Unis face “catastrophic” impact from Chinese international student ban

Professor Salvator Babones, author of last year’s explosive report on Australian universities’ extreme over-reliance on Chinese international students, now believes that these institutions are facing “catastrophic declines in revenue” from the China travel ban:

“It’s an unprecedented event affecting universities,’’ Assoc Prof Babones said.

“This is going to kill Semester 1 for everyone.

“It’s a risk of catastrophic declines in revenue.

“It would be very worrying and I would be scrambling to do what I could”…

According to official estimates, there are currently around 106,000 Chinese students blocked from entering Australia to commence their studies – a figure Babones believes may be conservative:

The number of Chinese students estimated to be stuck in China was conservative because it didn’t include new-starters yet to get a visa.

“Australian universities’ exposure to international and Chinese students is off the charts,’’ he said.

“They became vastly overexposed in the pursuit of increased revenue.

“They are extraordinarily reliant on Chinese students more so than any other universities outside of China.

“They should be able to meet the impact out of financial reserves and or borrowing.

“But they certainly will feel a substantial financial impact from the coronavirus epidemic.”

In particular, the impact on the elite Group of Eight (Go8) universities in Sydney and Melbourne will be extreme, given they are reliant on international students for one-third or more of their revenue:

All of which makes Babones’ warning in last year’s research paper prescient:

Australia’s universities are taking a multi-billion dollar gamble with taxpayer money to pursue a high-risk, high-reward international growth strategy that may ultimately prove incompatible with their public service mission. Their revenues have boomed as they enrol record numbers of international students, particularly from China. As long as their bets on the international student market pay off, the universities’ gamble will look like a success. If their bets go sour, taxpayers may be called on to help pick up the tab…

Australia’s universities do not seem to understand the high levels of financial risk inherent in their overreliance on the Chinese market…

Chinese enrolments are particularly unstable because of macroeconomic risk factors… macroeconomic risks are by far the most serious (from a financial perspective) because they could lead to a sudden and severe fall in Chinese enrolments…

Australian universities’ current prosperity is based on a flood of international student money — Chinese money in particular. The seven leading universities spotlighted in this report are taking massive financial risks in pursuit of this pot of gold. And just like the world’s leading banks in 2008, they must be aware that they are ‘too big to fail’. As public and publicly accountable institutions, they enjoy an implicit guarantee that if things go wrong, the government will come to the rescue. They should act now to mitigate the risk of a sudden revenue collapse by raising admissions standards and reducing international student enrolments.

Truer words have never been written.

At this stage, Education Minister Dan Teehan is resisting calls for a bail-out of universities. But the longer the fallout from coronavirus drags, the louder the calls will get.

Leith van Onselen
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Comments

    • +infinity. having studied at far too many of them it will be a good day. They are no longer academic institutions (when compared with overseas institutions Ive been fortunate enough to study at). Time to start again and teach the kids that is after all the purpose, profit secondary. lets hope we can create a home grown institution to be proud of. we have the talent abundant

  1. What LNP/ALP idiot is going to be the first to go the full retard and ask “who could have known?”

    Thousands of papers in the scientific literature make it abundantly clear that the rapid rise and spread of new and emerging diseases is a reality born of demographics, environmental disturbance and technology. China and wider Asia and Africa is ground zero and this will get much worse before it gets better.

    This was completely foreseeable and begs the question as to how the university business model became dependent upon a system with systemic economic and health risks that are shared nationally.

    As we sit and wait for an H1N1 outbreak with the lethality of the 1919 Spanish Influenza we should ponder the level of incompetence that has got us thus far.

    It’s called deregulation and ‘free market’ thinking. It is a business model that could not give a stuff about systemic risk.

    The only conclusion that can be drawn is that our government has no interest in anything other than fostering any old scheme to make a fast buck where any manner of externality produced by the globalist agenda (however severe they might be) will be worn by the Australian people – who never voted for it and don’t want it.

    The asinine dependence on overseas students has all the hallmarks of the ‘quarry Australia’ mentality on steroids. It is supposed to stop us noticing that our low levels of innovation and high tech industry has been the result of poor investment, myopic vision and a roll over and play dead mantra from the ALP and LNP who worship free markets and the privatisation of the nation state.

    One only has to look at any highly valued university outside of Australia where the vast majority of enrolments are kept for domestic students – as these are the future leaders and innovators that will drive their economy via invention and creativity. In Australia, we don’t truly believe that this will be the case and never have. That’s because we don’t invest in our kids or have any faith in ourselves. Instead we flog our natural and cultural heritage to enrich an elite whilst impoverishing our society. We have never managed to make innovation profitable as our ‘leaders’ don’t have the first idea about how to make that happen.

