will reap thereturn from hiring and investing in them, thereby helping Australia
identify which graduates should be offered permanent residency. And
offering more-certain visa pathways after graduation ensures that
Australia does not lose talented graduates to other countries.

Figure 1.12: Most Temporary Graduate visa-holders who go back to
study, study a VET course
Temporary Graduate visa-holders who went on to further study, by degreelevel before and after receiving graduate visa
Subsequent degree
66% of Masters by
Bachelor degree
coursework students
6,000 Masters coursework
who went back to study
Other higher education studied a VET degree
Other study
VET
4,000

2,000

0

VET

Bachelor degree
Masters coursework
Degree before receiving graduate visa

Notes: VET = Vocational Education and Training. Based on 2018 graduate visa
recipients. ‘Other higher education’ and ‘Other study’ omitted due to small sample
sizes. Cohort based on year graduate visa was granted. Based on confirmation ofenrolment.
Source: Grattan analysis of ABS (2021a)).

But there are real constraints on the degree of visa certainty that canbe offered to international graduates. International graduate numbers
73. Parkinson et al (2023, Figure 31).

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Graduates in limbo: International student visa pathways after graduation

are large and growing. Extending the duration of post-study work
rights offered to international graduates – with the aim of offering morecertainty to employers – risks increasing those numbers even further.
Each additional post-study work visa offered to international graduates
reduces others’ prospects of securing permanent residency. Similarly,
it is impractical to expand the number of permanent visas on offer eachyear to meet the demand of a growing stock of international graduates
who wish to stay permanently.74
As the Parkinson Review acknowledged, the best thing for Australia
and those students who struggle in Australia after graduating may be
for them to return home.75

What this report is not about
This report is not about the design and regulation of international
student visas. Nor is it about the regulation of Australia’s higher
education and VET sector. However, raising the bar for international
students and lifting the standards of education providers would improveoutcomes for international graduates, enhance Australia’s international
reputation, and make it harder for non-genuine students to enter
Australia. These issues may be the subject of future Grattan Institutereports.

The remainder of this report shows how talented international students
who wish to stay can be given their best shot at succeeding in Australia
after they graduate, while reducing the number of graduates we leave inlimbo.
Chapter 2 shows why leaving a growing number of international
graduates to struggle in the workforce, with declining prospects of
securing permanent residency, is in no one’s interests.
Chapter 3 shows how the Temporary Graduate visa should bereformed to more quickly identify talented graduates who are goodprospects for permanent residency, while limiting the growth in thestock of international graduates in Australia on temporary visas.
Chapter 4 shows how other skilled visas should be reformed toencourage talented graduates to stay.
Chapter 5 shows what needs to be done to help international
graduates succeed in the labour market.
74. For a detailed discussion of the trade-offs in expanding the number of permanent
visas on offer, see Coates et al (2022b, Chapter 2).
75. Parkinson et al (2023, p. 118).

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Graduates in limbo: International student visa pathways after graduation

2

Leaving so many international graduates in limbo is in no one’s interests

The growing number of international graduates who struggle while
stuck in limbo in Australia is in no one’s interests.
It erodes public trust in our migration program.
It runs counter to the government’s stated objective of reducing thenumber of ‘permanently temporary’ visa-holders in Australia.
Seeing so many disenchanted international graduates eventually returnhome after struggling in Australia for years damages the reputation of
our international higher education sector.
The growing stock of Temporary Graduate visa-holders in Australia
adds to population pressures in areas like housing, for little gain.
Leaving so many international graduates in limbo harms the long-term
prospects of those international graduates who do eventually securepermanent residency, and increases the risk that less-talented
graduates find a pathway to permanent residency.
And it’s unfair to those graduates who invest years in Australia with little
prospect of ever securing permanent residency.
2.1

International graduates left in limbo add to the number of‘permanently temporary’ visa-holders in Australia

The growing number of Temporary Graduate visa-holders who remain
in Australia for an extended period adds to the growing number of‘permanently temporary’ visa-holders in Australia.
As the number of temporary visa-holders grows – currently about 1.5
million people – so does the number of people in Australian society
who live under a restricted set of rights, such as not being able to voteor get unemployment support.
Grattan Institute 2023

While the impact is hard to quantify, the fact that a growing number ofpeople in Australia live without full political rights and other entitlements
available to permanent residents and citizens, risks eroding our
democratic norms and institutions.76
Lower-skilled temporary migration is unpopular in Australia. One 2021
opinion poll showed that when the phrase ‘short-term’ is used, support
for migration halves.77 Another found 72 per cent of Australians agreed
that temporary work visas should cover genuine skills shortages, notprovide cheap labour.78
Further increasing the numbers of temporary migrants working in
less-skilled jobs, especially under the guise of a skilled migration
program, undermines public confidence in the system. This isparticularly problematic if there is a cohort of Temporary Graduatevisa-holders who are not using their post-study work experience as
an opportunity to develop the skills they learnt while studying, butinstead are using it as a way to stay and work in Australia for as longas possible.
The government has already identified the growing number of‘permanently temporary’ visa-holders in Australia as an undesirable
outcome. As Home Affairs Minister Clare O’Neil said recently:79
We’ve done a lot of this already in our work to resolve some of thebiggest caseloads of permanently temporary people. But we need tomake sure this doesn’t happen in the future.

76. Coates et al (2022b, p. 40).
77. Essential Media (2021)
78. Lewis (2021).
79. O’Neil (2023).

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Graduates in limbo: International student visa pathways after graduation

We need to avoid policies and conditions that create ‘permanent
temporariness’. This means clearer pathways for the skilled workers
we need, and clarity for the migrants that have less of a prospect of
becoming a permanent resident.

Yet the government’s policies to make post-study work rights evenmore generous risks taking Australia in the opposite direction, adding
substantially to the stock of temporary visa-holders in Australia for an
extended period.
2.2

International graduates’ poor outcomes may deter
prospective international students from choosing Australia

The quality and reputation of Australia’s education system areimportant to prospective international students.80
Increasing post-study work rights may boost international student
numbers in the short term. But a growing cohort of Temporary
Graduate visa-holders, many of whom struggle to gain sought-afterwork experience after graduation, may return home frustrated thatthe reality of their Australian education experience did not meet their
expectations.
This risks harming Australia’s reputation in the international student
market and, in the long run, could deter international students fromchoosing Australia.
2.3

The poor outcomes for many international graduates risks
compromising Australia’s permanent skilled migrant intake

If international graduates struggle for an extended period in Australia
before eventually securing permanent residency, it could reduce
the sizeable benefits of Australia’s permanent skilled migrant intake(Box 2).
80. Quality Indicators for Learning and Teaching (2023a, Table 15).

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While the share of Temporary Graduate visa-holders who transition toa permanent visa is falling (Figure 1.10), international graduates stillaccount for a sizeable share of permanent skilled visa-holders eachyear. And international students overall accounted for one-in-threerecent permanent skilled visas and one-in-five family visas issued inrecent years.81
There is a substantial literature showing that young workers who
graduate into a weak labour market, or find themselves out of work
for an extended period early in their careers, can be ‘scarred’ by theexperience and face lower long-term earnings.82 Temporary Graduatevisa-holders who cannot secure a good job can be expected toexperience similar, if not larger, economic scarring.
A lack of clear transition pathways compromises the career development of international graduates who do eventually gain permanent
residency. About half of those graduates issued with a Temporary
Graduate visa in 2016, but who were among the lowest fifth of income
earners in the two years after receiving their Temporary Graduate
visa, had secured a permanent visa by June 2021.83 Working in a
low-skill job, or not in the occupation they studied for, risks reducing
the long-term earnings prospects of the many Temporary Graduatevisa-holders who do eventually transition to permanent residency.
International graduates have been found to give priority to obtaining
permanent residency over advancing their careers, such as bychanging to an occupation on the skilled occupation list or moving toa regional area.84 International graduates who return to study after
their Temporary Graduate visa lapses earn less in Australia in the long
81. Varela et al (2021).
82. Coates and Ballantyne (2022, Section 2.3.1), Parkinson et al (2023, p. 114) andBorland (2020).
83. Income decile calculated using total income in the personal income tax data for the
first two years after receiving their graduate visa. Grattan analysis of ABS (2021a).
84. Tang et al (2022a); and Blackmore et al (2023).

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Graduates in limbo: International student visa pathways after graduation

term than their peers who stay in Australia and never return to study(Figure 2.1).85
The long-term scarring of international graduates stuck on temporary
visas for extended periods may help explain why international students
who secure permanent residency tend to perform worse than might be
expected given their education.86 In contrast, evidence from Canada
suggests that in the long term, former international students canperform better in the labour market than skilled migrants who obtained
qualifications overseas before migrating.87
2.4

Figure 2.1: The earnings of Temporary Graduate visa-holders who returnto study in Australia never catch up to the earnings of those who don’t
Mean total income, 2023 dollars, 2013 Temporary Graduate visa recipients
Did not go back to study
Went back to study$60,000

Allowing many struggling graduates to stay increases the
chances that poor performers secure permanent residency$40,000

Allowing so many international graduates to stay in Australia forextended periods, despite clearly struggling in the labour market, risks
compromising the quality of the cohort of those granted permanent
residency each year. Many international graduates earning very low
incomes still manage to secure a permanent skilled visa (Figure 1.10).

