Unis face $19bn loss if travel bans continue into next year

If travel bans continue into next year then universities could lose a total of $19bn in international student fees.

If travel bans continue into next year universities could face a huge revenue loss because students are unable to come to Australia. Picture: James Croucher

If travel bans continue into next year reduced numbers of international students could slice $19 billion from university revenue between now and 2023, and cut up to $60bn from the broader Australian economy, a new report warns.

The report, from the Mitchell Institute at Victoria University, models two scenarios for international students.

The more optimistic one forecasts the loss of $10bn in revenue for universities: assuming that the number of students commencing courses will be only 50 per cent of the 2019 figure in 2020 and 2021, rising to 75 per cent in 2022 and return to the 2019 level in 2023.

But the worst scenario, costing universities $19bn, assumes that only 25 per cent of the 2019 arrivals will come this year, and no new students come next year, rising to 25 per cent in 2022 and 50 per cent in 2023.

“There is a real possibility of the worst scenario occurring,” said Peter Hurley, lead author of the report titled “Australian investment in education: higher education”.

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The report also warns that major damage from the loss of international students will flow on to the broader economy. It cites Australian Bureau of Statistics figures which show that for every $1 in international student tuition fees lost to universities, there is a reduction of $2 in international student spending in other areas of the economy.

“The scenarios above suggest that Australia’s economy faces a wider loss of between $30bn and $60bn between 2020 and 2023 because of the impact of the coronavirus on international student enrolments,” it says.

“To put this into context, this is about five to ten times the size of the automotive manufacturing sector before it largely shut down.”

Mr Hurley, an education policy fellow at the Mitchell Institute, said the economic impact of fewer international students would be strongly felt in major cities.

He said international students were up to 20 per cent of the population in the CBD areas of Melbourne and Sydney. They also lived in large numbers in suburbs further from the city where rent was cheaper, but where there were good transport links to universities. In some areas in the west of Melbourne and Sydney, international students made up 5 per cent of the population, he said.

Mr Hurley warned that much was still uncertain in forecasting international student numbers in the near year or two. Not only was it unknown when travel bans would be lifted but it was unclear how much pent up demand there would be from students who were unable to study in Australia this year.

“Universities would hope that there will be pent up demand, so when the system opens again those student who couldn’t enrol, will enrol,” he said.

But if economic conditions are bad in students’ home countries they might be unable to afford to study in Australia.

Mr Hurley said the impact of the coronavirus crisis was magnified for universities due to the “pipeline” effect of student enrolment. Because universities offered two or three year courses, a student choosing not to come had an impact on revenue for the next two or three years.

“If it (the travel ban) is protracted universities are simply not going to be able to absorb this,” he said.

He said that domestic students could also face challenges due to the coronavirus, because their numbers could grow beyond the capacity of the current level of government funding for courses, which has been frozen.

Not only do student numbers tend to grow when the job market is weak but school leavers might be unable to take a gap year to travel overseas in 2021 and could, instead, remain in Australia and boost domestic student numbers at cash-strapped universities.

“About 25 per cent of school leavers who go to university take a gap year. That might not be happening,” Mr Hurley said.