By FRANK LARKINS
The COVID -19 induced financial stress being experienced by many Australian universities is proportionally more severe and potentially longer-lasting than for most of their international counterparts, principally because of their higher dependence on overseas student fee income.
The English-speaking countries that are major competitors with Australia for the recruitment of overseas students are the United States of America, Canada, United Kingdom and New Zealand. Analysis of the 2017-18 higher education student enrolment data for these countries highlights that they are less financially exposed in the proportion of overseas students in their student profiles.
The USA had 5.5 per cent overseas students, Canada 13 per cent, UK 19.6 per cent (the non EU figure is 13.6 per cent), New Zealand 15.1 per cent while Australia was at 32.8 per cent. Furthermore, in 2018 some seven Australia universities had more than 40 per cent overseas students. What is striking about these statistic is Australia’s comparative vulnerability, especially when the overseas profile is dominated by Chinese and Indian students.
University resources world-wide are currently being consumed in developing costly strategies to offer alternative modes of learning to face-to-face teaching and to provide support services to protect the well-being of staff and students at a time of declining recurrent revenues.
Universities with a higher proportion of domestic students are expected to recover more quickly. These students are already in Australia and can adapt more readily to on-line learning programs to continue their studies.
Once universities reopen campuses, domestic students can return to on-campus activities even if international borders remain closed. This is especially important for students enrolled in courses that require an amount of hands-on skills-based development. The physical and biological sciences, engineering and medical sciences all require a laboratory practical training component to satisfactorily complete award courses. These courses have some of the highest overseas student enrolments who will be unable to gain access. A number of overseas students may elect to complete their courses in their home country. Furthermore, many may not return because of family financial hardships experienced through the present crisis. The decreased revenue may be very serious for some institutions with limited financial reserves as full cash flow recovery could take several years.
In 2018 some 52.2 per cent of the total revenue for continuing operations in universities came for Australian government financial assistance packages ($17.6 billion), 32.8 per cent from student contributions ($10.6 billion) and the remaining 16 per cent ($3.5 billion) from various other sources of income.
However, for seven universities student income represented for more than 40 per cent of their income and a further four received more than 35 per cent of their income from student fees. Six of these universities are in New South Wales and Victoria.
With the duration of the present self-isolation arrangements unknown and normality at least six months away one can anticipate that universities will be seeking additional support from governments.
Some, but not all Australian universities, have strong balance sheets. One can expect the Federal and state governments will be more amenable to providing financial support to assist domestic students than overseas students.
Increasing operating grants, student subsidies and some capital funding could be on the request agenda. However, the area for major focus is likely to be decreased funds to support research. In a number of universities more than 40 per cent of the funding for research comes from discretionary income, of which overseas student fees are a significant component. This source is unlikely to be as readily available in the near future. They also rely heavily on overseas students to advance their research programs.
The cost to Australia’s R&D effort could be substantial if momentum is lost in this area. More government assistance will be required to protect strategic national interests.
Professor Emeritus Frank Larkins,
The University of Melbourne