$20,000

As Home Affairs Minister Clare O’Neil has said, while our existingpermanent skilled visa programs perform well, parts of those programs
reward persistence rather than talent.88 This is especially a risk given
the current design of points-tested visas, where points are on offer
for characteristics which don’t predict applicants’ long-term successin Australia.89

$0

0

6
2
4
Years since receiving graduate visa

8

Notes: Data only available up to 31 December 2021. Primary Temporary Graduatevisa-holders only. Income based on total income reported in personal income tax
returns. Data exclude individuals who do not submit a tax return; these are likely to bedisproportionately low-income earners. Income inflated by Average Weekly Ordinary
Time Earnings (AWOTE) to 2023 dollars.
Source: Grattan analysis of: ABS (2021a).

85. This could be due to scarring or because those who do not get a permanent visa
immediately have lower earnings potential than their peers.
86. Varela and Breunig (n.d.).
87. Parkinson et al (2023, p. 110).
88. O’Neil (2023).
89. See Coates et al (2021, p. 66).

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Graduates in limbo: International student visa pathways after graduation

2.5

Temporary Graduate visa-holders stuck in limbo are more
vulnerable to exploitation at work

A growing number of Temporary Graduate visa-holders stuck in limbo
and working in low-skill jobs heightens the risk they will be exploitedin the workplace, damaging our global reputation and undermining
confidence in our migration program.90
With a greater number of temporary visa-holders vying for permanent
residency, and more international graduates dedicating years of theirlives to securing permanent residency in Australia, more international
graduates may be willing to accept poor pay or unsafe working
conditions if it helps them to jump through the hoops to secure apermanent visa.91
2.6

A growing number of Temporary Graduate visa-holders adds
to Australia’s population pressures, for little benefit

A growing number of Temporary Graduate visa-holders in Australia who
struggle in the labour market adds to Australia’s population pressures,for little benefit to the Australian community (Box 1).
Several studies have found that migration modestly increases
Australian house prices and rents. Researchers at the Reserve Bank
estimate that the migration-led ramp up in population growth since 2005
led to housing rents being 9 per cent higher than they otherwise would
have been in 2018.92
The growth in the number of Temporary Graduate visa-holders inAustralia, from 50,000 in 2017 to 200,000 today, has probably raised
90. Australians expect that workers, including migrant workers, will be treated well in
the workforce and have their workplace rights upheld. See Coates et al (2023,
Chapter 1).
91. Ibid (Section 2.2).
92. Tulip and Saunders (2019).

Grattan Institute 2023

rents across Australia by up to 1.3 per cent over that period. Further
expected increases in the number of Temporary Graduate visa-holders– to about 370,000 by 2030 – would increase rents by a further 1.4 percent (Figure 1.5).93
While there is debate about the optimal size of Australia’s annual
migrant intake,94 there is clearly a limit to the pace of migration that
Australia can accommodate without eroding living standards. And
it’s clear that Temporary Graduate visa-holders left in limbo for an
extended period, most of whom struggle to make best use of theirskills in Australia, benefit Australia less than many other cohorts ofpermanent and temporary migrants.95
2.6.1

It’s unfair to international graduates who invest years inAustralia for little return

While the primary objective of Australia’s migration program should be
to maximise the wellbeing of the Australian community,96 Australia does
have a responsibility to treat temporary visa-holders well while they arehere.
As the Parkinson Review outlines, Australia has an ethical responsibility
to not offer false hope to temporary visa-holders.97

93. Assumes an average of 2.5 Temporary Graduate visa-holders per additional
dwelling and an elasticity of supply in the stock of housing of 4 per cent for each
10 per cent increase in house prices/rents. Grattan analysis of Figure 1.5; ABS(2021c); Daley et al (2018).
94. See Parkinson et al (2023); Productivity Commission (2016).
95. For example, each Temporary Graduate visa-holder offers a fiscal dividend of just
$7,800, compared to $38,600 for a Temporary Skill Shortage visa-holder. Varela etal (2021, Table B2).
96. Previously defined by Grattan Institute as including both citizens and permanent
residents. See Coates et al (2021, Chapter 3).
97. Parkinson et al (2023, pp. 99, 102).

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Graduates in limbo: International student visa pathways after graduation

Over time, migrants lose their connection with their home countries
and become embedded in the Australian community.98 They develop
personal relationships, start families, and build lives in Australia. After
this point, sending migrants home has the potential to cause harm bothto the migrant and to Australia’s social cohesion.
Yet, as outlined in Chapter 1, many more Temporary Graduatevisa-holders want to stay in Australia than there are permanent visa
places available each year to accommodate them. Therefore, as amatter of ethics, we should seek to limit migrants’ temporary stay byeither facilitating a permanent pathway or requiring temporary migrants
to leave Australia.

98. Parkinson et al (2023, p. 99).

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Graduates in limbo: International student visa pathways after graduation

3

Reform graduate visas

Post-study work visas allow international graduates to demonstrate
their potential in the labour market, helping Australia to identify thebest graduates for permanent skilled visas. Yet Australia has allowed
post-study graduate visas to become too generous.
The federal government should reform the current Temporary Graduate
visa to offer a shorter period of work rights to international graduates,
although still long enough to identify which graduates are likely to begood prospects for permanent residency. The visa should also be
renamed the ‘Post-Study Work’ visa.
A ‘University Graduate’ stream should be available to all graduatesfrom Australian universities. It should last two years for graduates of
Bachelors and Masters-by-coursework degrees, three years for Masters
by research, and four years for PhD-holders.
A ‘Vocational Work’ stream should replace the existing ‘Graduate Work’stream for graduates of vocational courses, and should offer two yearsof work rights to graduates with good prospects of getting permanent
residency.
Visa extensions for graduates with tertiary degrees in nominatedareas of shortage, and for living in the regions, should be scrapped.
Instead, Post-Study Work visa-holders should be eligible for a two-year
extension if they find a job earning more than $70,000 a year – a strong
signal that they will succeed in Australia in the long term. And age andEnglish requirements for the new visa should be tightened.
A new stream of the Global Talent visa called the ‘ExceptionallyTalented Graduate’ stream should be offered to a limited number of themost talented international graduates.
Grattan Institute 2023

3.1

Reform the Temporary Graduate visa

The federal government should rename the Temporary Graduate visa
as the Post-Study Work visa and shorten the period of work rights
available to international graduates.99
A new University Graduate visa stream should replace the existing
Post-Study Work stream
A University Graduate visa stream offering the same or shorter work
rights to international graduates should replace the Post-Study Work
stream of the Temporary Graduate visa, to more clearly show that thevisa is intended for university graduates (see Table 3.1).
The new Post-Study Work visa should be available to almost all
graduates, but the duration of the visa should be the same or shorter
than that previously offered by the Temporary Graduate visa:∙ PhD degree-holders would be offered a four-year visa, down fromsix years currently;∙ Masters-by-research degree-holders would be offered a three-year
visa, the same as currently offered;∙ Masters-by-coursework degree-holders would be offered a twoyear visa, down from three years currently; and∙ Bachelor degree-holders would be offered a two-year visa, thesame as currently offered.
99. The ‘Temporary’ in the name of the current visa deters employers from taking
on international student graduates (see Section 1.4), contributing to the poor
labour market outcomes of this cohort. Navitas (2022) recommended renaming
the Temporary Graduate visa.

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Graduates in limbo: International student visa pathways after graduation

Table 3.1: The new Post-Study Work visa should offer the same or shorter post-study work rights as the Temporary Graduate visa
Post-Study Workvisa stream

Qualification and duration

Visa extension

Future visa options

Other conditions

University Graduate
stream

PhD: four years(previous: six years)

A two-year extension if:• earned at least $70,000 a year whileworking full-time over a 12-month
period• have been in current full-time job for atleast three months and it pays morethan $70,000 a year

Temporary:• Temporary Skill Shortage (subclass 482)
Points:• Skilled Independent (subclass 189)
• Skilled Nominated visa (subclass 190)
• Skilled Work Regional (Provisional) visa
(subclass 491)
Employer sponsorship:• Employer Nomination Scheme (subclass 186)
• Skilled Regional visa (subclass 494/191)••

Temporary:• Temporary Skill Shortage (subclass 482)
• Training (subclass 407)
Points:• Skilled Independent (subclass 189)
• Skilled Nominated visa (subclass 190)
• Skilled Work Regional (Provisional) visa
(subclass 491)
Employer sponsorship:• Employer Nomination Scheme (subclass 186)
• Skilled Regional visa (subclass 494/191)••

Masters by research: three years(previous: three years, or five years
for selected occupations in shortage)
Masters by coursework: two years(previous: three years, or five years
for selected occupations in shortage)•••

Maximum age: 35
English language: minimum IELTS
score of 6.5 and a minimum scoreof 5.5 for each of the four parts
Retain Australian study
requirements
Automatically issued upon
graduation
Cost: initial visa: $1,895,
extension visa: $500

Bachelor: two years(previous: two years, or four years forselected occupations in shortage)
Vocational Work
stream

VET qualifications and university
Diplomas: two years, longer for somequalifications(previous: 18 months, temporarily
increased to 24 months)

A two-year extension if:• earned at least $70,000 a year whileworking full-time over a 12-month
period• have been in current full-time job for atleast three months and it pays morethan $70,000 a year

•
•
•

•
•

Maximum age: 35
English language: minimum IELTS
score of 6.5 and a minimum scoreof 5.5 for each of the four parts
Retain Australian study
requirements
Automatically issued upon
graduation
Keep skills assessment and use
new Jobs and Skills Australia
occupation list for middle-tier TSS
visa
Issued upon proof of graduationand if other conditions are met
Cost: initial visa: $1,895,
extension visa: $500

Notes: IELTS = International English Language Testing System. TSS = Temporary Skill Shortage. Extended post-study work rights are currently available predominately for graduates withhealth, IT, engineering, and education degrees: Department of Education (2023a). Longer duration visas are conferred at the discretion of the Department of Home Affairs where the courseof study and work to qualify for a skills assessment exceed two years. For example, plumbers, electricians, air-conditioning mechanics, and refrigeration mechanics.
Source: Grattan analysis.

