Universities are facing an unprecedented financial shock following the COVID-19 pandemic. The pandemic raises new questions about the viability of the international student program and revives old questions about whose interests it serves. Denis Blight AO was one of the architects of the international student program that grew into one of the mainstays of higher education financing. Here he reflects on the challenges that lie ahead for universities in managing funding shortfalls, debunks some of the myths, and presents an important argument for the future of higher education: the need for a new model of delivery that serves university and national interests.
In a reflection on recent Federal Government changes to the funding of higher education, Professor Ian Jacobs, the President and Vice Chancellor of the University of New South Wales, wrote on 22 June that the University had added to its motto the element of:
‘Heart’ to better reflect our commitment to a holistic educational experience and a determination to embody the compassion and caring for others that is the cornerstone of a generational push to see more diversity, equity and inclusion. The UNSW Council endorsed the proposal to evolve our motto from “Scientia manu et mente” or Knowledge by Hand and Mind to “Scientia corde mente et manu” or Knowledge by Heart, Mind and Hand. This is more than just a slogan of renewed values and aspirations. It captures the fact that true educational excellence includes a quest for meaning; a higher purpose for the individual and society. We strive to educate our community for life – and that includes but is not limited to the workplace.
The Vice Chancellor’s reflection was one of a number that followed the announcement of a new formula for the allocation of funding to university teaching aimed at encouraging students to focus on acquiring skills to support economic recovery and future employment.
There have been other pressures for change in higher education generated by policy or political circumstance. For example, Clive Hamilton’s Silent Invasion speaks of a conflict between a ‘defence’ view that emphasises democratic values and human rights, and an ‘economic’ view that does not. Amongst factors involved in this conflict are said to be China’s exploitation of university linkages, and control of overseas Chinese students. Hamilton claims the Australian establishment has set the economy above everything, and we need to take a very different stand, accepting some cost from protecting our freedom from China’s incursions.
As a proponent of efforts to increase educational interactions throughout the Indo-Pacific, and one of the early architects of increased student enrolments from China and India, I have a somewhat different view: while economic benefits are fundamental, in the long term we need to think more broadly using heart and mind processes. Two instances provide some background to my thinking.
First, in my research for a biography of Sir John Crawford, I found that he visited China from 14 to 28 June 1978. An extract that expands on Crawford in the 1970s reads as follows:
His report on the visit noted that there had been a ‘retrogression’ in the volume and quality of science in China from the mid-sixties, ‘coinciding with the Cultural Revolution’. Crawford found ‘signs of improvement since 1974: morale was on ‘an upward trend’; current work seemed ‘quite good, especially in the applied field’; plant breeders were ‘in the ascendancy’; and the stimulus of contact with friendly western countries including the United States, Canada, Australia and France… was ‘plainly in evidence’.
Crawford made a point in his report about the unconstrained and open-minded attitude of the scientists and administrators to whom he spoke: no questions were out of order. He recommended that China’s progress in agriculture could be aided by increased exchanges between Australian and Chinese scientists.
The same could be said today in relation to a wider range of fields. Australia’s capacity to increase productivity, adapt to climate change, and contribute more through aid and trade will grow if it develops its knowledge base.
This leads to my second piece of background: my personal experience of China during the opening-up reforms of recent decades, including the opportunities provided to Chinese scholars and students to travel outside China for further education, and for Western scholars to visit Chinese universities to teach and participate in academic forums, just as Crawford had suggested. It seems to me that Australia has been a major beneficiary of China’s opening to the West heralded by the end of the Cultural Revolution.
I played a modest role in the increased scholarly flow from East and Southeast Asia. In the case of China, after a faltering effort on the eve of the terrible events of Tiananmen Square of 1989, as CEO of IDP Education Australia, I negotiated an agreement for the recruitment of Chinese students to study in Australia, at a time when the process was highly restricted by Chinese regulation.
I do agree with the Vice Chancellor of the University of New South Wales that we should tackle the issues with ‘Knowledge by Heart, Mind and Hand.’ We do, however, need to be pragmatic. Some of our universities are, from a strictly business point of view, overexposed to the Chinese (and to a lesser extent the Indian) student market – I have been arguing for a decade that we are too dependent on the Chinese and Indian markets and on a too narrow range of disciplines.
