University leader calls for levy on uni income to pay for Accord

University of Newcastle chief Alex Zelinsky calls for a levy on university income to pay for measures in the Universities Accord.

One of the two university leaders who sparked the push for a tax on international student fees has shifted ground and proposed an annual levy which all universities would pay on their total revenue.

University of Newcastle vice-chancellor Alex Zelinsky said the levy, which he labelled an efficiency dividend, could be applied at 0.5 per cent or 1 per cent of total university revenue and go into a special fund to support disadvantaged students, university infrastructure and research.

Based on total university revenue of $39 billion in 2021 the efficiency dividend would raise $200m to $400m a year.

Professor Zelinsky said the fund would help redress the imbalance between universities that earn high income from international students and those which don’t. “The idea is to be thinking about how to distribute funds more equitably,” he said.

Currently annual university revenues vary from nearly $3bn for the universities of Sydney and Melbourne, to less than $500m for the likes of Victoria University, James Cook University and the University of Southern Queensland.

Professor Zelinsky said he would welcome the Universities Accord panel, which is conducting a major review of higher education, examining his proposal and modelling it.

He said an efficiency dividend “might be very attractive to the government” and could be run by a new body, the Tertiary Education Commission, which the Universities Accord interim report suggests could oversee universities.

The federal government is currently considering the merits of taxing international student fees, an idea originally proposed to the Universities Accord review by Professor Zelinsky and another NSW vice-chancellor, the University of Technology Sydney’s Andrew Parfitt.

The international student tax has an obvious attraction to government because it does not directly impact voters. and offers a way to pay for ideas put forward in the Accord interim report to improve university teaching and research.

However no other vice-chancellors have publicly supported an international student tax and Group of Eight universities – where international students are concentrated – strongly oppose both it and Professor Zelensky’s new proposal for an efficiency dividend.

Go8 chief executive Vicky Thomson said the fundamental problem was the lack of government support, for university research, 70 per cent of which occurred in Go8 universities, which led to it being underwritten by international student fees.

“We should be focused on addressing the underlying issue of research funding, not grasping at revenue raising measures which are in effect a tax on ourselves,” she said.

Ms Thomson said a levy on international students undermined the principle of not taxing charities (which universities are) in the conduct of their work.

“Our universities are not for profit. We reinvest every single dollar back into delivering quality education and research,” she said.

Speaking on the podcast Debate@Go8, University of Queensland chancellor and former Department of Foreign Affairs and Trade head Peter Varghese said that Australia had to “come to grips with the reality that our future as a nation is going to be, to a very large extent, be determined by our capacity to innovate, and our capacity to innovate, in turn, is going to be greatly influenced by the performance of our universities”.

“So I don’t think we can subcontract the investment in research to international students, which is essentially what a tax on international students would be,” Mr Varghese said.

Griffith University vice-chancellor Carolyn Evans said that over the past decade and more, the cost of running universities had increasingly shifted to students, particularly international students. “This has left those universities less able to enrol international students and with thin domestic markets because of their regional locations in a financially perilous position,” Professor Evans wrote in an article in The Australian.

However she said that “shuffling money around by levying international students” is not a real solution. “It requires trust from the sector that government will use the money more wisely than the universities which earned it, and that it will not disappear altogether,” Professor Evans said.