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Graduates in limbo: International student visa pathways after graduation

The longer duration visa for PhD and Masters-by-research graduatesreflects their better labour market prospects after graduating.100 In
addition, the length and assessment of research-based degrees mean
they are unlikely to be targeted by migrants who wish to come and workin Australia under the guise of undertaking international study.
Masters-by-coursework degree-holders should not be offered longer
post-study work rights than graduates with a Bachelor degree,
because graduates of these degrees typically have similar or
worse labour market outcomes than Bachelor degree-holders.101
Masters-by-coursework graduates are also a large and growing
proportion of international graduates, and offering students longer
work rights for shorter degrees could encourage students to study inpoor-quality Masters programs.102
Recent visa extensions for studying particular courses should be
scrapped
The federal government’s recent decision to offer international
graduates studying degrees in nominated areas of shortage an
additional two years on their Temporary Graduate visa should bereversed.103

is likely to grow as international students switch to these degrees in
the hope of securing longer work rights. These extensions are a key
reason the number of Temporary Graduate visa-holders in Australia is
expected to almost double by the end of the decade (Figure 1.5).
Offering extensions of post-study work rights for studying particular
courses is a poor way to identify which graduates are likely to be goodprospects for permanent residency, and rewards those most motivatedto stay in Australia. Individual courses, and the occupations theylead to, are not good predictors of students’ long-term employment
prospects in Australia.105 And it is practically impossible to reliably
identify which occupations are in shortage.106
Privileging particular occupations in Australia’s visa programs has led
to perverse outcomes in the past. For example, tens of thousands ofgraduates with accounting degrees – equivalent to roughly one-in-four
accountants employed in Australia today – have submitted expressionsof interest for a points-tested visa.107

The areas of study eligible for the extension are very broad, covering
about 40 per cent of international student completions.104 And that

The degrees for which the extra post-study work rights are offered
do not seem well-targeted at areas that appear to have legitimate
shortages. For example, science degrees are on the list, but labour
market outcomes for these graduates are worse than average.108 The
full-time employment rate for engineering graduates is only 45 percent and for IT graduates it is only 37 per cent. And only 25 per cent100. According to the Knight Review: ‘The economic benefit they bring to Australia
is not from the money they spend here; it is from the jobs created for others byapplying the research they create’ (Knight (2011, p. ix)).
101. In 2019, 42 per cent of all international student higher education enrolments werein Masters-by-coursework degrees, much higher than the 19 per cent of domestic
students enrolled in a Masters-by-coursework degree. See Figure 1.2. The Knight
Review recommended that Masters-by-coursework and Bachelor graduates
should both receive two years of work rights: Knight (ibid, Recommendation 4).
102. Hare (2023b).
103. Department of Education (2023a).
104. Grattan analysis of Department of Education (2022b).

105. Existing occupation lists do not give priority to high-skill, high-wage occupations:
Coates et al (2021, Figure 7.9). Incomes also vary dramatically within
occupations: Coates and Reysenbach (2022, Figure 4.3).
106. Governments lack the data to meaningfully identify skills shortages in the labour
market. When employer demand increases and unemployment is low, employers
become more willing to hire people regardless of their education and experience.
See Coates et al (2022a, p. 23).
107. Coates et al (2021, Figure 7.11).
108. See Hare (2021)

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Graduates in limbo: International student visa pathways after graduationof engineering graduates and 39 per cent of IT graduates work as
professionals or managers.109
Offering extended post-study work rights to international graduates who
pursue particular degrees risks distorting the study choices they make,harming their long-term prospects if they are able to stay in Australia.
And there is no guarantee that those students who are enticed toswitch course by the prospect of extended work rights will pursue thatcareer in the long term.
There should be no extension for graduates who study and work inregional areas
The Second Post-Study Work stream, which enables a person who hasstudied, lived, and worked in regional areas to get a second graduate
visa of up to two years duration, should also be abolished.
This visa adds to population pressures by extending the duration of
post-study work rights to a large cohort of graduates. International
graduates who study, live, and work anywhere outside Sydney,
Melbourne, or Brisbane are eligible for this visa. The visa is becoming
more popular. In 2022-23, 6,183 Second Post-Study Work stream visas
were granted, up from 439 in 2021-22 (Figure 1.3).
Migration is often seen as a way to support population growth inregional Australia. Yet diverting skilled migrants to regional areas is
likely to reduce the net benefits the community derives from permanentskilled migration.110 Grattan Institute has previously called on Australian
governments to stop trying to divert people to regional Australia.111
Policies designed to artificially hold jobs or people in regional areas
have not fared well in the past.
109. Parkinson et al (2023, p.115)
110. Coates et al (2021, p. 29).
111. Daley et al (2019, p. 8).

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Requiring skilled migrants to live and work in regional areas isespecially costly in the long term. Encouraging migrants to move toregional areas is likely to hurt their long-term career development –including for any spouses – by constraining their employment choices
to regional areas early in their careers. It also remains unclear how
many migrants diverted to regional Australia, especially for permanent
visas, actually remain there in the long-term.112
A Vocational Work visa stream should replace the Graduate Work
stream
A new Vocational Work stream within the new Post-Study Work visa
should replace the existing Graduate Work stream of the Temporary
Graduate visa, and be limited to graduates of particular vocationalcourses and university diplomas.113 The new stream should offer two
years of work rights,114 or longer at the discretion of the Department ofHome Affairs where the course of study and work to qualify for a skills
assessment is longer than two years.115
The current requirements that applicants nominate one occupation on
the Medium- and Long-term Strategic Skills List, have a qualification
closely related to that occupation, and be assessed as having skills
suitable for that occupation, should be maintained.116 Without thisrequirement, large numbers of VET graduates would have little
prospect of becoming permanent residents on the graduate visa. It
112. More than one quarter of recent arrivals who were living in regional and remoteareas in 2011 had moved to major cities by 2016, compared to about 10 per centfor people born in Australia. See Coates et al (2022b, p. 45).
113. Currently, international students who obtain a university degree can apply for the
Graduate Work stream.
114. The duration of the Graduate Work stream visa was formerly 18 months, but has
been temporarily extended to 24 months: Department of Home Affairs (2023i).
115. For example, the qualifications for plumbers, electricians, air-conditioning
mechanics, and refrigeration mechanics take longer than two years.
116. Department of Home Affairs (2023i).

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Graduates in limbo: International student visa pathways after graduation

would also make VET study more attractive to non-genuine students
seeking to use the VET system as a way to access the Australianlabour market.
The new skilled occupation lists for the middle tier of the Temporary
Skill Shortage visas should be used to determine eligibility for the
Vocational Work visa stream once it has been created (Section 4.1).

Visa extensions should be offered only to graduates who earn morethan $70,000 a year
Extensions to the Post-Study Work visa should be offered only topeople who succeed in the labour market. This visa should offer an
additional two years of work rights if the person is working full-timeand earning at least $70,000 per year, or if they earn at least $70,000
while working full-time in any 12-month period (Table 3.1). The wage
threshold should be indexed to growth in Average Weekly Ordinary
Time Earnings (AWOTE).
A $70,000 wage threshold would ensure the extension is offered only
to international graduates with good prospects of securing a further
visa, such as via a sponsoring employer or a permanent points-tested
visa, and to succeed in the long term in Australia. The $70,000 wage
threshold for the visa extension is the same as the Temporary Skilled
Migration Income Threshold (TSMIT), which was increased to $70,000
from $53,900 on 1 July 2023.
The extension would give employers certainty that talented graduates
will be able to work for them for a long enough time to make hiringthem worth it. The extra time would also enable graduates to acquire
the required experience to apply for a Temporary Skilled Shortage
Grattan Institute 2023

visa,117 as well as increase their chances of getting a points-tested visa,
because they could gain more Australian experience.118
To be eligible for the extension, graduates will have to provide evidence
that they have earned at least $70,000 a year while working full-timeover a 12-month period.119 Alternatively, graduates would be eligible forthe visa extension if they have been in their current full-time job for atleast three months and it is paying more than $70,000 a year.
Employers found to have made false or misleading statements, suchas by falsifying pay slips or group certificates, should be subject to civil
and criminal penalties. The Department of Home Affairs should create
a new automated process of data matching with the Australian Tax
Office to ensure that the employers of Post-Study Work visa-holders
are paying workers the salaries claimed when seeking the visa
extension.120
About 20 per cent of international graduates holding a Temporary
Graduate visa today would be expected to qualify for the extension(Box 4). Assuming wage growth of 4 per cent, a $70,000-a-year
threshold for the visa extension will be $72,800 by 1 July 2024.