As we face pressures to reform the higher education sector, driven by the demands of health security and commerce, a set of other issues deserve examination. These include how a proper international education strategy and program should be constructed; the impact of the recent changes in funding levels for humanities and Science, Technology, Engineering and Mathematics (STEM) subjects; and the future of the movement of scholars across international borders in the short term and in a post-COVID-19 environment. There are implications for the whole student cycle from information, counselling and recruitment through to mode of study, post-study work rights and employment at home or abroad.
Lecture theatre at the University of South Australia, Adelaide, Australia - July 21, 2016. Image credit: reinaimaging, Shutterstock.
This paper seeks to address the future for Australia in the international higher education market against the background of those thorny topics. Each element and step carries with it questions of who benefits; the roles of the various actors; the construction of suitable curricula; and the interconnections between modes of delivery.
Each deserves more detailed examination than I can give here. Scholars more knowledgeable than me have visited them before, comprehensively. Accordingly, I will focus on a select few where I feel confident I can contribute meaningfully. I will address the old controversy about who benefits from international student recruitment, the pressures on university finances from the collapse of international enrolments and proposed changes to fee structures, and the implications of the COVID-19 crisis for how we deliver quality education to domestic and international students.
Before turning to those topics, it is useful to revisit the modern history of international student recruitment in Australia.
The Birth of the Overseas Student Market
Australian universities have been engaged with Asia for decades largely through the Colombo Plan, which from 1950 started to send students on scholarship from Asia to Australia and other developed countries, and through the activity of individuals with universities throughout the region.
The engagement took a more organised form from 1969 with the establishment of the Australian Asian Universities Cooperation Scheme (AAUCS). It focused on technical and advisory support for selected universities in Indonesia, Malaysia, the Philippines and Thailand, particularly in the agricultural and related sciences.
Over a period of time, we saw a build-up of privately-funded students, particularly from Malaysia. Alongside them was a cohort of fully-sponsored students under the umbrella of the Colombo Plan. This latter group of so-called subsidised students were enrolled more or less on the same conditions as applied to Australian domestic students – in other words their tuition costs were met by the Australian taxpayer to the same extent as domestic students.
By 1985-86, the cost of this subsidy was estimated to have reached approximately $100 million. Because of the subsidised nature of the program and the fact that it led to competition for places between foreign and Australian scholars it was necessarily subject to a system of national quotas.
In addition, a small number of scholars gained entry by paying the full costs of their tuition, a program that largely escaped government regulation.
Two reviews sponsored by the Australian Government 1983 and 1984 reported on this complex situation: the Jackson Committee, commissioned by the Department of Foreign Affairs, which had a wider remit to review the Australian aid program; and the Goldring Committee, commissioned by the Department of Immigration and Ethnic Affairs, which was asked to advise on the continuation or otherwise of the subsidised program.
In the event, the Australian Government opted for a combination of the recommendations of the two committees. The government decided to:
(a) enable universities to recruit overseas students without quota limits provided candidates met established entry standards, including an ability to pursue academic studies in the English language, and candidates or their sponsor met the estimated full costs of their education and;
(b) continue the subsidised program, but to steadily phase it out. A new program of scholarships called the equity and merit scheme was introduced, alongside the established scholarship program, focused on disadvantaged foreign scholars, especially women.
Universities took advantage of the opening to slowly recruit fee-paying students, actively encouraged by the Federal Government through an export market development grant scheme (EMDG). Over time, a somewhat scatter gun system was refined so that universities worked together in education fairs and through IDP, the successor to the Australian Asian Universities Cooperation Scheme. IDP experimented with the so-called one stop shop first in Indonesia and the Philippines (where it had established offices) and then in most other Southeast Asian and East Asian nations and eventually in about 30 countries.
IDP in collaboration with the British Council, Cambridge University and a number of Australian universities also established the International English Language Testing System (IELTS) as a measure of the English-language competence of foreign students. Initially, traditional markets like Malaysia, Singapore and Hong Kong were the major source countries. This was extended to South Korea and Taiwan.
Many universities recruited foreign students through IDP’s offices. They also chose to do so directly and through a range of private educational agents located throughout international markets. Over time, the industry grew to the level it reached before COVID. Two major developments were recruitment of students from China and India to the point that some 40 percent of enrolments were derived from those two countries. I was closely involved in both initiatives. The soft power impact and fiduciary and (alleged) security and foreign interference risks of the program deserve some discussion.
Much of the discussion on international education has centred on the question of who benefits from the increased enrolment of international students in Australian universities. At one end of this debate, is a view that the universities are the main beneficiaries and at the other end, that it is, or should be, the international students themselves. Much of the debate ignores the possibility of multiple beneficiaries and win-win outcomes.
