March 2004 issue

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NZ's hard times

There is no doubt that 2003 was a difficult year for operators in New Zealand, but the language teaching industry and the government believe they are on track to consolidate student numbers this year and learn from last year's problems. Amy Baker finds out more.

There were many stories in the world's press last year about problems in New Zealand's English language teaching industry, specifically related to a downturn in the number of Chinese students, its number-one student provider country. As Stuart Boag of Education New Zealand observes, 'The number of Chinese students [coming to New Zealand] captured some attention during 2003.'

Statistics were not available at the time of going to press to reveal by what percentage Chinese student numbers had declined, but a number of schools closed last year, including two prominent school organisations, with the Chinese downturn largely to blame, according to press reports. Reasons for the slowdown included a reluctance by Chinese students to travel because of Sars, the strengthening New Zealand dollar and Chinese media reports of poor standards at some New Zealand schools.

What industry bodies and many New Zealand schools are stressing now is that strategies need to be in place to manage severe fluxes in student enrolment. Some schools point out that by having had caps on student numbers from certain countries, they were protected from the severity of the situation last year. 'We had no difficulty at Languages International in maintaining the same numbers in 2003 as we had in 2001 and 2002,' relates Frances Woolcott, Director of the school, which is based in Auckland. 'In those earlier years, we had stayed within our strategy of keeping Chinese students to under 15 per cent of the total student body.'

However, Woolcott acknowledges, '2003 was the year from hell for the private English language teaching industry' and points to other factors as having had a negative impact on schools' performances. These include an exponential increase in compliance costs, two highly publicised court cases involving foreign students being charged with criminal offences, kamikazi discounting by schools competing for students and the poorly-controlled entry of 'get-rich-quick' language school operators into the marketplace.

Guy Hughes at Language Schools New Zealand blames the exchange rate and 'a few bad operators trying to cash in on increased numbers of Chinese students' as chiefly responsible for dwindling student numbers. '[Bad operators] have been generally people with little idea of the needs of this industry. They spring up when things are good, and change to something else when things are not, leaving the quality operators to pick up the pieces.'

Boag underlines, 'We should not ignore the impact of a couple of high profile institutional business failures during the year. Fortunately, the students at these institutions were protected [but] there is no doubt that there was an effect on market confidence in China.' He adds, 'New Zealand is working hard to ensure that the Chinese government and students understand the robustness of quality standards in New Zealand.' A delegation led by the Education Minister visited China last year to stress commitment to quality.

Despite these difficult operating conditions, many providers' experiences were not too dismal last year. At Edenz Colleges in Auckland, Tim Cooper reports that Chinese numbers were down by 80 per cent, but overall numbers held steady. And Chris Leckie, Principal at Rotorua English Language Academy in Rotorua, says that 2003 was satisfactory, although in the second half of the year, numbers were down about 30 per cent on 2002.

Hughes relates a 10 per cent drop in numbers in Queenstown and a 40 per cent drop in Christchurch last year, with Korea being the other notable market to wane at his schools. Adriana Newman, at Prime International College in Auckland, concurs. 'Apparently, the Korean market has been affected too, due to the high kiwi dollar and [other] changes,' she says.

On the plus side, a number of schools have noted increasing enrolments, or are expecting more enrolments, from other world regions. Newman says, 'We are to receive more South American and European students [in 2004]', while Woolcott adds, 'No single market has proven itself to be a supreme rising star in the last 12 months. However, Eastern Europe, the former Soviet states, the Middle East and South America are all showing us that New Zealand is no longer 'too far away'.'

Schools are quite buoyant in their expectations for 2004, with the biggest obstacle to success being closer to home, in the form of government actions that target private language schools (see right) and unwieldy immigration legislation. Hughes says, 'We are waiting for our government to give us a level playing field in terms of the right for students to work on a student visa while at language schools, as they can in competitor countries.' Newman also calls for faster visa processing times.

Next year, Cooper forecasts 'more regulation and fewer schools', but is hoping for a slow recovery, while Adrian Kerr, Director of Aoraki International College in Timaru, also predicts a 'gradual resurrection' of business. At Languages International, Woolcott similarly envisages business returning to form in the next 18 months to two years, in which time, she expects to see favourable reductions in exchange rates, a more general awareness that education is New Zealand's fourth-largest export dollar earner, and numerous checks and balances on new language schools entering the marketplace, as well as 'significant spring cleaning in the Ministry of Education'.

Boag finishes by saying, 'In summary, we expect 2004 to be a year of consolidation and development, as the industry adjusts to the realities and opportunities of the international education market that has itself transformed markedly over the past few years, and continues to do so.'

The government v private schools

'We see the robust changes in government policy and the lack of support from the government as being the biggest hurdle for the industry,' states Adriana Newman of Prime International College in Auckland, summing up what many private language providers feel.

At the end of last year, the New Zealand Ministry of Education proposed increasing the education export levy, for private training establishments only, from 0.45 to 0.7 per cent of tuition fees. The levy was originally introduced to provide a central fund that would be used to improve quality control and promotion.

In light of the collapse of schools last year, including the Modern Age Institute of Learning chain, when the government had to provide funding to ensure accommodation for students affected by the sudden closure, it has proposed changing a law to raise the levy and guard against a similar situation occurring again.

'The code of practice for the pastoral care of international students and the New Zealand Qualifications Authority require that student fee protection mechanisms are in place,' said Education Minister, Trevor Mallard. 'But despite this, in the case of some private businesses, students have been left out of pocket. The [amended] bill will allow the government to recover any past or future costs that taxpayers incur as a result of the actions or inactions of this type of private business.'

However, private language schools feel they should not fit the bill for what was essentially the government's failure. Tim Cooper, of Edenz Colleges in Auckland, points out, '[Government] agencies were the only people able to know what was going on with those schools as they had sole management of the schools' validation and registration.'

Chris Leckie of Rotorua English Language Academy in Rotorua agrees. 'We consider that the government has not monitored weak schools carefully enough. Good schools should not have to bail out poor ones.'

There is real concern among providers that the government's strategy will affect the competitiveness of private schools. 'The government is not only greedy but is foolish in 'seeking to kill the goose',' says Cooper. Guy Hughes of Language Schools New Zealand adds, 'We have a government given to uninformed knee-jerk reactions with little idea of the consequences.'

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