117. Currently, to get a TSS visa, applicants need two years of experience in thenominated occupation. For graduates who did not get a job immediately after
graduating, the extension would allow them to acquire two years of experience.
118. In the current points test, Australian experience is more heavily weighted thanoverseas experience, and individuals get more points for more experience.
119. Visa-holders could earn the $70,000 in any 12-month period while holding the
Post-Study Work visa, including by working for more than one employer, provided
they were employed full-time in both roles and did not work for those employers
concurrently.
120. Data matching should also be used to ensure employers are complying with their
obligations for temporary and permanent employer sponsorship. The AustralianTax Office already has a visa data-matching program, in operation since 2009.
See: Coates et al (2022a, pp. 52–54).

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Graduates in limbo: International student visa pathways after graduation

By comparison, the typical Australian university graduate earns$75,000 two years after graduating.121 Bachelor graduates earn lessthan other graduates, with the typical bachelor graduate earning$70,000 within two years of graduating. Graduates who obtainfull-time work in essential professions such as nursing, school andearly childhood teaching, or as allied health professionals such as
physiotherapists, would qualify for the extension as they typically earnmore than $70,000 with two years experience.122
Other eligibility rules should be tightened
The new Post-Study Work visa should be available only to people
younger than 35, down from 50 currently.123 A lower age thresholdwould better target people who are likely to qualify for subsequent
skilled visas and be good prospects for permanent residency.124
English language requirements for the new visa should be raised, sothat only applicants who achieve an English competency score of atleast 6.5 on the International English Language Testing System (IELTS)(up from at least 6 currently), and a minimum score of 5.5 for eachof the four parts, are eligible. Graduates will need to show that they
have achieved this score within the past three years, which aligns withcurrent IELTS requirements.125

121. Grattan analysis of ABS (2022). 2023 AWOTE-inflated dollars. Includes Bachelor,
Masters, PhD, graduate diploma, and graduate certificate-holders. Based onhighest qualification obtained and median full-time earnings.
122. Coates et al (2022b, Figure 4.6).
123. In 2021, 93 per cent of primary Temporary Graduate visa-holders were younger
than 35 (Grattan analysis of ABS (2021b).
124. The maximum age for permanent employer-sponsored and points-tested visas is
45. See Coates et al (2021, Table 7.1).
125. Graduates from the UK, the US, Canada, New Zealand, or Ireland are exempt
from having to sit the IELTS test: Department of Home Affairs (2023e). This
provision should also be kept.

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Box 4: Setting the appropriate wage thresholds for theextension visas
Of the 58,686 primary Temporary Graduate visa-holders inAustralia in August 2021, 19 per cent were working full-timeand earned more than $65,000 per year.a Accounting for wages
growth, earnings of $65,000 in 2021 would be equivalent to about$72,000 a year by July 2024, when the new visa starts.b
This calculation includes visa-holders who had just graduated, so
earnings would probably be a bit higher for people at the end of
their Temporary Graduate visa. But, because these Census andHome Affairs data were from August 2021, when the borders wereclosed, labour market outcomes for Temporary Graduate visaholders were probably stronger than in normal times. This number
also includes people working full-time hours, but not necessarily ina full-time job.
Personal income tax data tell a similar story. About 20 per cent ofinternational graduates in 2021 reported their total income washigher than $65,000 a year within two years of graduating, and 15
per cent reported total income higher than $70,000.c
So a wage threshold of $70,000 in a full-time job would mean
about 20 per cent of Temporary Graduate visa-holders would be
able to gain the two-year extension. And that share should rise
if barriers to employing international graduates are removed, as
recommended in Chapter 5.
a. ABS (2021b). Another 4 per cent were working part-time and earned morethan $65,000 per year.
b. AWOTE used from 2021 to July 2023. Assumes 4 per cent from July 2023
to July 2024.
c. In 2021 AWOTE-inflated dollars. Includes graduates who received theirgraduate visa between 2014 and 2018. Data exclude anyone who didn’t
have a tax return, primarily those earning below the tax-free threshold.

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Graduates in limbo: International student visa pathways after graduation

Lifting minimum English language requirements would bring the visa
more in line with what graduates typically need to secure a permanent
points-tested visa and a good job.126
New research shows that permanent migrants who speak English‘very well’ earn 12 per cent more than permanent migrants who speak
English ‘well’ and 24 per cent more than migrants who speak English‘not very well’.127
Post-Study Work visas should be issued automatically upon graduation
The Post-Study Work visa should be issued automatically to all eligible
students upon graduation.128
This would help international students overcome the barrier of not
being able to guarantee to a future employer that they will have a visa
when their graduate job starts (see Section 1.4).
Students would be able to apply for the visa in advance of finishing
their studies, and the visa would be granted, subject to meeting otherconditions, unless the education provider informed the Department ofHome Affairs that the person did not graduate.129
3.2

Transition arrangements

Transition arrangements should be introduced for the changes to thegraduate visa.

126. For instance, while applicants only need an IELTS score of 6 to apply for apermanent points-tested visa, very few visas are issued to people with an IELTS
score of less than 7. See Coates et al (2021, Table 7.1).
127. Varela and Breunig (n.d.).
128. In line with Parkinson et al (2023) Recommendation 27.
129. Applicants would still need to satisfy other criteria, such as the character test andEnglish language requirements.

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The new Post-Study Work visa should be introduced on 1 July 2024,
provided changes to the Department of Home Affairs operating
systems can be completed in time. If not, then the new visa should
start on 1 July 2025.
People in Australia on a Temporary Graduate visa should have theterms of their current visa honoured, including those who have a longer
visa due to having a degree in a nominated area of shortage. People
who applied for a Temporary Graduate visa prior to any announced
changes should also still be eligible for the Temporary Graduate visa as
it existed at the time they applied.
Once the new Post-Study Work visa is introduced, international
students should be eligible only for the new visa. This should be
the case even though some students may have come here with the
expectation of obtaining more generous post-study work rights upon
graduation.
3.3

Our proposed Post-Study Work visa would help Australia to
identify the best graduates for permanent residency

Allowing students to stay and work after graduating helps Australia to
identify the best graduates for permanent residency.
Australia currently lacks the tools to effectively identify whichinternational graduates are good prospects for permanent skilled visas
immediately upon graduation. For instance, the institution at whichinternational graduates study is not a good predictor of their long-term
potential. Studies have found either a small earnings advantage from
attending a top-ranking Australian university, or no advantage at all.130

130. What a person studies matters more: See Norton (2021) and Norton and
Cherastidtham (2014). One study found an earnings disadvantage for regional
university graduates: Norton (2021). See also Parkinson et al (2023, p. 122).

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Graduates in limbo: International student visa pathways after graduation

Nor should Australia determine eligibility for post-study work rights,
or permanent residency, by using international graduates’ university
results. Different institutions, and faculties within those institutions,adopt different approaches to grading student progress. And the qualityof students will vary across degrees. For example, graduates withpoorer marks in highly sought-after courses such as Medicine or Law
may prove to be better candidates for permanent residency than top
graduates in other, less-competitive courses.131

Figure 3.1: Graduates who succeed on the Temporary Graduate visa also
succeed in the long term
Mean real income (2023 dollars) for Temporary Graduate visa-holders byyears since visa granted and income decile while on the Temporary Graduate
visa$125,000

Grattan Institute analysis shows that initial employment outcomes ofinternational graduates are a good indicator of graduates’ employment
prospects 5-to-10 years later (Figure 3.1). For example, five years
after graduating, graduates who were in the top income decile on
their graduate visa earned on average $100,000 a year, compared to$43,000 a year for graduates who were in the bottom decile on theirgraduate visa.132$100,000

Income 8 years since graduating
Income 5 years since graduating
Income on Temporary Graduate visa

$75,000$50,000

Our proposed post-study work rights would give graduates enoughtime to find a job – to help Australia identify talented graduates withstrong labour market outcomes – without the length of work rights
being so long that it offers false hope to those who are unlikely to everget permanent residency and adds to Australia’s population pressures(see Chapter 2).

$25,000$0

HighestLowestIncome decile

Offering shorter post-study work rights to international graduates may
make it harder for some to secure a good job and secure employer
sponsorship, or apply for a permanent points-tested visa. But by
reducing the stock of international graduates on temporary visas inAustralia after graduation, we increase the certainty of future visa
pathways for this cohort, which Chapter 1 showed was the mostimportant consideration for employers hiring international graduates.

Notes: ’Income on Temporary Graduate visa’ and income deciles calculated basedon income within two years of being granted a Temporary Graduate visa. This
includes some Temporary Graduate visa-holders on an 18-month graduate visa who
moved to another visa before 2 years. Data from 2010 till 2021. Income calculatedusing total income in the personal income tax data and AWOTE-inflated to 2023
dollars. Data exclude individuals who do not submit a tax return; these are likely to
be disproportionately low-income earners.
Source: Grattan analysis of ABS (2021a) .

