AUSTRALIA: Universities face funding crisis

A collapse in income from foreign student fees has begun to hit universities across the country with Monash University, the nation's biggest, facing a A$45 million (US$44.8 million) drop in revenue next year and the loss of 300 jobs.

In an email to staff last week, Monash Vice-chancellor Professor Ed Byrne announced that overseas student numbers were expected to fall by 10% "at best" in 2011. Byrne said foreign student fees accounted for more than 20% of Monash's annual income, "so the drop will have a significant adverse impact upon the university's budget". Planned expenditure for 2011 would need to be reduced by around $45 million".

"Regrettably savings are required in the university's salary budget," the email stated. "In order to achieve necessary savings whilst minimising the impact upon staff the university will be seeking expressions of interest in voluntary separation packages."

Although Byrne denied a decision had been made regarding the number of redundancies, the National Tertiary Education Union said it had been advised that 300 jobs were on the line "in the first instance".

The situation facing Monash is not unique and nor is the university's failure to prepare for the downturn. Universities have been subject to warnings for years that their reliance on foreign student fee income has placed many in a dangerous financial situation.

But few suspected the federal government might act to cut back on the continued rapid expansion in the export trade in education by restricting student visas and curbing skilled migration. In April, the government announced changes to its skilled migration programme and imposed new regulations covering foreign students applying for permanent residency.

Tens of thousands of overseas students have used Australia's education system as a means of gaining access to the Australian workforce with dodgy vocational education colleges springing up to offer dubious courses in cooking and hairdressing.

The government crackdown has forced dozens of the colleges to shut and now universities have been caught up as well. Once Indian students in particular realised that studying for an Australian business or commerce degree no longer offered them automatic entry, they began turning away in droves.

As University World News reported last month, 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.

A study prepared for the Australian Technology Network of Universities by Professor John Phillimore and Paul Koshy of the John Curtin Institute of Public Policy at Curtin University in Perth, The Economic Implications of Fewer International Higher Education Students in Australia described the alarming consequences for the Australian economy.

"International education is Australia's third largest export industry, generating $18 billion in exports in 2009," the report stated. "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 had only 32% of the total foreign student market, it was the most economically significant part of the post-secondary sector, generating 57% of export revenue, the authors noted. 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.

The Group of Eight research-intensive universities joined the nation's vice-chancellors in warning that a savage downturn in foreign student numbers would threaten universities. The two bodies have called on the government to take urgent action and save the international education industry from the brink of potential disaster.

Both have urged changes to student visa arrangements to ensure legitimate students are not discouraged from applying to enrol in Australian universities, warning that tightening visas to tackle problems in the training sector, particularly dodgy colleges, had resulted in "collateral damage" to universities.

Academics and general staff most at risk at Monash are in the country's largest economics and commerce faculty, which has a high proportion of foreign students. Faculty dean Professor Stephen King wrote in a blog last month that the federal government had three choices in preventing a funding crisis for universities:

"Fix the visa issue so the Australian education system remains internationally competitive and the cross subsidy to domestic students can continue; or massively increase the funding per domestic student so it covers the true cost of that student's education (either backed up by an increase in Hecs [higher education contribution scheme] or via taxpayer funding); or prepare to inject billions of dollars into the tertiary sector in the form of bailouts over the next two to three years".

King wrote that because option three was "the default option, I expect that option three will occur. And if it does, the federal government will be responsible for trashing the reputation of our universities and killing a viable long-term export industry in education".