AUSTRALIA: Downturn threatens universities
Caught up in a post-election battle over who will hold the reins of government, neither Prime Minister Julia Gillard nor Opposition Leader Tony Abbott appear concerned by the effects of a sharp fall in Australia's third largest export industry: selling education to foreigners.
But a report titled The Economic Implications of Fewer International Higher Education Students in Australia, prepared for the Australian Technology Network of Universities last month, sets out the alarming consequences.
Describing a worst-case scenario it dubs 'the Perfect Storm'*, the report says enrolments by overseas students could plunge more than 100,000 by 2015 with a potential fall in university revenues of $7 billion (US$6.4 billion) over the next five years along with a loss of more than 1,850 jobs.
"This is a severe hit, especially as the sector moves to a competitive demand-driven domestic funding model in 2012," the report says.
Written by Professor John Phillimore and Paul Koshy of the John Curtin Institute of Public Policy at Curtin University in Perth, the report says the cost to the national economy could amount to almost $6 billion, with a loss in employment of more than 45,000 full-time equivalent positions.
"International education is Australia's third largest export industry, generating $18 billion in exports in 2009," the authors say. "It is 50% larger than tourism-related travel, and has grown by 94% since 2004; in 2009, there were 629,918 international students in Australia of whom 203,324 were in higher education, 232,475 attended a VET [vocational education and training] provider and 135,141 were in an English language course."
Although higher education has only 32% of the total foreign student market, the report says it is the most economically significant part of the post-secondary sector, generating 57% of export revenue.
On average, each foreign university student spends almost $51,000 a year, with just over a third on fees and the rest on goods and services, mainly for accommodation, food and retail purchases.
As well, the authors say that for every two of these students, one extra job is created. The total value-added benefits generated by students - including student and family visitors' expenditure - amounted to $9.3 billion last year. Of this, $3.5 billion was for education expenses while the other $5.8 billion was in the rest of the economy.
But the report warns that international higher education is now under severe pressure as a result of recent global and domestic developments.
These include a stronger Australian dollar, the impact of the global financial crisis, increased competition from other countries such as the US, "reputational damage caused by attacks on international and especially Indian students", the collapse of a significant number of private vocational education colleges and major changes to student visa and skilled migration rules that have limited the chances of foreign students gaining permanent residency.
Then there were the debates that dominated last month's election campaign in which both the government and opposition proposed substantial cuts to immigration and a move towards a 'sustainable population'.
Phillimore and Koshy say the impact of most of these factors has yet to be fully felt but is likely to be reflected in future figures on commencements and visa grants. Yet they note that indications of a serious decline are already evident with total commencements of foreign students falling by more than 6% for the year to June 2010, with English language colleges hardest hit, down 20.5%.
"Further reports from agents and providers suggest enrolments could fall by 30-40%," the authors say. "This is worrying for the higher education sector as [English language courses are] a common pathway into higher education in subsequent years."
Department of Immigration figures show a similar downward trend and higher education visa grants declined in 2009-10 by 11.5%, mostly the result of a fall in visas from India. Offshore higher education visa grants fell by 25% and were only slightly offset by increases in postgraduate research students receiving visas.
Late last week, the National Tertiary Education Union warned that the fall in applications from foreign students had the potential to undermine the financial viability of universities and other education providers that have become increasingly reliant on international student fee income.
"This drop in international student visa applications clearly indicates Australia is becoming a less attractive study destination for international students," said Matt McGowan, the union's Victorian Division Secretary.
McGowan said fees from international students were the second most important source of income for universities and, on average, accounted for 15% of their total earnings. For a number of universities, the fee income made up half their annual budgets.
He said the union was also calling on the main political parties to guarantee that public universities and public technical and further education colleges would be compensated for any loss of international student fee income resulting from changes to government policy.
* The authors of the report used modelling of the potential economic impact of a decline in commencements and enrolments using a baseline of modest 3% growth from 2010, with three plausible scenarios up to 2015:
A 'Sideways' scenario in which commencements decline by 10% in 2011, remain constant over 2012, before returning to baseline growth of 3% per annum; a 'Trough' scenario, where commencements are hit by rolling decline, with a decrease in student numbers of 20% in each of 2011, 2012 and 2013, before expanding again by 3% per annum over each of 2014 and 2015; and a 'Perfect Storm' scenario in which commencements fall by 35% in 2011 then remain flat over 2012 and 2013, before returning to baseline growth thereafter, albeit from a vastly reduced base.