131. See Carroll (2023).
132. Grattan analysis of ABS (2021a).

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Graduates in limbo: International student visa pathways after graduation

3.4

Our reforms would mean fewer international graduates inAustralia

Our reforms would slow the expected growth in the number of
Temporary Graduate visa-holders in Australia over the next few years.
Grattan Institute modelling suggests that, under our proposed
Post-Study Work visa, there would be about 260,000 international
graduates in Australia by 2030, compared to about 370,000 if current
Temporary Graduate visa settings remain in place (see Figure 3.2).
This change largely arises from the decline in the period that graduates
are expected to remain in Australia on the Post-Study Work visa.
Fewer people on temporary visas in Australia would be a step inthe direction of the government’s stated goal of ending ‘permanent
temporariness’. There would be fewer people competing for scarcepermanent places, and those who stayed in Australia on the extension
visa would be good candidates for permanent residency.

Figure 3.2: Our proposed changes to post-study work rights would mean
fewer Temporary Graduate visa-holders in Australia
Projected number of Temporary Graduate visa-holders in Australia, financial
year ending
400,000

Status quo:
Temporary
Graduate visa

350,000
300,000

New Post-StudyWork visa

250,000
200,000

Actual
150,000
100,000

Our reforms may modestly reduce the number of international students
who choose to study in Australia
As noted in Section 1.2, many international students choose to studyin Australia because of the generous work rights on offer. Shortening
the period and tightening the eligibility for an extended graduate visa
may discourage some international students from choosing to study inAustralia. However, we expect any decrease in student numbers would
be modest.
Our proposed reforms are still broadly aligned with the post-study work
rights of countries that Australia competes with to attract international
students, if not still more generous (Table 1.2). And international
students pick where to study based on a variety of factors, such as thesafety of the country, labour market prospects, and education quality,
not just the availability of post-study work rights.
Grattan Institute 2023

50,000

0
2015

2018

2021

2024

2027

2030

Notes: Includes primary and secondary visa-holders. Status quo projection as per
Figure 1.5. Projected numbers for the new Post-Study Work visa assume that 20 per
cent of Post-Study Work visa-holders get an extension visa across all degrees (seeBox 4). 40 per cent of university graduates take up the Post-Study Work visa by 2027,
and 10 per cent of VET graduates transition to a Post-Study Work visa at the end of
their visa. International student university and VET completions grow at 3 per cent per
year. The number of future international graduates eligible for the new visa is expected
to fall by 5 per cent due to the lowering of the maximum age of eligibility to 35 years.
Sources: Grattan analysis; Department of Home Affairs (2023a).

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Graduates in limbo: International student visa pathways after graduation

We expect our reforms would result in international student numbers
rising by 3 per cent a year, compared to 4 per cent under current
policy. By 2030, that would equate to about 40,000 fewer international
students in Australia.133
Our reforms should make Australia more attractive to the most talented
international graduates
By reducing the number of international students who struggle in thelabour market, with little prospect of permanent residency, our reforms
would also protect the reputation of Australia’s education sector. And
by reducing competition for the limited number of permanent skilledplaces available, our reforms would increase the chances that talented
graduates are offered permanent residency.
Therefore our reforms may act to support international student numbers, especially among talented students who are attractive prospects
for permanent residency, offsetting the decline in international students
highly motivated by the prospect of extended post-study work rights.
Fewer poor-quality graduates would secure permanent residency
Improving the quality of the stock of graduate visa-holders in Australia
could unlock further long-term gains via improving the quality of theapplicant pool for permanent residency. As shown in Box 2, the biggest
benefits from Australia’s international exports arise from getting themost talented graduates to stay in Australia.
Yet many international graduates earning very low incomes still
manage to secure a permanent skilled visa (Figure 1.11). And
Section 3.3 showed that international graduates who earned low wages
while holding a Temporary Graduate visa earned much less than otherinternational graduates once they acquired permanent residency.
133. Based on higher education enrolments in 2019.

Grattan Institute 2023

By reducing the post-study work rights offered by default to allinternational graduates, and only offering extensions to the Post-StudyWork visa to graduates earning more than $70,000 a year, thecomposition of international graduates applying for permanent skilledvisas may improve. Preventing less-talented graduates from staying inAustralia would mean fewer less-talented graduates would be able tostay long enough in Australia to secure a permanent visa.
Fewer international graduates would mean modestly lower rents
International students and graduates who reside in Australia place extra
pressure on Australia’s already-constrained housing stock (Box 1).
Reducing the expected stock of international graduates in Australia by
100,000 by 2030, and reducing the number of international students
in Australia by 40,000 by the same date, would reduce the number ofextra homes Australia needs to build by about 60,000 by the end of thedecade. Therefore our reforms to graduate visas could result in rents inAustralia being about 1 per cent lower than otherwise by 2030.134
Fewer graduates in low-paid jobs could mean higher wages forless-skilled workers
There is limited evidence that migrants ‘take jobs’ or materiallyreduce incumbents’ incomes, at least in aggregate (Box 1). However,improving the quality of the Temporary Graduate visa cohort bytargeting high-wage workers, and reducing international student
numbers, would probably boost the wages of less-skilled Australian134. Assumes an average of 2.5 international graduates per additional dwelling
and an elasticity of supply in the stock of housing of 4 per cent for each 10 per
cent increase in house prices/rents. Also assumes that international graduates
do not stay here on another visa, such as a further student visa. Therefore,
these estimates should be treated as an upper-bound impact of our reforms on
Australia’s housing market. Grattan analysis of Figure 1.5; ABS (2021c); Daley etal (2018).

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Graduates in limbo: International student visa pathways after graduation

workers in occupations where lower-skilled Temporary Graduate andstudent visa-holders are concentrated, such as in hospitality and retail.

3.5

Reducing the number of international graduates in Australia in visa
limbo working in less-skilled jobs would also reduce the risk thatinternational graduates are exploited in Australia. Exploitation is morecommon for those earning lower wages, because higher-wage workers
have more bargaining power and are better able to protect themselvesfrom being exploited.135

The government should create a new stream of the Global Talent visa
called the ‘Exceptionally Talented Graduate’ stream, which would give
permanent residency to a small number of exceptional international
students at the end of their studies. At first, no more than 200 such
visas would be issued each year. Subject to an effective evaluation of
graduate outcomes, the program could be expanded in time to 500 or
1,000 places.

Some stakeholders have raised concerns that reducing the numberof international graduates in Australia on temporary visas, and onlyoffering extensions to graduates in higher-paid jobs, would make itharder for employers in the care economy to meet their workforce
needs. Yet pushing highly-qualified international graduates to workin less-skilled and typically low-paid roles in the care economy is nota sustainable solution to workforce shortages in those sectors. An
endless cycle of international graduates with little intention to stayworking in low-paid care-economy jobs is unlikely to lead to high-qualitycare. And relying on temporary visa-holders to fill lower-wage,
less-skilled jobs in the care economy risks further exploitation of
migrant workers.
Offering more competitive wages for less-skilled care-economy jobs
is the only way to sustainably close workforce shortages in the careeconomy in the long term.136 In an effort to reduce worker shortages
in the care economy, the government has announced it will pilot a new
essential-worker visa stream for temporary sponsorship, for migrants
who work in the aged-care sector and earn at least $51,222 a year.137
But creating a new, low-skilled care economy visa comes with big risks
that will require careful management.138
135. Coates et al (2023).
136. Coates et al (2022b, p. 95).
137. Department of Home Affairs (2023h) and Department of Home Affairs (2023j).
138. Coates and Wiltshire (2023).

Grattan Institute 2023

Create an Exceptionally Talented Graduate permanent visa
for outstanding international graduates

The stream would be restricted to students studying Bachelor-level,
Masters-by-research-level or PhD-level qualifications.
To get the visa, international students would have to be nominatedby their institution in the final year of their studies.139 Applications
would be assessed by a panel of experts set up by the Department.
The panel could recommend a shortlist to the Department, which
would then offer the visas to selected high-achieving individuals. The
criteria should include: academic results and awards, other awards,
academic publications, level of study, references from lecturers andother university staff, and extra-curricular activities.
Offering a clear pathway to permanent residency for the most talented
students would encourage more to choose to study in Australia.140
While there are other pathways that these students may take, offering
them a direct pathway would ensure they stay in Australia, rather thanmove to faster paths to permanent residency in another country.

139. Students would first express an interest to their university about obtaining thevisa, then universities would nominate students. For example, universities could
select students who were in the top 2-to-5 per cent of their student cohort andwho received strong references from lecturers. Each university should be allowed
to nominate a maximum of 50 students each year.
140. Parkinson et al (2023, p. 122).

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Graduates in limbo: International student visa pathways after graduation

The government would need to clearly communicate that this visa isoffered only to a small number of exceptional students, to deter false
advertising by unscrupulous education agents to prospective students
that there is a direct pathway to permanent residency for all students
who study in Australia.

