For the past 25 years international student enrolments have risen like an escalator but now they are set to drop like an elevator.
The crash in international enrolments and the ramifications will be felt across Australia - from the Pilbara to the cafes of Darlinghurst.
Government data shows foreign student enrolments in higher education are down 6.3 per cent for the year to June 2010. Student recruitment agents suggest both higher education and VET enrolments could fall by up to 30-40 per cent over the next five years.
The reasons are manifold. I will short-list a few here in no particular order:
- Lack of marketing differentiation. If you go to an education fair in Hong Kong, New Delhi or Manila, the brochures from Australian universities all look the same. That’s because they are effectively targeting the same markets with the same products.
- Disconnecting visas from permanent residency. A minority of private providers and agents sought to rort the system. Now everyone is getting punished, yet if that’s what it takes to clean up the sector - so be it. But it has had a harsh knock-on effect for the university sector.
- Changes to student visas (risk of overstaying) - under current visa arrangements, the family of a Chinese student wanting to do an undergraduate course at Monash would need to show it had up to $150,000 in the bank for six months before the date of the visa application. This is ridiculous. Britain only requires students to show a bank deposit of about $40,000 held for 28 days and the US only asks the student to show adequate funds for self-sufficiency. This is a major turn off for international students.
- The high price of the dollar. International students have to save and pay more when our dollar is high. It’s currently trading at 93 cents against the US. So for an $80,000 degree, they now have to save $20,000 more than they did three years ago.
- Increased competition. The USA remains the number one choice for foreign students, particularly from China. American institutions are also starting to flex their market muscles offshore. The fees at many American state universities are lower than comparable Australian institutions.
- The GFC. Banks don’t hawk this fact around but many Asian (and Australian) investors have millions of dollars frozen in US property trusts. If Mum and Dad can’t access their money, they can’t spend it on the kid’s offshore education.
- “She’ll be right thinking”. It has been assumed by many senior officers at Australian universities that there would always be a “river of gold” in international students. This created a “template mentality” of taking international students for granted - and who likes to be taken for granted?
- The relatively low public value in which universities and TAFE’s are held in Australia. If something goes wrong in the tertiary education system “that’s their problem”. If something goes wrong in the healthcare system, “that’s everybody’s problem”. Universities don’t have the emotional or ideological pull of the school sector.
- False perceptions. The media failed to distinguish in the lead up to the Federal election that international students are not technically migrants even though they are counted by the ABS as immigrants. They are in fact “visitors”. Nor was it reported that two thirds of all international students return to their homelands to work. Reports ran rife through India and China that foreign students were not welcome in Australia.
- Race prejudice. It’s the devils of our worst nature that makes us blame economic problems on people from overseas. Mercifully such prejudice is in the minority but their voices are loud, strident and they carry far.
What’s at stake?
International students generated $18 billion last year and provided about 70,000 jobs in VET, universities, government agencies and support enterprises.
Universities rely on foreign student fees for an average of 16 per cent, of their total funding, although some major universities such as Central Queensland University (44 per cent of total revenue), Ballarat University (31 per cent) and RMIT University (26 per cent) are far more exposed. Much of that revenue is used to cross-subsidise domestic students.
It’s too early to say how a fall in international enrolments will affect domestic student numbers. Yet with fewer foreign students spending money, rents will fall with various knock effects throughout the real estate industry. There will also be much lower demand for goods and services such as food, transport and tourism amounting to many millions of dollars lost.
Professor Phillimore and fellow Curtin University colleague Paul Koshy said that in a worst-case scenario, by 2015 foreign student enrolments in higher education could plunge from about 214,000 in 2010 to about 148,000 in 2015, resulting in 36,182 fewer jobs and the loss of $7 billion in university revenues. That’s half the sector gone.
''There's been a systematic under funding of domestic students, so no Australian university gets enough money from government or fees to pay our costs. Our costs are dependent on the international markets, so not only do international students bring vast economic earnings to the state, not only do they contribute culturally enormously to our campuses, they also are key factors in university budgets in this country,” Monash University Vice-chancellor Ed Byrne said in The Age recently.
Now add this to increased domestic demand for goods and services, as more people find jobs in the services sector, as the baby boomers continue to retire and the under servicing of apprenticeships in specific trades by the Keating and Howard Governments hits the economy.
The GFC eclipsed the skills shortages. It didn’t make them go away. Some of the skills shortages are in professions where international students found short term and long-term employment - especially in IT, engineering and accounting.
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Malcolm King works in generational workforce change. He was an associate director at DEEWR Labour Market Strategy in Canberra and the senior communications strategist at Carnegie Mellon University. He also runs a professional writing business called Republic.