Some critics have described university administrators as ‘greedy’ accompanied by claims of ‘outrageously high’ salaries of Vice Chancellors, excessive spending on buildings, equipment, accommodation and waste. In some cases, others point to the strong balance sheets of universities, accumulated partially from the profits gleaned from international students. It is also argued that Australian students ‘forced’ to sit in seminars with foreign students not well equipped with English language skills are negatively affected by the consequential slower pace of learning or that standards are deliberately being lowered so as to ensure a satisfactory pass rate for favoured high fee-paying student clients.
In my view, most of these claims are wrong or unfair:
- Vice Chancellors are responsible for the leadership and management of large, multi-billion dollar enterprises often comprising independent-minded staff with strong union affiliations and student bodies some with radical tendencies, no easy task.
- International students benefit from a high-quality education, as well as the social, cultural and language experience they accrue from time spent in a foreign country. Evidence suggests that, equipped with work experience in Australia, graduating foreign students gain good jobs on returning home at least as quickly as their Australian counterparts.
- It is true that universities generate ‘profits’ from international students especially in disciplines where international demand is high. These profits are used to supplement university total revenues, including through cross subsidy of university research, and to strengthen balance sheets.
- Evidence also suggests that international students perform at least as well as domestic Australian students. Moreover, anecdotal evidence indicates that international students engaged in postgraduate research are a vital part of the research cohort of Australian universities especially in science and mathematics.
My personal experience is that Australian students also benefit socially and culturally if not language-wise from the presence of foreign students on campus. Admittedly, I have heard accounts from some young Australians of their frustration at interruptions at seminars as foreign students struggle with the language and accents of lecturers and tutors. No doubt these concerns have reached the ears of Ministers.
Government Funding of Universities and Cross Subsidy
The profits and cross subsidy question does deserve further examination. Any such examination will inevitably give rise to questions about the extent to which government funding of university teaching and research has fallen over the last two or three decades.
According to Rodney Tiffen, emeritus professor of politics at the University of Sydney, Government funding of tertiary education peaked in Australia in 1975 at 1.5 per cent of GDP. Currently, the Government contributes 0.8 per cent, or just over half that proportion. In 1975, around 277,000 students were enrolled in higher education; by 2016, the number had increased fivefold to 1.46 million, a figure that reflects an increased participation rate and the presence of large numbers of international students.
Those figures, Tiffen claims, capture the essential story of Australian universities over the past 45 years: massive growth combined with declining public investment. It can, however, be reasonably argued that benefits of scale and modern technology should lead to cost efficiencies especially in teaching. Research, on the other hand, may well have become more expensive.
International Impact of Changes in Domestic University Fee Levels
Changes in the funding of courses foreshadowed by the Government may or may not help but will certainly complicate university finances.
Some critics have pointed to the possible perverse impact of the government decision (yet to be confirmed by the Senate) to increase fees charged to Australian students enrolling in humanities courses and to reduce the fees for agriculture and STEM courses. Humanities’ teaching costs universities less so, provided enrolments hold up. The additional surpluses gained might help university finances, offsetting in the short-term losses from decreased international student fees and reduced funding gained for agriculture and STEM. Any increased domestic fee levels in business and commerce courses, the most popular disciplines for many international students, might enable universities to increase fee levels for international enrolees.
What Have Universities Done with the Money?
The examination should also test the thesis that university administrations have spent excessively on building and other infrastructure and on staff salaries and emoluments. A definitive ruling on this issue would require a more forensic analysis than is possible here but my preliminary review suggests that universities have a ‘war chest’ of net current assets, as might be interpreted from a statement by the Tertiary Education Standards and Quality Agency (TEQSA). A recent study by the University of Melbourne’s Ian Marshman and Frank Larkins suggests that some universities have built up substantial reserves largely from surpluses from international student fees.
TEQSA has suggested that universities generally have strong balance sheets with substantial reserves, built largely through international student revenues. But as I discuss below not all are in a strong position to withstand the impact of international events.
Impact of International Events
The COVID-19 crisis is not the first external event to impact on international education in Australia but it is certainly the most serious. Other events include: the stock market collapse of 1987; the killings in Tiananmen Square in 1989; the Gulf War of 1990; the Asian Financial Crisis of 1997 to 1999; the recession induced by 9/11 of 2001 to 2003; SARS in 2002 and 2003; the Bali Bombing of October 2002; the Iraq war of 2003; the London bombings of July 2009; and the Global Recession of 2007 to 2010.
