In countries like Australia where education is a major export earner (it’s the third largest), testing the English skills of prospective students has been a mandatory part of applying for a study visa. No surprise there, most countries competing to recruit fee-paying students require some sort of language test score to apply for a visa. The difference was that in Australia, the only acceptable test score was from IELTS, making this business a very lucrative monopoly. Now, monopolies may not be flavour of the decade in the global economy, but they exist, even in education; however there aren’t many government-sanctioned monopolies that benefit only one private sector for-profit enterprise. What’s even more amazing is when two of the major shareholders in this monopolist are a UK government quango and one of the world’s top universities. Yes that’s right, IELTS is jointly owned by the British Council, Cambridge University, IDP and IELTS Australia.
This is an unusual post-modern colonial enterprise, given the history of the key Australian shareholder IDP. IDP started life as the Australian Asian Universities’ Cooperation Scheme (AAUCS) a quango, who were part of the Australian government’s diplomatic outreach programme (the Columbo Plan). In 1969 their remit was to provide development assistance to universities in South East Asia.
Twelve years later this quango became the International Development Plan (IDP) and the recruitment of fee-paying foreign students began as an initiative of the Hawke Labor government in 1985 (fees for local students began in 1989). In 1989 IDP became part of IELTS and in 1996 the organisation switched from being a quango to a private company whose shareholders were 38 of Australia’s universities. Everything went swimmingly with the student recruitment business growing rapidly but then in 2003-4 the local market and IDP fell off a cliff. In 2005 a new CEO, Tony Pollock, was hired to turn IDP around and within a year 50% of IDP was sold to the local listed online recruitment company SEEK Pty Ltd. SEEK have since become a major local education company via their investment in THINK Education Group. In 2008, IDP purchased the 46% of IELTS Australia it didn’t own making it a wholly owned subsidiary.
While IELTS Australia has enjoyed a privileged position, things haven’t been all plain sailing with the company being subjected to police and judicial investigations into cheating and bribery by students and test centre staff over the previous two years.
Fast forward to 2011 and in July, Chris Bowen MP, the Australian Immigration Minister, announced the breakup of ILETS’s monopoly, allowing students to apply for visas with test results from:
- Test of English as a Foreign Language (TOEFL)
- Cambridge English Advanced Exam (also known as Certificate in Advanced English, CAE)
- Pearson Test of English
While this is a substantive but slow change given Pearson first applied to the Australian government way back in May 2009! So why the change in policy now? It’s a combination of two factors, the most pressing is that Australia education export sector is under serious sustained competitive pressure, and removing unnecessary barriers to student recruitment is a priority (the review of English language tests began in 2008). Secondly, the IELTS monopoly showed that Australia’s tough competition laws had some glaring gaps. In 1974 when the local Trade Practices Act came into effect, universities were exempt, but as they developed for-profit enterprises they in theory began to fall with the Act’s remit. Competition law cases relating to education were few and far between, but the introduction of the Competition and Consumer Act in January 2011 put the sector on notice that the game had changed. For the Federal government this meant allowing the IELTS monopoly not only looked hypocritical (and may have been illegal) it actually ran counter to the interests of the education export sector.
The monopoly is gone, although ironically, competition may not be as fierce as one might expect given that the CAE exam is run by Cambridge ESOL, the department of Cambridge University, who are also part owners of IELTS.
Education is big business in Australia, but problems facing the sector from changes to visa regulations, a sky high currency and problems in key markets like India, should make education policy a political and bureaucratic priority. The current minority Labour government (who rely on independent and Green support) is so focused on its proposed carbon tax and managing a resources boom two-speed economy, that education policy is stuck in the slow lane.