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Graduates in limbo: International student visa pathways after graduation

4

Reform skilled visas

The biggest benefits for Australia of international education come fromgetting the best students to stay in Australia. Yet Chapter 1 showedthat many employers are reluctant to hire international graduates
because of uncertainty about their visa pathways once their graduate
visa expires.
The federal government is reforming employer sponsorship of migrant
workers. These changes are a step forward, but further reform isneeded to create a simpler and more-certain pathway to permanent
residency for international graduates.
First, skilled occupation lists should be abolished for both temporary
and permanent employer sponsorship. Employers should be able tosponsor graduates earning more than $70,000 a year for a temporaryvisa, and more than $85,000 a year for a permanent visa. Temporary
Graduate visa-holders who receive the extension visa should be eligible
for a temporary skilled visa by the end of their extension.
Second, the points test should be reformed, to reward talent rather thanpersistence. The points test is increasingly bloated with characteristics
that are not well-correlated with migrants’ long-term success inAustralia. In a reformed points test, younger workers should get
more points, and more consideration should be given to the skills of
secondary applicants.
Offering more permanent skilled visas would increase graduates’chances of securing permanent residency. However, there are practicallimits on the number of permanent visas that can be offered each year.
And skilled visas should not prioritise international graduates simply
because they have studied in Australia.
Grattan Institute 2023

4.1

Planned changes to employer sponsorship do not provide
clear pathways for Temporary Graduate visa-holders

Employer-sponsored visas are one pathway available to international
graduates once their Temporary Graduate visa lapses. In 2021-22, 10
per cent of Temporary Graduate visa-holders who remained in Australia
and moved to another visa moved onto a Temporary Skill Shortage(TSS) visa, compared to about 5 per cent pre-COVID.141 In total, 5.5
per cent of Temporary Graduate visa-holders receive a permanent
employer-sponsored visa within eight years of graduating.142
High-income graduates are more likely to transition onto a TSS visa
after their Temporary Graduate visa: 10 per cent of those among the
top 30 per cent of income earners on the Temporary Graduate visa
transition to a TSS visa, compared to just 1 per cent among the bottom
30 per cent of Temporary Graduate visa-holders.143
In response to the Parkinson Review, the federal government plansto create three tiers for employer sponsorship of migrant workers,
covering both temporary and permanent employer-sponsored visas:144
1. A fast, simple route for specialised, highly skilled workers above
a certain (as yet unspecified) wage threshold.145 It may be limited
to high-paying jobs in high-tech sectors, or extended to a broader
range of jobs in any occupation.

141. Department of Home Affairs (2023k).
142. Based on 2013 Temporary Graduate visa recipients: Grattan analysis of ABS(2021a).
143. Based on 2018 Temporary Graduate visa recipients.
144. O’Neil (2023).
145. The Parkinson Review recommended at least $90,000 a year. And early reporting
suggests it will be between $120,000 and $150,000: Read and Coorey (2023).

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Graduates in limbo: International student visa pathways after graduation

2. A mainstream sponsored visa pathway, with a minimum wage
threshold of $70,000 a year from 1 July 2023. It will be restricted
to occupations deemed in need by Jobs and Skills Australia.
3. An essential-worker visa, focused on care-economy workers.
This visa has a lower minimum salary of $51,222 a year, alower English language requirement, and a shorter pathway topermanent residency. The visa started in May 2023 with an agedcare pilot.146
Other reforms include allowing TSS visa-holders up to 180 days to finda new employer before their visa lapses, instead of the current 60 days.
And the government has committed to making employer-sponsoredvisas portable, allowing migrants to switch more easily between
sponsoring employers should they find a better job once in Australia.
The government is also exploring a switch to monthly fees for employer
sponsorship, which would mean employers would not have to pay alarge fee upfront to sponsor international graduates.147
These reforms are a step forward, but will do little to increaseinternational graduates’ certainty about their future visa prospects.
Most graduates are unlikely to be eligible for the high-wage tier at theend of their graduate visa, so will still rely on their occupation being on
a list when they graduate.
Using occupation lists for employer-sponsored visas adds costand complexity to the sponsorship process. Continuing to use
occupation lists as the basis for temporary and permanent employer
sponsorship means employers and graduates will remain uncertain
about whether an international graduate can move from a graduate

146. The Aged Care Industry Labour Agreement. See: Department of Home Affairs(2023j).
147. Department of Home Affairs (2023h, p. 6).

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visa to a temporary sponsored visa, and finally to a permanent
employer-sponsored visa.
In our survey of graduate employers, concerns that skilled occupation
lists would change, making it harder to sponsor workers in the future,
was a factor that deterred employers from recruiting international
graduates (see Section 1.4).
The government’s proposed changes to employer sponsorship may
also distort the career choices of graduates who want to obtainpermanent residency. For example, some international students may
choose to study an aged care course, mainly because it offers thequickest and most certain pathway to permanent residency, even if they
never intend to pursue that career long term.148
At a minimum, Jobs and Skills Australia should base its updated
occupation lists for skilled migrants on high-skill occupations that attract
high wages, rather than seeking to identify occupations in shortage.149
This change would ensure skilled migration is better oriented towards
skilled migrants, and it would offer greater certainty to graduates that
their occupation will be on the occupation list when they finish theirgraduate visa.
4.2

Skilled visas should be further reformed to strengthen visa
pathways for graduates

Further changes to skilled visas are needed to provide clearer
pathways for talented graduates to stay in Australia once their graduate
visa expires. Past work by Grattan Institute has shown that permanentskilled visas should prioritise younger, high-skilled migrants.150

148. Hare (2023c).
149. Targeting high-wage jobs is more likely to target occupations in shortage than themethodology currently employed. See Coates et al (2022a, Section 2.4.1).
150. See Coates et al (2022b, Chapter 3).

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Graduates in limbo: International student visa pathways after graduation

Skilled occupation lists should be abolished for both temporary andpermanent employer sponsorshipas an additional tax on temporary sponsorship employers, adding todelays and uncertainty in sponsoring skilled workers.

Temporary employer sponsorship should be available for any jobthat pays more than $70,000, and permanent employer sponsorshipshould be available for any job that pays more than $85,000.151 In bothcases, the market salary rate would still need to be met, to ensure thatsponsored workers are paid no less than local workers doing the same
job.

Wage thresholds would mean graduates would be more likely tomake choices about their studies and work that improve their careerprospects. They would be less likely to study degrees that offer clearer
pathways to permanent residency but do not suit their natural talents,and less likely to eschew valuable experience in lieu of working in a job
with a higher chance of permanency.

A guaranteed offer of a high-wage job is a strong sign that applicants
have valuable skills and will succeed in Australia. Offering sponsorshipfor high-skilled workers capable of attracting high wages is also betterfor targeting skill shortages, since workers in areas of genuine shortage
are likely to attract a wage premium over time, and workers who
attract high wages are likely to be harder to train quickly when in short
supply.152

Our proposed reform would create a simpler and more-certain pathway
to permanent citizenship for applicants – and more certainty forsponsoring firms. Firms would no longer need to fit the sponsored role
into a particular listed occupation, and temporary visa-holders would
no longer be at the mercy of occupation lists that can change at any
time. This is particularly important for international graduates who may
take at least three years to earn enough to be eligible for employer
sponsorship.

Sponsored workers would still be required to be proficient in English
and have a minimum of two years of relevant work experience. The
two-year extension visa would mean that most high-wage graduates
should be able to get the necessary experience. And all temporarysponsored workers would have a pathway to permanent residency,
provided they earn at least $85,000 a year.
Labour market testing for temporary sponsorship should also be
abolished, reducing impediments to employers hiring international
graduates.153 Current rules for labour-market testing effectively act

151. See Coates et al (2022b, Chapter 4) for a full description of Grattan Institute’s
proposed reforms to the TSS visa, and Coates et al (ibid, pp. 54–61) for a fulldescription of our proposed reforms to the permanent employer-sponsored visa.
152. Coates et al (2022a, Chapter 2).
153. Labour-market testing requires sponsoring employers to advertise a job before
hiring a skilled migrant.

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Reform the requirements for permanent sponsorship
Workers on a Temporary Skill Shortage visa have a pathway topermanent residency via an employer sponsorship arrangement if theywork for the same employer and in the same occupation for three years
on the TSS visa. For graduates to take this pathway under our reforms,
they will have been in Australia for at least eight years before they are
eligible.154
Grattan Institute has previously recommended that the governmentchange the requirement to work with a single employer for at least
three years to be eligible for permanent sponsorship, to two yearsof experience with any sponsor.155 This would reduce exploitation,
154. A one-year Masters degree, two years on a Post-Study work visa, two years on
the extension, and three years on a TSS visa.
155. Coates et al (2023, Section 2.3.4).

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Graduates in limbo: International student visa pathways after graduation

because workers would not have to rely on their employer sponsoringthem for permanent residency. It would also reduce the time that
individuals are on a temporary visa.156

independent, state-nominated, and regional visas should be replacedwith a single universal points-tested program that targets younger,higher-skilled workers.160

The extension under our proposed Post-Study Work visa should alsocount towards eligibility for permanent sponsorship.

