Education Minister rules out university virus bail-out

Last week, Professor Salvatore Babones warned of the ‘moral hazard’ inflicting Australia’s universities, which would see them trying to socialise the cost of lower Chinese international student flows on Australian taxpayers:

Chinese student enrolments in Australian higher education have increased six-fold in the past two decades. Chinese students almost always pay full fees and are disproportionately concentrated in high-margin course-work master’s programs. At least eight Australian universities rely on Chinese student tuition revenue for 11 to 26 per cent of their total revenue.

The coronavirus epidemic, and the travel bans it prompted, threaten to derail that particular gravy train. So it comes as no surprise that university vice-chancellors have lobbied aggressively to have Australia’s travel ban lifted for Chinese students. This, despite the fact that most have prohibited their own staff and students from travelling to China — or even to Hong Kong. And despite the fact that university studies have been suspended in China and Hong Kong themselves.

How can it be that Hong Kong and Australian vice-chancellors have come to such radically different evaluations of their ability to safely manage coronavirus exposure? In another two words: moral hazard.

Moral hazard is the expectation that organisations (and their leaders) will reap the rewards of their successes while others will bear the burdens of their failures. If the government lifts its travel ban and 100,000 Chinese students fly into Australia, university revenues will continue the robust growth that has propelled Australia up the international rankings.

But if those students introduce coronavirus into the general population, Medicare — which means taxpayers — will pick up the bill. If Australian universities were required to reimburse the government for the costs of treating any coronavirus cases that could be traced back to their Chinese students, they would probably be much less eager to lift the travel ban.

Moral hazard is also how Australia’s top universities got into the coronavirus bind in the first place. They ran enormous financial risks by recklessly expanding Chinese student numbers over the past 20 years. Many of us have warned about the real possibility — and potentially severe consequences — of a sudden drop in Chinese enrolments. Our warnings were ignored or dismissed.
Now another moral hazard is opening up: the possibility of a government bailout for Australia’s beleaguered universities. Any proposals along these lines should be nipped in the bud.

Organisations that pursue risky rapid revenue growth should put aside reserves for a rainy day, or use their windfalls to buy insurance.

Predictably, after spending years milking Chinese students and privatising the gains, the universities are now pressuring the federal government to provide them with a bail-out, which Education Minister Dan Teehan is trying to resist:

Universities have been asking for help to get Chinese students back to Australia, with at least 70,000 still waiting offshore for travel bans and quarantine to expire.

The chair of Universities Australia, Deborah Terry… said universities were not overexposed to Chinese students…

The federal Education Minister Dan Tehan has told university vice-chancellors they have to “wring every last dollar” out of the money they receive from taxpayers if they want more funding…

“If we are going to ask the Australian people for more support, it is first incumbent upon us to maximise the value of what we already receive,” Mr Tehan said.

Essentially, Australia’s universities see a ‘heads I win, tails you lose’ situation from Chinese students.

When times are good, they enjoy the gains. But when the inevitable downturn arrives, they go cap in hand to taxpayers demanding a bail-out, as well as demanding the travel ban be lifted, thus exposing taxpayers and the broader community to the costs of any coronavirus outbreak.

If the universities need to save costs, perhaps they should look first at their vice chancellors exorbitant million-dollar pay.

Leith van Onselen
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Comments

  1. There is a lot of fat that can be trimmed from universities without impacting student service levels. VC salary reductions would be a good start.

  2. If the universities need to save costs, perhaps they should look first at their vice chancellors exorbitant million-dollar pay.

    Exactly. Cap the salaries.

    Greens want $500k salary cap for NSW public service

    https://www.illawarramercury.com.au/story/5932486/greens-want-500k-salary-cap-for-fat-cats-including-uow/

    NSW Greens want ‘commonsense’ wage cap for publicly funded executives

    Michael Spence, vice-chancellor of University of Sydney, makes $1.44 million a year.

    https://www.news.com.au/finance/work/careers/nsw-greens-want-commonsense-wage-cap-for-publiclyfunded-executives/news-story/47fbc53c60be57186b1882c4ec452e86

    • Arthur Schopenhauer

      The VC position in the US (Chancellor) is paid between $225k and $400k.
      The University of California VC salaries are less than half the Australian salaries, even allowing for a poor exchange rate.
      Aussie VCs are paid outrageous salaries.