    Who suffers the most if the transport network feeding the ‘rivers of gold’ for overseas students also greatly increases the incidence of morbidity and mortality in Australia? Who has factored in the systemic risk to domestic students at Australian Universities and the opportunity cost of one significant pandemic/epidemic?

    Let’s ask Phil Honeywood what his family’s heath and wellbeing is worth? Because its time that Lucky Phil went to visit the Hot Zone in China with his wife and kids. Perhaps he can run a study tour and take Dan with him

      • Titanium DiOxide

        It wasn’t always so. Australia was the only continent not affected much by the 1918 Spanish flu.
        Why? We had strict quarantines enforced by the new government.

    • Arthur Schopenhauer

      On the mark again Clive.

      The “roll over and play dead mantra” has infected most of the population. Before the last election I asked all and sundry what they thought of Bill’s “make electric cars in Oz” policy. Every response was some version of, “Mate, we couldn’t do that here”.

      Miners not farmers. Takers not makers.

    • The money from the Chinese students was not being spent on anything useful. It was spent on building new buildings and hiring an army of useless administrators and other parasites. If there is a “bail-out”, the Government must insist that its money be earmarked to ONLY be spent directly on the education of local students.

      • Totally. Under the new age of incentivised VCs on massive packages, the universities have installed an administrative machinery based upon corporate management systems that exploit casual staff and keep ’em coming through the gates. They have done it using the same ‘throw bananas to the Woke’ whilst raiding the silverware approach i.e. dress like Robin Hood as you rob the poor and tell them it is for a good cause. On the footer of all their millions of emails and soul destroying communications there are any number of hollow mantras supporting any cause other than what universities were actually set up to do. This distracts kids who think the enemy is the patriarchy/racists/roving gangs of trans-phobics/man spreading train commuters etc – and not that their education and future is being stolen from them by crooks in academic gowns and people like Phil Honeywood. Academic and teaching staff have become servants to the tail wagging the dog. Students have degrees marketed to them and are told enormous numbers of lies about their future potential for ‘making a difference’ as they come off the production line like sausages filled with sawdust and spin. Their degrees are devalued by the very spin that parasites like ‘Phil Honeywood’ spew out like tobacco corporations building a Marlboro Man who dies of cancer.

        As you say, some tail docking is badly needed.

    • I think the time has come for University Vice-Chancellors to be renamed as CEO’s.
      A few steps down the track and Australian Group of 8 Universities could start floating on the Stock Exchange.
      As a long term employee of one of the Group of 8’s, all I can say is …. f*ck em all.

    • Not just the education system. Globalisation is a ‘web’ with China at the centre linked to multiple global supply chains. If China continues to stall economically it will be interesting to see how this exhibits itself overtime.

  2. It seems like all big businesses in Australia expect the Govt to cover their business risks. Like a form of free, unlimited insurance. We should probably charge for that. Maybe we need to nationalise the unis. Wait, I remember a time when……

  3. The china has been posturing mightly for scummo to repeal the ban. Will he or won’t he. He got caught flat by bushfires. Will he risk a spread of corona here to kow tow to the mighty china. Will he use the financial risk to the university sector and tourism to justify the china orders to open the gates to the china virus. Even if he gets a spine and blocks flights as needed the china is going to punish this country. We all know it. Let it burn. Let it all burn to the ground.

  4. Forrest GumpMEMBER

    Okay: If Scumo opens the gates and allows the virus in, and the virus takes hold here. Im all good. I have plenty of sick leave…at the employers expense….Ouch!

    I can see how that one will pan out already. Employers will be knocking on Scumo’s door asking for a handout to cover costs & lost time.

    • … and our roads will be a lot safer. There is a ridiculous amount of unsafe driving going on among the aged contingent.

        • ErmingtonPlumbingMEMBER

          Statistically the current generation of Young drivers are far safer than young people were in the past.

          I love how pointing this out to my father in law annoys the sh!t outof him

          • It’s funny how perception and reality diverge. I always think of my generation as being a pretty capable bunch in the driving stakes whereas I look at the youngsters today with their mandatory 100hrs, different P’s etc and think “what a waste of time that’s been!”

            But if you swear they’re better for it then who I am to argue.

  5. – I hope this will make the universities re-think their strategy of relying on foreign students.

    • happy valleyMEMBER

      Like the financial services industry, they will learn nothing and change nothing for the better.