The points test is increasingly bloated with characteristics that are notwell-correlated with migrants’ long-term success in Australia. These
include characteristics such as regional study, the ‘professional year’,and studying at an Australian higher education institution.161 Points
for these characteristics encourage international graduates to makestudy and career choices to seek additional points, rather than making
choices that are best for their career prospects.162

Visa fees for permanent sponsorship should be reviewed to ensure they
are not a barrier to employers offering permanent sponsorship to TSS
visa-holders.
The points test should be reformed, to reward talent rather thanpersistence
Many Temporary Graduate visa-holders utilise points-tested visas togain permanent residency. About five-in-six Temporary Graduate visaholders who receive permanent residency within five years receive apoints-tested visa.157
Australia’s points-tested visas are broadly working.158 In general,
workers who gain a permanent points-tested visa are younger and earnmore than incumbent Australians.159 But the system can work better.
Some permanent points-tested visa streams attract more talented
migrants than others. Grattan Institute has previously recommended
that separate permanent points-tested visa streams for skilled
156. The typical domestic graduate working full-time with a Bachelor degree or higher
earns $82,000 four years after graduating.
157. 49 per cent received an independent points-test visa, 19 per cent state or territory
nominated, and 15 per cent regional points. Partner and employer-sponsoredwere less common, with 12 per cent and 4 per cent respectively. Based on 2016
Temporary Graduate visa recipients who received permanent residency by 2021.
158. Specifically, the subclass 189 skilled independent visa, the subclass 190 skilled
nominated visa, and the subclass 491 skilled work regional (provisional) visa
(which provides a pathway to permanent residency via the subclass 191 visa).
159. Coates et al (2021, Chapter 7).

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Younger workers should get more points. The points test alreadyweights age heavily compared to other selection factors, andpoints-tested migrants are significantly younger than those selected
via other skilled-worker streams. But the distribution of points relating
to age is poorly designed. Currently, an applicant aged 25 gets only
five points more than an applicant aged 39. Yet, all else being equal,
the difference in future contributions from migrants of these two ages issubstantial.163
More consideration should be given to the skills of secondary
applicants, who account for roughly half of all permanent skilled visas
granted each year.
Points offered via the test for different characteristics should be
re-calibrated to reflect the contribution those characteristics make tomigrants’ contribution to the welfare of the Australian community.
A revamped points test should better align migrants’ incentives topursue permanent residency with investing in their own long-term
160. See Coates et al (2022b, Chapter 3).
161. See Coates et al (2021, Section 7.3.2).
162. Tang et al (2022b); and Parkinson et al (2023, p. 108).
163. See Coates et al (2022b, Section 2.3).

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Graduates in limbo: International student visa pathways after graduation

career development. This would especially be the case if permanent
selection was more focused on wages and skills, rather thancharacteristics such as whether the person studied in Australia or ina regional area.
The Home Affairs Minister has said the government intends to overhaul
the points test.164
Grattan Institute is doing further research on exactly how to revamp thepoints test, which will be published in coming months.
4.3

Australia cannot offer all international graduates permanent
residency

Offering clearer pathways to permanent residency for international
graduates would improve their employment prospects after graduation.
And clear pathways to permanent residency are also important for
attracting and retaining the best talent to stay in Australia. But there
are constraints on the degree of visa certainty that can be offered tointernational graduates.
The federal government plans to offer 190,000 permanent visas in
2023-24, including 137,100 places in the various permanent skilled visa
programs.165 And one third of permanent skilled visas, and one in five
permanent family visas, have historically been issued to those whose
first visa was a student visa.166
Expanding the number of permanent visas available each year
would allow Australia to offer more-certain pathways to permanent
residency for international graduates. But it would be unrealistic to offer
permanent residency to all international graduates who want to stay –164. O’Neil (2023). The points test has not been reviewed since 2006: Birrell et al(2006).
165. Department of Home Affairs (2023d).
166. Varela et al (2021).

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there were more graduate visas issued this past year than there werepermanent skilled visas available (Figure 1.3). And most permanentskilled visas are offered to people who never studied in Australia.167 In
fact offering more permanent visas may attract even more temporaryvisa-holders to Australia.
An increase in the size of Australia’s permanent migrant intake would
offer a fiscal dividend to the country, provided the extra permanent
visas went to younger workers. But by expanding Australia’s populationin the long term, a larger permanent intake would also impose costs onmembers of the community, such as more expensive housing, higher
levels of urban congestion, and broader environmental impacts.
Whatever its merits, a big increase in the number of permanent visas
offered each year would be politically difficult. A 2022 survey foundthat 24 per cent of Australians believe too many migrants are being
accepted, and 52 per cent believe the current number is ‘about right’.168
However, the proportion of people wanting fewer migrants has fallenfrom 44 per cent in 2018, probably in part because Australia had lessmigration during the pandemic.169
Even if the permanent skilled intake was larger, it’s not clear thatoffering all the extra places to international graduates would be inAustralia’s national interest. After all, international graduates tend tohave lower incomes once granted permanent residency, on average,
than similar permanent skilled visa-holders who obtained their degrees
abroad (Section 1.3). And less-talented graduates – those with fewer
167. Varela et al (ibid, Table B1).
168. 22 per cent want more migrants accepted into Australia. Data from O’Donnell(2022).
169. The 2022 Mapping Social Cohesion Survey found that support for migration andmulticulturalism is high and growing. For example, the proportion of people who
agree or strongly agree that ‘accepting immigrants from many different countries
makes Australia stronger’ increased from 63 per cent in 2018 to 78 per cent in
2022.

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outside options in other countries – are often among those mostly
highly motivated to secure permanent residency in Australia.
The policy choices we make about who gets each of the limited numberof permanent skilled visas available each year have an enormous
impact on the well-being of Australians. Even small improvementsin the selection of permanent skilled migrants can have enduring
benefits over an extended period.170 Conversely, mistakes made in
selecting permanent skilled migrants will have long-lasting impacts
on the composition of Australia’s population, and the well-being of theAustralian community.
Guaranteeing all international graduates an automatic pathway topermanent residency would make Australia’s student visa programa de-facto part of Australia’s permanent skilled migrant program.
Offering privileged pathways to permanent residency for graduatesrisks selecting less-talented international graduates already in Australia
over higher-skilled applicants from abroad.171
The best way to strengthen pathways to permanent residency is toalign them with the characteristics that best predict migrants’ long-term
success in Australia.172 This would align graduates’ incentives to getpermanent residency with advancing their own careers.

170. For instance, past Grattan Institute analysis estimated that improvements
to Australia’s permanent skilled migration program could add $159 billion toAustralian government budgets combined over the next 30 years. Coates et al(2022b, p. 70).
171. Coates et al (ibid, p. 43).
172. Coates et al (ibid, Section 2.10).

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Graduates in limbo: International student visa pathways after graduation5

Help international graduates to succeed in the labour market

Chapter 1 showed that international students face many barriers togetting a good job once they graduate. They need more help, andbarriers to their employment should be removed.
A government campaign should educate employers about graduate
visas, especially the work rights they offer, as well as other visa
pathways after graduate visas.
Universities need to invest more in career advice and support services
for international graduates.
The federal government should regularly publish detailed league tablesof the employment outcomes of international graduates, including theirearnings, broken down for each course of study offered by Australianhigher-education providers.
Federal, state, and territory governments should remove therequirement for permanent residency for public sector graduate jobs.

The campaign should be run by the Department of Home Affairs
and involve online and in-person education sessions for humanresources staff and senior management, particularly at organisations
that have graduate programs. The campaign should also target
job advertisement sites such as SEEK, Indeed, and LinkedIn, andindustry bodies, so that these organisations can advise their clients andmembers about visa rules and how best to advertise jobs to get accessto a bigger pool of talent.174
The campaign should also aim to improve employer understandingof overseas qualifications, and to reduce discrimination againstinternational graduates.
Universities should also play a greater role in changing employer
attitudes to international graduates. The Australian Universities Accord
found that:175
Industry attitudes towards hiring international students and graduates requires significant attention. Universities play a pivotal
role in connecting industry with international students, including
communicating the benefits of employing international students andaddressing misinformation regarding international visa limitations.

And the federal government should change the fortnightly cap on
working hours for international students to an annual cap of 1,560
hours (an average of 30 hours a week).
5.1

A government campaign should educate employers about
graduate and other visas

A government campaign should educate employers about temporary
and permanent visas.173 Many employers have a poor understanding of
the Temporary Graduate visa and other visas. This can unnecessarily
deter them from hiring international graduates (see Section 1.4).
Increasing employers’ understanding of graduate and other visas
should make employers more willing to employ international graduates.
173. Navitas (2022).

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5.2

More funding is needed for settlement and support services
for international graduates

International students need more help to transition to work after
graduating.176 The Parkinson Review found that the combination of
174. In our survey of graduate employers, ‘Access to a broader talent pool’ was themost common response when employers were asked what the primary reasons
were for recruiting temporary visa-holders among university graduates.
175. Department of Education (2023c, p. 57).
176. Parkinson et al (2023, p. 122).

