Budget 2021: International students won’t return in force until 2023, says Treasury

International students won’t return in force until at 2023, causing years of pain for universities, according to federal Treasury’s budget assumptions.

There’s no joy in the budget for international students in the budget. Treasury assumes they won’t return in force until 2023.

Universities will have to wait until at least 2023 for a full scale return of international students, and face years of revenue losses, if the assumptions used by Federal Treasury in putting together this year’s budget are borne out.

Budget Paper No 1 says a key assumption in its economic forecast is that a return of international students in 2021 will be limited to “small phased programs” and student numbers will only “gradually increase” from 2022. This means that universities and other education providers who teach international students, cannot expect to have a year of uninterrupted enrolments until at least 2023.

Despite this challenging outlook, universities have not benefited from any new assistance in the federal budget. The only help for higher education is a $26m initiative offering 5000 student places for short courses to private and independent colleges, which the government announced last week.

The federal budget also assumes that state and territory caps on quarantine places will continue to have a restricting effect on international student arrivals until mid-2022 (except for students coming to Australia from an overseas travel bubble), and only gradually recover from then.

The long timescale for return will condemn thousands more students — who are stranded overseas by Australia’s closed borders — to complete their courses without setting foot on their campus again, and redoubles the difficulties for students who have to do mandatory face-to-face components as part of their course.

It also gives Australia’s major international education competitors — the US, the UK and Canada — a golden opportunity to poach Australia’s potential students, and could do permanent damage to the Australian education brand.

Universities are highly vulnerable financially to the growing delay in allowing re-entry of international students. Every student who does not start a course in a particular semester, robs the university of revenue for the whole duration of their course, which is two to three years or more.

It creates a pipeline effect where each student lost now creates financial pain years down the track. At the moment, universities are still earning revenue from students who enrolled before Covid but as these students complete their courses, they are not being replaced. This means unlike most businesses — which are already in the throes of recovery — for universities the pain is still growing and could get much worse.

The impact will also be harsh for other education providers enrolling international students and businesses in property, retail, travel and entertainment which, pre-Covid, enjoyed part of the $24bn that international students spent each year in the general economy.

Although the overseas student business is not alone in still suffering economic pain — so are all businesses dependent on international travel — international education, which engages with each student customer over many years, takes far longer to recover.

According to a Mitchell study, 10,000 international students will have to enter Australia a month to replace students who are completing courses. Currently NSW hopes to put nearly 300 arriving students through quarantine each week, starting later this year.