The Australian Population Research Institute (APRI) has released an update to its November report on overseas students, entitled Australia’s higher education overseas student industry revisited, which analyses the Commonwealth Department of Education’s newly released 2017 student enrolment data, which revealed a “striking further increase in the share of commencing overseas students”.
Below are key extracts:
By 2016 this share [of overseas students] already reached the very high level of 26.7 per cent. Surely, you might think, it can’t go much higher, since at this level it was way above that in Australia’s major competitor countries, the UK and the USA.
However it has. The news is that in 2017 this share increased to 28.9 per cent. In the November report we focussed on the Group of Eight (Go8). This was because in a number of these universities, including the University of Sydney and the University of NSW, this share was almost 40 per cent by 2016. The enrolment data for 2017 shown in Tables 1 and 2 indicates that the Go8 saw much faster increases in overseas student commencements than in the non-Go8 universities. So much so, that by 2017, the share of overseas student commencement to all commencements had reached well over 40 per cent in the University of Sydney, ANU, and the University of NSW.
We do not repeat the reasons why this high reliance on overseas students is a serious source of concern, except to provide a brief summary immediately below. But obviously, if the level of reliance on overseas student enrolments and revenue was an issue with the 2016 enrolments, there are even more grounds for concern given the further sharp increase in 2017.
This report focuses on an issue not explored in the November report. This is the implications of such rapid growth in overseas student commencements for access to higher education on the part of domestic students. The higher education overseas student industry repeatedly claims that there is no conflict between the expansion of overseas student enrolments and domestic opportunity. Yet as we will see, in the case of the Go8, over the five years to 2017, all of the expansion in commencements has gone to overseas students. Domestic enrolments have been static.
This a highly topical matter because in December 2017 the Coalition government announced that it would henceforth cap the level of domestic higher education enrolments. Since that time, Australia’s universities, including the Go8, have mounted an offensive against this decision on the grounds that it limits opportunities for domestic students. Yet the enrolment data examined below indicates that, at least since 2012, the Go8 has effectively enforced just such a cap on domestic enrolments…
The stabilisation of domestic enrolments was not because the Go8 lacked the capacity to increase their student load. They did have the capacity, but all of it has been taken up by increased enrolments from overseas students. As Table 2 shows, there seems to be no abatement in this trend. The Go8 took on 168,985 commencing overseas students in 2017, which represents an 11 per cent increase on the 150,173 enrolled in 2016.
Clearly, the Go8 universities preferred to enrol overseas students. In effect, the benefits of the allegedly superior education that these universities offer went to overseas students rather than to local students. This was not because overseas students had superior potential to take advantage of what the Go8 offers. The contrary is the case. The Go8 do not preference high performing overseas students. There are minimal entry barriers to their enrolment other than the ability to pay the huge fees required…
In the business and commerce faculties at the Go8, where Chinese students often constitute the majority, there is a direct cost to the quality of the education offered. We argued that such courses have had to be made less demanding so that the many Chinese students with relatively limited English language skills can cope with their requirements and assessments…
Australia’s universities, especially the Go8, are caught in a vicious circle as their reliance on overseas student revenue deepens. They are in no position to prioritise teaching which benefits the vocational needs of their domestic students or to focus on research activities relevant to Australian industry or the wellbeing of Australian citizens. They have to focus on research which scores on the international ratings and they have to sustain high enrolments from international students in order to help finance this research.
It is about time that the Australian government recognised this situation. National, rather than university, priorities should guide higher education policy. Successive governments have allowed the universities’ success in generating revenue, revenue which is counted as export income, to obscure the wider consequences of this activity.
As noted last time, Australia’s universities have become a giant rent-seeking business, just like the superannuation industry.
Rather than clipping the ticket on the deluge of funds coming in via compulsory superannuation, the universities sector instead clips the ticket on the deluge of foreign students arriving in the hope of transitioning to permanent residency.
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Instead of focusing on providing a high quality education and upskilling Australia’s population, the universities sector has become focussed on pushing through as many students as possible in order to maximise fees and profit. Again, this has parallels to the superannuation industry, whose focus is on maximising funds under management and fees, rather than achieving strong returns for members.
The end result has been the erosion of standards and too many university graduates chasing too few professional jobs.
About the only winners from Australia’s rent-seeking university system are vice-chancellors, whose pay has already exploded to an average of $1 million on the back of the student explosion, at the same time as university students are stuck paying off expensive and increasingly worthless degrees, taxpayers are stuck writing-off unpayable debts, and the broader population is suffering under the never-ending population crush.
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It’s time to put a leash on the university sector, starting with removing the link between foreign students studying at university and gaining work visas and permanent residency. Let our universities compete on quality and value alone.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
