In the previous article we forecast the financial impact of COVID-19 on Australian universities would last for several years and conservatively result in a $13- 15 billion loss of revenue. We indicated that the decline in international student fee income would be the key factor generating this outcome. The Mitchell Institute using broader assumptions has estimated that accumulated losses could be higher – up to $19 billion by 2023.

Some actions that the Australian Government might consider in responding to this decline in income are discussed here.

The Australian higher education sector lacks a cohesive and comprehensive policy framework. One consequence is that there are few reference points or national goals against which the implications of such a decline in revenue can be assessed.

International students are predominantly characterised by Australian governments as a commercial activity undertaken largely independently of direct government support.  Accordingly, there is little incentive or appetite to intervene or render assistance, particularly given competing emergency funding priorities. Consistent with this, the recently announced Higher Education COVID-19 Support package was unashamedly “Australians first” with no provision for international students.

There are perhaps three levels at which the Australian Government might consider intervening to provide support to the sector.

The first focuses explicitly on the area where universities are expected to incur the greatest level of revenue reduction – the international student market. In this area, the Australian Government’s response for reasons outlined above is likely to be as much regulatory as financial in nature. Some options might include:

* accelerating the eventual opening up of access to Australia for foreign students, including research students, in particular those from countries clearly demonstrating they have the COVID-19 virus under control. In doing this, it would be helpful if universities’ academic calendars were taken into account so that arrivals to Australia can align with the start of the academic calendar.

* reviewing current student visa conditions to ensure that study in Australia continues to responsibly offer work and study entitlements that are favourable relative to those of other destination countries.

* as foreshadowed for the tourism sector, collaborate with the Australian education sector on development and funding of a major and sustained international education marketing and recruitment program to be executed once borders are re-opened. The focus must be as much on new and emerging markets as on core and traditional source countries.

* given that the “new normal” will now finally include a far greater element of on-line learning, co-invest with willing universities on the development of world-class digital platforms, curriculum and pedagogy. In the new world order of international education Australian universities will need to match it with even stiffer competition in order to rebuild and sustain its market share.

The second relates to the wider consequences of a significant decline in international revenue that has consequences for the university sector’s contribution to research and research training.

International student fees have been a major funding source for university research. Particularly in relation to STEMM disciplines, international students have become the backbone of Australian research training. A decline in each will have knock-on consequences for the international ranking of Australian universities, something that heavily influences international student demand. These are serious issues that have great national significance.   Australian Government response will need to consider what measures it might take to sustain current levels of university research and encourage greater numbers of domestic students to enroll in research higher degree studies.

A third lever is also available. This would allow for structural reform without the need for major investment. In the event of a long and challenging journey back to the ‘new normal’ which will affect individual universities in different ways, the Australian Government might revisit  – while desirably learning  from past forays –  the deregulation of domestic student fees. It could also open up the possibility of institutional mergers and campus rationalisations in order to secure longer term viability within the higher education sector.

Ian Marshman is a former Senior Vice Principal and Frank Larkins a former Deputy Vice Chancellor at The University of Melbourne. They are both Honorary Fellows at Uni Melbourne’s Centre for the Study of Higher Education


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