      • – Nothing works so well like a nice deep recession. It will “clean up” the entire (corrupt) system. Then we can start with a nice clean slate.
        – I read that in the US enrollment (into e.g. universities) is down by some 10% since the year 2010. The young people over there don’t see the benefit of taking on LOTS of student debts and then finidng out that there is no way to pay down/off their giant mountain of debt.
        – When are our students going to realize that having a degree doesn´t guarantee a good job anymore in this “weak” economy ?

        • – When are our students going to realize that having a degree doesn´t guarantee a good job anymore in this “weak” economy ?

          I think we are comfortably past the point where people think a degree guarantees a good job (not sure anyone believed that even when I was at uni twenty years ago).

          Now they are doing degrees just to get A job. Hence the growth in degrees of questionable utility.

  6. Who needs revenue when one can get debt ?

    Gov can provide interest free loans to unis. Like HECS for the unis themselves. More debt will also make them work harder and be more efficient, etc. no more of this lazy by balance sheet stuff!

  7. only Asians still believe in a capitalist meritocratic fairy tale where education, knowledge and skills lead to wealth and recognition
    but that belief will not last long

    instead of wasting those hundreds of thousands on Australian degrees they should just buy an off plan in Mt Druitt

    • ErmingtonPlumbingMEMBER

      Mt Druitt is to expensive.
      How about off the plan purchases in Bathurst, Orange or Dubbo?

      • Mount Hope, nsw has a nice sounding name and plenty of flat ground around it. Not so much that you couldn’t inflate the land prices though.

  8. Rubbish. Universities even if they are big, can never be “too big to fail”. When a bank fails, you have contagion of counterparty failure. Better for all if we get rid of some of the Go8.

    • Arthur Schopenhauer

      Really? Let them collapse? Generations of investment? They are much harder to establish and maintain than a bank.

      Reverting some of the peripheral institutions to Colleges of Advanced Education or Institutes of Technology, and removing the private grifters from the TAFE sector would be more sensible.

      • You are right. I put a lot of the blame on the Dawkins “reforms”, which turned the colleges of advanced education into vastly more expensive universities, far more than was needed for a population the size of Australia.

  9. Mining BoganMEMBER

    Have they said “unprecedented” yet?

    Yes they have. That means it’s time for Scummo to fold.

  10. greedypuppyMEMBER

    a trip to the Sydney fish market recently was refreshingly stress free. I haven’t seen the place so quiet since the early 2000s before it became a must visit place on the Chinese bucket list. Normally staff are having to “remind” the punters (elderly chinese women) not to handle the fish (despite signs in Chinese) while domestic shoppers are elbowed out of the way by visitors. Every cloud has a silver lining …

  11. The BystanderMEMBER

    If the government is bailing the unis out for their own poor strategic decisions, then it should be done **on the express condition** that they reduce the bloat in their administrations, and reverse the declining education standards they’ve let occur over the last 20-30 years. Otherwise it’s no better than the Obama bailouts of the banks during the Global Financial Crisis, who then immediately continued to behave just as poorly as they had pre-GFC.

    • ” …they reduce the bloat in their administrations, and reverse the declining education standards they’ve let occur over the last 20-30 years…”
      The treacherous government can fix this by revoking work rights and permanent residency pathway from international student visas.

  12. Don’t get too hopeful. Spoke to a friend in Bangkok last night. She says all thestudents are going to Thailand for a fortnight before heading to oz and nz. The ones with half a brain are on their way.

    Btw my American Chinese friend has done this. He starts in nz this semester.
    The unis May have to wait a while longer to get what they deserve.

    • Yes, I suspect there will be plenty coming in from 3rd countries after doing “quarantine” and inflict will be low … but could be high if some of them catch the virus while there & it spreads to Aussie economy (unlikely as it is).

      • Yeah interesting times and all that. I reckon the unis will somehow try to get some sort of monetary concession from the gov even if a lot of students turn up. But I don’t think that Semester 1 will be as big of a negative event for the Unis as many are hoping, just yet. If this thing gets going and we have a global pandemic, then we shall need to wait and see how that eventuates

        • If the incubation period keeps creeping up like it is (just reported one person not showing symptoms for 42 days) and Chinese students come in through other countries (which i’m sure Scummo is more than happy about) then I can see our uni’s being ground zero for the outbreak in Oz. That should make the greater population happy about our degree mills and the kind of people they are attracting.

  13. We don’t know how big or otherwise this Coronavirus thing will be. But it will wash over eventually in a few months. Those students will continue their education. Universities are government bodies, and most of them have huge reserves. I’m not sure why people here are rejoycing their downfall….in reality this will be a blip on the radar for them.