As with any business and all markets, global education entails risks that need to be understood, planned for and managed. In an uncertain world, and with geopolitical tensions aplenty, Australia’s exposure to China through higher education – the nation’s third biggest export earner – has rightly attracted much commentary. In my view, there are two key risks for our universities which should not be conflated: one of them is predictable and more straightforward to mitigate; the other is a more complex risk that is linked to global forces outside of our control.
The international education success of Australian universities is a good news story stretching back nearly 70 years. It is a remarkable journey that should be celebrated. Our engagement with foreign students has raised the reputation of our universities and enabled Australia to compete – and in many cases lead – in global research. It has provided a genuine avenue for ‘soft power’ – and created jobs and huge economic benefit for Australia.
During the past decade, the greatest demand for international education has been from China, commensurate with that nation’s economic rise. Our universities have stood out in a highly competitive marketplace. For instance, Australia is forecast to soon surpass the United Kingdom to become the second biggest source market for international students behind only the United States. This is a breathtaking achievement that reflects the calibre of our universities, their business acumen and the overall Australian experience.
It’s also a powerful example of what is possible when government, industry and our universities work together in the national interest – on a global stage, at scale.
But while this is a success story for Australia, it also brings undeniable risks – not unlike the challenges faced by all organisations who have dealings with China in an increasingly complex geopolitical and economic context. It is right to argue that those challenges are increasing, and are finely balanced given trade wars and other international tensions.
University leaders, just like our peers in banking, mining and other business sectors, take these risks incredibly seriously. So too does the federal government, and its major agencies – as evidenced only too clearly by yesterday’s meeting of senior Canberra officials with the Go8, Universities Australia and other officials. This was not a one-off meeting, but part of an ongoing dialogue amid ambiguity and flux.
In this context, the Centre for Independent Studies report by the University of Sydney’s Associate Professor Salvatore Babones is unremarkable in that it says nothing essentially new. But it is nonetheless disappointing in that it continues an unhappy recent trend of commentary about Australia’s engagement with China that only tells part of the story.
University leaders, just like our peers in banking, mining and other business sectors, take these risks incredibly seriously. So too does the federal government, and its major agencies – as evidenced only too clearly by yesterday’s meeting of senior Canberra officials with the Go8, Universities Australia and other officials.
There are actually two distinct components of risk I believe Australian universities face right now.
The first is entirely predictable, with an inevitable plateau – and then fall – in demand from China as its own universities grow in scale and improve in quality. After nearly 10 years of double-digit growth in Chinese student numbers, enrolments in Australia have started to level off – and this is likely to continue. Two things are behind this trend. Firstly, there are more universities in China to cater for increasing domestic demand – and Chinese universities are rapidly developing into world-class institutions in their own right. Secondly, the United States, the UK, and Canada are ramping up the marketing of their traditional image as learning and research powerhouses. The UK, in particular, recognises the importance of international student numbers in the context of Brexit and is taking steps to make itself even more attractive.
Like many other Australian universities, UNSW has been determinedly planning for these changing market forces. We are diversifying on a range of fronts – while continuing to engage with China. This will see a shift in the nature of our international activity. Only last week, official figures showed a rise in students coming from countries other than China, including Nepal, India and ASEAN nations. That momentum will continue, albeit that progress in these nations will take time to develop. Another area of opportunity comes in online and blended learning, powered by digital. As a world leader, Australia is well placed to be at the forefront of new approaches to quality education for nations otherwise unlikely to send large numbers of students overseas.
The second risk is deeply troubling for Australians more broadly, not just for the higher education sector. If our worst fears were realised, and a major geopolitical development occurred, students from China, and other nations, might not be able to, or wish to, come to Australia. This would have a major impact on many of our universities. It is important to note that in most of those scenarios, given the importance of China, the shockwaves would almost certainly be felt way beyond the campus walls.
Our universities have been aware of, and have carefully considered, these risks. Many have limited financial reserves to deal with decline. Some have put aside sufficient funds to give them a window of time to deal with a major sudden downturn in international students. But only so far. In the absence of alternative sources of income, the knock-on effects would quickly be experienced. Fewer students would mean fewer staff and infrastructure and less research activity.There would also be broader implications given that, during the course of their degree, an international student contributes more than $300,000, on average, to the national economy through food, accommodation, travel and entertainment.
There is much to the current Australia-China relationship in higher education that is deserving of vigorous debate. Our universities, as bastions of free speech and innovation, welcome such discussions. But they need to be considered contributions, founded on facts. For sure, there are real risks. No one in the university sector is denying that; and vice-chancellors are seeking to strengthen our engagement with government at all levels to ensure that all that we do – whether it is student enrolment, research collaboration or commercial partnerships – is always in the long-term national interest.
Professor Ian Jacobs is the President and Vice-Chancellor of UNSW Sydney. A version of this article was published today in The Australian Financial Review.