    • It’s very easy to implement. Any university that wants to accept HECS funded students needs to accept the salary cap.

      No salary cap, no HECS support.

      Actually maybe any university not signing up to the salary cap doesn’t get visas processed for their international students.

      Again, easy peasy cos its the Golden Rule. He who has the gold makes the rules.

    • All power to you Salvatore Babones! I tip my lid.

      The Australian ‘Service Economy’ model has opened Australia to gobsmacking risks and it exposes a lack of regulation and analysis that this really scary.

      Salvatore Babones is absolutely correct about the economic risks and risk to the entire tertiary model and the moral hazards that have been built into the system. We’ve used a corrupt method to buy in researchers who have been funded by other nations and then stolen people from developing countries that have had their education paid for by public funds by those least able to afford the loss of this investment.

      Bigger than this is the health risks at a time where it 100% certain that new and emerging diseases of high mortality and transmissibility will continue to arise and the universities have turned themselves into the key community health risk as mad population projections create mega-cities.

      Universities are now risks to Australian society economically, socially and medically.

      This “brilliant” corporate management has leveraged risk into community health, domestic education, democratic process, security and economics.

      Overpaid VCs who have milked the system and will now ask us all to pay for their recklessness and the dumping of students in Thailand says everything that needs to be said. These people will happily kill people in developing countries in order to keep their business model.

      Where did this risk come from? It comes from the very idea that tertiary education is a commodity and that government will not target investment into education. We are seeing the predictable neoliberal model in practice.

      It’s not just reckless and irresponsible – it is murderous, anti-democratic and a cancer.

      We should all file our end-of-life plan for Australia. Our nation has been placed on the open market by the LNP and ALP.

  3. BoomToBustMEMBER

    I say bring on the flood of infected students, lets get everyone infected and see the peoples response. If they dont riot in the streets they got everything the deserve.

    • Yeah I’d have a good read of the WHS legislation (etc etc) before implementing a sh!tcvnt idea like that.

      • The mouth on it! Is there any need?

        You’ve been hanging out with Timmeh and Wing Nut too much.

          • the only person who can swear according to haroldus is that chick from juice media. I wouldn’t be surprised if he has a loop of her saying f*$king. over and over.. with that big cheeky toothy smile.

          • Mining BoganMEMBER

            I was delighted to find out it was two sweary chicks.

            For a shut-in it doesn’t get any better than that.

    • HIV binding sequence just a co-incidence, same as the virus lab being 110m from the Wuhan fish market.

      • the barrel on that gun is warm and there’s an acrid whiff of cordite in the air (pls edit as appopriate LSW-man)
        In layman’s terms, this is about as likely as your cat saying “woof” and humping your leg.

  4. When i went to Uni in the 80’s you were accepted on your HSC mark and it was a privilege to get into some of the good ones, now its all about cash for them….suk on it as this is what happens when you focus on cash and one country to make it for you at the expense of quality education for its own population.

    • and a 4 year engineering degree was 4k p.a. and payback at CPI, f#cken! I remember a couple of quarters of delation saw the debt go down.

      let me pick up my walking stick and say “they were the dayyyyys”

    • to be fair, it’s not just Australian universities who went all in on the Xino-fascists, it was the whole world. And why would you expect unis to be smarter or better at risk?

  5. James RossMEMBER

    I hear Murdoch Uni are going to take the Chinese & Australian governments and Qantas to court for lost revenue, damn this virus thing is just pure bullshit !

    • Socialism for the unis and corporations losing profits and democracy for all the other peons. Doesn’t sound like Australia, does it?

  6. it’s all a charade because all the students have figured out they can transit through a third (or is that second?) country and Tehan and Scomo know they’ve figured it out. some just can’t afford to do it. it was 100,000 chinese students in china last week, now its 70,000. hmmm