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Graduates in limbo: International student visa pathways after graduation

generous post-study work rights, unclear pathways to permanent
residency, and a lack of support to succeed in Australia’s labour market
has led to ‘uncertainty, distress, and confusion’ among international
students and graduates.177
Not-for-profits, government agencies, and for-profit settlement services
all play an important role in helping international graduates findemployment, by providing settlement services for people who relocate
for work, providing networking opportunities, writing job applications,
helping people prepare for interviews, and helping them understandAustralian workplace culture and laws.
The Australian Universities Accord raised the idea of a levy oninternational student fee income as a way to help fund housing,
infrastructure, research, and other national priorities.178 This levy, if
enacted, could help to fund the education campaign and the support
services recommended in this report.179 Alternatively, an additionalcharge on international student visas could fund these activities.
Universities should also invest more in career advice and support
services for international graduates. The Universities Accord says
universities should ‘play a role in supporting international students
who may not always be aware of what employment opportunities
exist for them both during and post-study. Ensuring international
students, particularly those studying in areas of Australia’s skills needs,
are connected to industry throughout their education will facilitate
better pathways into employment and therefore help meet workforce
shortages’.180

177. Ibid (p. 108).
178. Department of Education (2023c, p. 16).
179. The cost of the levy would be likely to be shared between the university andthe international student, via the university charging higher tuition fees, even if
universities were legally required to pay the levy.
180. Department of Education (2023c, p. 57).

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5.3

The government should publish information about theemployment outcomes of international graduates

The federal government should regularly publish detailed league tablesof the employment outcomes of international graduates, including theirearnings, broken down for each course of study offered by Australianhigher-education providers. League tables would strengthen the
incentives for universities to invest in helping international students
succeed after graduating.
5.4

Governments should accept international students for public
sector graduate jobs

Most public sector graduate jobs require applicants to be permanent
residents. For example, only citizens are typically permitted to workfor the federal public service.181 State government graduate programs
typically are also restricted to citizens and permanent residents,182
although most fixed-term state public sector jobs are open to temporaryvisa-holders with valid work rights. Several public sector respondents toour survey of graduate employers said government hiring rules stopped
their organisation from employing Temporary Graduate visa-holders(Section 1.4).
Where temporary visa-holders are able to apply for the role,
governments should account for the fact that students may not have avisa with full work rights at the time of application, but will have one by
the time the job starts. The NSW Government, for example, requires
181. A non-Australian citizen may be engaged in the Australian Public Service (APS)
only if an Agency Head considers it appropriate, in accordance with subsection
22(8) of the Public Service Act 1999: Australian Public Service Commission(2023).
182. For example, the Victorian Government graduate program specifically excludes
Temporary Graduate visa-holders, although they have committed to employing
more international students: Victorian Government (2023) and Study Melbourne(2023).

53

Graduates in limbo: International student visa pathways after graduationthat temporary visa-holders must have a current visa at the time of
application that allows them to work for the 18-month program.183
This means that students need to wait until they are on the Temporary
Graduate visa before they can apply, and at that point, they may nothave enough time left on their visa to complete the graduate program.
The federal and state governments should change their employment
policies to make temporary visa-holders eligible for graduate roles.
Under our proposed reforms outlined in this chapter and Chapter 3,
an international graduate in a public sector graduate program would be
eligible for an extension visa, and probably a Temporary Skill Shortage
or permanent visa after that, so there should be no concerns about thelength of time a graduate can work.
For the federal government, graduate jobs offered to international
graduates on a temporary visa might need to be time-limited, butwith the explicit understanding that the contract will be extended if an
extension visa or other visa is granted.184
International graduates employed by the federal government while
holding a temporary visa would still need to satisfy the conditions tobe granted a security clearance.185 Security clearances are typicallynot required for employment in state and territory governments, unless

183. NSW Government (2023).
184. The current policy is: ‘Where the citizenship requirement has been waived fora temporary visa-holder, engagement should be on a non-ongoing basis andlimited to the time available on the temporary visa... If an employee no longer
holds a valid work visa, their employment can be ended for loss of an essential
qualification under subsection 29(3)(b) of the Public Service Act’: Australian
Public Service Commission (2023).
185. For example, citizenship has historically been required in order to be eligible for
an Australian Government security clearance. However, the employer can waive
the citizenship or checkable background requirements if there is an exceptional
business need and a risk assessment is conducted. See Department of Defence(2023).

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the job requires accessing information deemed classified by the federal
government.186
5.5

Reform the cap on work hours for international students

International student working hours are capped at 48 hours afortnight during study periods, and work hours are unlimited during
vacation periods.187 This cap on working hours is intended to prevent
non-genuine students from coming to Australia on a student visa andworking full-time, and to ensure students have enough time to devote
to studying. Most comparable countries have a similar cap on working
hours.188
The cap on working hours is intended to work in combination withother student visa conditions, such as attending class and making
satisfactory course progress.189 International students are also required
to demonstrate they have sufficient savings to support themselves
while studying in Australia.190
Hours worked for internships or work experience which are amandatory requirement of a course do not count towards the working
hours cap.191 But the fortnightly working hours cap limits opportunities
186. For example, see Department of Defence (ibid).
187. Historically the cap was 40 hours a fortnight, but was uncapped during COVID tohelp address labour shortages. Students working in aged care can continue towork unlimited hours until the end of 2023.
188. Australia’s new 48-hour cap per fortnight is more generous than the caps in
Canada, New Zealand, the US, and the UK, where students can typically work
20 hours per week. Finland allows students to work any number of hours in agiven week, as long as for the year their average working hours are no more than
30 a week. Sweden has no cap on working hours but students must study for atleast 40 hours per week. See Coates et al (2023, Chapter 2).
189. See Department of Home Affairs (2023l).
190. From October 1 2023, international students will need to show evidence of$24,505 in savings: Clare et al (2023).
191. Parkinson et al (2023, p. 112).

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Graduates in limbo: International student visa pathways after graduation

for international students to gain valuable work experience that is notformally required as part of their studies. As the Parkinson Review
noted:192
At the moment, unless they are an approved element of thestudent’s course, unpaid work (including work-integrated learning,internships, and work experience) are all counted towards the cap on
working hours. International students are forced to choose between
undertaking paid work or taking advantage of opportunities that could
enable better success in their field of study or training and a moreseamless transition into the labour market post-study.

Opportunities to gain relevant work experience and build networks areimportant for labour market success for graduates.193 Work-integrated
learning, unpaid internships, and work experience all provide students
with these opportunities.
The Parkinson Review also found that full-time employment rates werehigher among Temporary Graduate visa-holders who were vocationalor had work-integrated learning, such as for pharmacists, teachers, anddoctors.194 A lack of local work experience, or lack of familiarity with
Australian workplace culture, is often cited by employers as a reason
for not recruiting international graduates (see Section 1.4).
Grattan Institute’s 2023 report, Short-changed: How to stop the
exploitation of migrant workers in Australia, showed that the cap
on student working hours is a major contributor to exploitation ofinternational students in the workplace.195

192. Parkinson et al (2023, p. 112).
193. Jackson and Collings (2018).
194. Parkinson et al (2023, Figure 41).
195. Coates et al (2023). According to Farbenblum and Berg (2020, p. 3), ‘This
restriction profoundly contributes to exploitation of international students, andto their unwillingness to seek help for underpayment or report violations ofworkplace laws when they occur’. See also Boucher (2023, p. 158).

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Students who have worked more than allowed under their visa
conditions, possibly due to pressure from their employer or because ofunderpayment, are unlikely to complain to their employer about working
conditions or report exploitation to the Fair Work Ombudsman due tofear of having their visa cancelled.196 This creates a vicious cycle: oncea student has breached their visa and their employer knows this, they
become more vulnerable to exploitation.
Uncapping work hours would risk a boom in non-genuine students
Removing the cap on working hours completely could lead to more
non-genuine students migrating to Australia primarily to work. Thisoccurred during 2022 when students were allowed to work unlimited
hours.197
Uncapping student work hours would risk turning student visas into
a de facto low-skill work visa, undermining confidence in Australia’s
migration program and potentially leading to exploitation of non-genuine
students.
Uncapping working hours may also dilute the quality of higher
education in Australia, because non-genuine students may enrol
in poor-quality courses, or struggle to complete their course due toworking too many hours.
Keeping some form of cap on working hours sends a signal that people
coming to Australia on a student visa should be here to study and notwork full-time.

196. Despite these fears, very few student visas are cancelled for breaching the cap
on work hours: Farbenblum and Berg (2020, p. 7).
197. The relaxation of caps on student work rights coincided with a big jump in student
visa lodgements and a decline in the proportion of visa applications granted:
Coates et al (2023, p. 37).

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Graduates in limbo: International student visa pathways after graduation

The government should replace the fortnightly cap on international
students’ working hours with an annual cap
The government should change the fortnightly cap on working hours forinternational students to an annual cap. We recommend an annual capthat allows a student to work 30 hours per week on average across thewhole year, a total of 1,560 hours per year. This is the approach usedin Finland.198
Such a cap would allow international students studying for anundergraduate degree to work an average of 20 hours a week during
study periods, and an average of 40 hours a week during study breaks.
And an annual cap could more flexibly accommodate study-related
work experience.
An annual cap could reduce exploitation of international students, byreducing the bargaining power of employers who knowingly coerce
students to work in breach of their visa rules in a given fortnight.199
However, an annual cap on work hours would be marginally moredifficult to enforce, compared to a fortnightly cap, especially where
migrants work for multiple employers in a given year. It would put
a greater burden on the Department of Home Affairs to collate theevidence that an international student has breached the cap on student
work rights over the course of a year.200

198. Finnish Immigration Service (2023).
199. Coates et al (2023, Section 2.6).
200. In practice very few student visas are cancelled for breaching the cap on work
hours: Farbenblum and Berg (2020, p. 7).

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Graduates in limbo: International student visa pathways after graduation

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