Foreign student levy plan reopens value-for-money debate

In the realm of international education in Australia, the timeless lyrics of Bob Dylan echo: “Gather round people wherever you roam and admit that the waters around you have grown … and you better start swimmin’ or you’ll sink like a stone for the times they are a-changin’.”

Amid a multitude of ongoing reviews in the Australian education sector, there is a prevailing sense of uncertainty, especially for those engaged in international education. The eagerly anticipated Universities Accord, initially slated for a December 2023 release, has faced significant delays, pushing its expected publication to March 2024.

This delay hints at forthcoming substantial changes, notably the contentious international student levy proposed in the Universities Accord interim report, despite strong opposition within the sector.

The Australian government contends that the proposed international student levy could act as a safeguard against future economic or policy shocks, or alternatively, fund national and sector priorities such as infrastructure and research.

A radical policy step

Termed a “radical policy step”, the report emphasises that a few Australian universities, based on recent international revenue, would shoulder the majority of the contributions, with a potential 5% levy on 2021 international student fees estimated to collect over AU$430 million (US$280 million), half of which would be from just five universities.

Support for the plan to tax nearly AU$10 billion in international student fees is limited, with only three universities expressing full endorsement. The University of Newcastle and University of Technology Sydney first proposed the levy, with James Cook University showing support.

The vice-chancellor of the University of Newcastle, Alex Zelinsky, sees the levy as potentially beneficial for universities in regional areas. Despite opposition, proponents argue that it cannot be dismissed outright, especially considering the challenges faced by regional universities in capturing the international market.

The proposed levy has, unsurprisingly, faced significant criticism from the Group of Eight, representing major research-intensive universities. These institutions, such as the University of Sydney, University of New South Wales and the University of Melbourne, have consistently attracted the lion’s share of international students in Australia.

The backlash prompted a response from two Melbourne professors, Christopher Ziguras and Gwilym Croucher, who delved into the implications of the levy and emphasised the financial burden it places on international students.

They highlighted that most international students already pay tuition fees significantly higher than those paid by domestic students and are generally doing more “heavy lifting” than their domestic counterparts to afford their education. The levy could further drive the feeling among international students that they are seen as “cash cows”, they said.

Critics from the private sector have also weighed in on the debate, including Troy Williams, chief executive of the Independent Tertiary Education Council Australia, who argued that imposing such a levy would strain international students financially and diminish Australia’s attractiveness as an educational destination.

Return on investment

What seems to be escaping the critics is that international students will only in fact be impacted by the tax if universities and colleges pass it on to them in the form of increased tuition fees.

On the question of ‘cash cows’, it is clear that in Australia, like Canada and the United Kingdom, international students pay considerably more than their domestic counterparts. This has not escaped any international student to date, and leaves them more focused on the return on investment of their degree.

The Australian Labor Party government is understandably driven by a desire for significant revenue and a proactive stance to mitigate future risks after the pandemic as well as its aims to support education in regional areas and improve access to tertiary education for under-represented groups.

The prospect of taxing wealthier institutions to subsidise their less affluent counterparts, despite objections from the Group of Eight, aligns with the government’s commitment to addressing growing inequity.

Post-pandemic, wealthy Australian universities have seen increased investment and a rise in affluent international students. By contrast, less affluent institutions are struggling, impacting their ability to educate the majority of students, particularly those from low socio-economic status backgrounds.

This divergence in fortunes underscores the challenges faced by the segment focusing on equity among students, a key priority for the Labor government in expanding access to tertiary education.

On the verge of expansion

Australia is on the verge of its biggest university expansion since the time of the 1980s education minister John Dawkins; that is, if you believe his present-day successor, Jason Clare.

In his speech to launch the Australian Universities Accord’s interim report, Clare said the country must vastly increase the number of people obtaining post-school qualifications. “If we don’t, we won’t have the skills and the economic firepower that we need to make this country everything it can be in the years ahead,” he said.

But there is a significant barrier standing in the way: as reviewers proclaim the need for ever more education, the people supposed to benefit most from this herculean effort – the students – seem to be losing interest.

Emma Dawson, executive director of public policy think tank Per Capita, says young people (including international students) are questioning not so much the cost of degrees as the value.

“Students are graduating with high debt for courses that aren’t necessarily getting them the jobs they were promised. A degree isn’t worth what it used to be in terms of the job market. The job you used to get with a bachelor degree now needs a postgrad,” she says.

More worrying for those working in international tertiary education, the tide seems to be turning in favour of the levy. Greg Craven, a University of Melbourne graduate and most recently the former vice-chancellor of the Australian Catholic University, said recently: “The greed of Australia’s top universities has no cap!” and proceeded to lambast the Group of Eight.

The Australian National University’s Bruce Chapman, the economist who designed Australia’s HECS (Higher Education Contribution Scheme) student loan scheme, has also strongly backed a levy on international student fees, provoking a further backlash from the Group of Eight universities, which label it an “envy tax”.

With students increasingly questioning the return on investment of a degree and with the prospect of an international levy that may increase international tuition fees looming ever larger, it is now more important than ever that universities can evidence the return on investment of their degrees and which companies employ their graduates – both in Australia and for international students back in their home countries.

Back to Bob Dylan: “Come writers and critics who prophesise with your pen and keep your eyes wide, the chance won’t come again … for the times they are a-changin’.”

Louise Nicol is founder of alsocan and Asia Careers Group SDN BHD.