Homeward Bound

Universities that profit from overseas students should shoulder the risk if they walk away. By Nick Cater.

China played the race card on Friday, warning citizens not to study in Australia. Not to be outdone, the ABC reported at the weekend there had been “numerous reports of people of Asian appearance experiencing flagrant racism across Australia in the wake of COVID-19”. Outside Ultimo and Beijing, however, the slur was seen for what it was: an excuse to impose further trade sanctions on the country its official newspaper describes as “chewing gum on the boot of China”.

The loss of fee-paying students from China would be a serious blow to Australian universities for which they are unprepared.

It could deprive some universities of up to a quarter of their revenue, more than half a billion dollars in the case of the University of Sydney, for example. This would be another blow to inner-city economies where tens of thousands of Chinese students live.

Yet the bursting of the overseas student bubble could be the salvation for higher education if it returns to its core business of educating young Australians.

Universities would no doubt deny that overseas students have been taking places from Australians at our best universities, but that is what the numbers suggest.

The number of Australian students commencing courses at Group of Eight universities fell by more than 2000 between 2009 and 2018. The number of overseas students doubled to 60,000.

Universities are under no obligation to educate other nations’ progeny. Yet the growth in the overseas student market has been extraordinary, particularly from mainland China, from where half the foreign students come.

At Monash University, for example, revenue from overseas students has tripled in the past 10 years to $1.1bn last year, overtaking the money it receives from the commonwealth government for Australian students.

If Chinese students were withdrawn, Monash stands to lose about a quarter of its revenue. Others, like Sydney and UNSW, are in the same boat, leading to the predictable demands for government assistance.

“Why is the government letting universities suffer?” asks Gavin Moodie, adjunct professor at RMIT, which boasts the largest proportion of overseas students in the country.

Moodie accuses conservatives in the Coalition of an ideological attack in retaliation for university divestment from fossil-fuel investments, the alleged suppression of free speech, the rejection by some of the Ramsay Centre for Western Civilisation, and so forth.

The real reason for the cold shoulder is far more prosaic. If universities want to behave like businesses, enrolling students for no higher purpose than clipping the ticket, they should shoulder the risk. Managing a business in contraction is a novel experience for university administrators. The growth curve in higher education began in the late 1950s under Robert Menzies. Yet radical change is needed if universities are to thrive. The job cuts have already begun. It will be interesting to see who goes first, academics or administrators.

At Monash the payroll for bureaucrats has risen by 60 per cent in real terms since 2009, twice as fast as the academic payroll. The COVID-19 pandemic and its consequences will lead to a contraction of higher education across the developed world. There are predictions in the US that 500 to 1000 colleges could close because of falling demand, mostly from domestic students.

In Australia the haircut may be particularly savage, since the concentration of overseas students is higher than any comparable country.

The model of local universities designed by John Dawkins in the 1980s is ill-suited to the challenge. Mergers would seem logical, but that has always been a struggle in higher education.

Universities should have seen this coming. The growth in domestic students was bound to hit its natural limit, while the overseas market is naturally unstable, even without the heavy reliance on a country prepared to use its youth as pawns in a trade war. Education was likely to be an early casualty of bilateral tension. Keeping its students at home or sending them elsewhere imposes little if any cost on China.

Yet opportunities will emerge from the crisis if universities are bold enough to take them.

The rapid growth in foreign admissions has degraded the university experience for many domestic students, particularly in the courses where overseas students are in the majority. Teaching staff are obliged to divert their attention to issues of basic literacy. There is room for greater efficiency in higher learning, reducing the large investment students are obliged to make in fees and salaries forgone.

The move to online learning accelerated by the COVID-19 crisis will play a much larger part in the life of the university of the future. Some of our bolder universities might focus on excellence, not the mealy-mouthed version that finds its way into mission statements next to the word inclusion, but the kind that insists on the meeting of entry standards.

Finally, universities might wake up to the violation of their own institutions by cyber attacks, theft of intellectual property, the buying of influence and the systematic surveillance of campuses by Chinese consular staff. A little more realism might have avoided this crisis in the first place.