policy & reform
campusreview.com.au
Photo: Peter Parks/AAP
$19b loss looming
New report indicates
pandemic could decimate our
university sector and bruise
the broader economy.
By Wade Zaglas
A
new report by education policy
think tank the Mitchell Institute
at Victoria University shows the
university sector could expect to lose up to
$19 billion over the next three years due to
a dearth of international student revenue
caused by the coronavirus pandemic.
The forecast also warns that the
broader economy will be hit with another
$20 million loss, stemming from a nadir in
international students’ financial positions.
It is expected that the “next big hit” will
arrive mid-year, as $2 billion in annual tuition
fees dries up after international students are
prevented from coming to or returning to
Australia to complete their courses.
In an interesting analogy, the report
estimates that, with each six-monthly
intake of international students cancelled
due to international border controls
related to COVID-19, an “economic blow
equivalent to when Australia lost its entire
car manufacturing industry” will take place.
Currently, the Australian government
suggests that border controls could remain
in place for the next 18 months and be
the last restriction to be lifted. Such a
predicament would represent a death blow
for the international student sector and the
universities heavily reliant on the sector’s
tuition fees.
While the government announces a raft
of measures to prop up the sector, experts
warn that “it will fall well short of plugging
the gap from the loss of international
student revenue”.
The Australian Investment in Education:
Higher Education report revealed Australia’s
dependence, or “addiction”, to international
student revenue, as academic Salvatore
Babones called it, although he didn’t single
out China. The report mentions there
was a 137 per cent growth in international
student revenue over the previous decade.
The report also highlighted that 40 per
cent of the sector’s annual student revenue
came from international students.
However, despite such a windfall in
revenue from international students over
the last 10 years, the report concluded
that rising education costs in recent times
had compromised the ability of many
universities to break even.
And that was before the COVID-19
pandemic ravaged the sector and
presented a whole set of other challenges.
The report found that, in 2018,
international students contributed nearly
$9 million in annual revenue to Australian
universities, representing roughly 58 per
cent of student revenue “for Australia’s
largest and most prestigious universities”.
The broader economy is also tipped to
take a big hit, as international students in
the higher education sector delivered at
least $10 million to the broader economy,
including tourism, retail, hospitality and
other vital sectors.
Report author Peter Hurley from the
Mitchell Institute said most universities
had insufficient surpluses to “weather the
COVID-19 contraction”.
“The sudden and steep decline in
international student enrolments is a
Sources of revenue: international and domestic students
Universities with more than
50 per cent student revenue
from international students
International
student revenue as
percentage of total
student revenue
significant economic challenge for
universities, and this affects the opportunities
for Australian students too,” he said.
The current situation is compounded as,
while international student numbers have
risen dramatically, the caps on domestic
funding have translated into “static”
participation rates for Australian students.
“It is likely that demand from domestic
students for university places will rise
because of workers looking to reskill and
upskill during the uncertain economic
conditions. Also, a quarter of school leavers
usually take a gap year to work or travel.
With those plans off the agenda, these
too may be looking to study. However,
universities are currently unable to respond
fully to any changes in demand due to caps
on places,” Hurley said.
“Increasing capacity in the tertiary sector
by removing the caps on university places
would provide both an opportunity for
Australians with few job prospects to build
their skills in preparation for the economic
recovery, along with helping universities to
offset this unprecedented drop in revenue
from international students.”
The latest report claims to be the “most
accurate picture to date about the amount
of funds that go towards governmentfunded
education and training in the higher
education sector”.
“It reveals that the federal government
spent $13.4 billion in 2018, and almost
45 per cent of this was in the form of
income contingent loans, which are
recouped by the government through
higher income taxes.”
The report provides illuminating
additional data, showing the reliance
on international students for some of
Australia’s top universities.
Universities Australia (UA) was contacted
regarding the report, but advised it would
not comment until it had digested the
report’s findings. ■
Domestic
student
revenue ($000)
International
student
revenue ($000)
University of Sydney 58.5 per cent $628,627 $884,693
University of Melbourne 58.5 per cent $624,837 $879,312
University of NSW 57.7 per cent $522,692 $712,461
Monash University 55.1 per cent $695,198 $851,989
University of Queensland 51.6 per cent $537,784 $572,698
Federation University Australia 51.2 per cent $121,798 $127,724
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