Travellers wear face masks to protect against transmission of COVID-19, Chengdu, China - January 23, 2020. Image credit: B.Zhou, Shutterstock.
Of these, only the SARS crisis of 2002-2003 had any sizeable impact: it dramatically slowed the rapid growth experienced from 2000 down to the steady growth experienced throughout the period to 2009 and up to this year. COVID-19 has suspended growth almost completely and has highlighted weaknesses in international education strategies and particularly over-dependence on China and India, on face-to-face teaching, and on a narrow range of disciplines. The paper by Marshman and Larkins models revenue losses of Australian universities. In summary:
It is demonstrated that the universities face very serious challenges with varying degrees of financial management risk. Based on the analyses conducted universities are placed into three categories in accord with the financial management risk challenges that have been identified. Universities are predicted to face high, medium or low risks over the period from the present to 2024, because of the loss of overseas fee revenue.
Seven universities are placed in the highest financial management risk category – Monash, RMIT, University of Technology Sydney, La Trobe, Central Queensland, Southern Cross and Canberra universities. Another 13 universities are assessed to face medium financial management risk. The remaining 18 universities, just under half of the total sector institutions, have been categorised as facing management risks that are of lower severity. The nature of the risk varies according to the relative reliance on international fee revenue and the underlying financial resilience of individual institutions. The adverse consequences of the COVID-19 pandemic on the university sector are both immediate and can be anticipated to endure for many years. Some strategic policy choices that will need to be made to varying degrees by universities to mitigate predicted losses are discussed. These choices are likely to result in changes to sector-wide operational practices more profound than anything experienced since the establishment of the unified national system in the early 1990s.
The depth of this crisis has led to suggestions that the business structure of international student recruitment is broken. Some of this criticism emerges from international educators in Europe who have long disliked the entrepreneurial/full fee approach adopted by Australia, preferring a full or substantially government-subsidised model. Nevertheless, there is no escaping the conclusion that the established model is under serious challenge particularly if the crisis is, as seems likely, extended over more than two years. We certainly cannot assume that recovery will follow the pattern of previous crises. A new model will be needed but we do not know what it will look like.
Much will depend on the response of universities and Australian governments. A new business model, perhaps built on a seamless combination of face-to-face and online delivery, will be needed. Some pilot projects that combine quarantine, COVID testing and charter flights are being prepared. A cohesive, connected response by all universities would help. I am hoping for the best that a new international education strategy will underpin a cohesive response.
Elements of an International Education Strategy
Although the flow of students across international borders is the key component of international education, it is not the only one. Indeed, it is more likely to be successful if it is seen as an element of a broader package.
Australia faces a growing competitive challenge in higher education from abroad. Our universities must be better if they are to maintain advantages they have enjoyed in the past. This will require reversing the decline in the share of national income we spend on high education. A greater, sustainable commitment of public funding will be necessary as universities in countries like Japan and Singapore, and eventually China, close the quality gap, and even overtake us, in the international rankings.
This package includes a reverse flow involving the movement of Australians to source countries such as is afforded by the New Colombo Plan, Australian Volunteers Abroad, short and long-term secondments supported by Australian universities to counterparts in our region and Australian researchers seconded or appointed to national and international centres abroad.
An international education strategy also would fit comfortably within the framework of an effort to promote Australian education, language and culture abroad such as was envisaged in the short life of the Australia Abroad Council. Several English language teaching centres in the Asia Pacific are self-financing components of such a framework and could potentially support a wider cultural effort.
Many international educators and academics struggle with the concept of business planning generally and especially with the notion of profit. But struggle with the notion we must. If an activity generates a surplus, the ethical question is for what purpose? If, as usually is the case, the surplus is reinvested in the mission of the university or in other worthwhile ventures such as scholarship or promotion of Australian studies, I find profit to be a good word.
Dr. Denis Blight AO is a former Australian diplomat and aid administrator with responsibilities for Australian aid in Southeast Asia and China. He is the former CEO of IDP Education Australia a not-for-profit international education agency. He also is former CEO of CAB International in the UK and former CEO of the Crawford Fund. He is now an honorary Visitor at the ANU School of History.
Banner image: The Great Court at the University of Queensland, Brisbane, Australia. Credit: shebalso, Flickr.