Last month, the chief executive of the International Education Association of Australia, Phil Honeywood, warned that Australia’s education sector and broader economy faced an $8 billion hit from the loss of Chinese international students:
Phil Honeywood said the entry ban on non-citizens who had been in mainland China was a worst-case scenario for universities, English-language colleges and schools relying on the arrival of 200,000 Chinese students this year…
“The industry is worth $39 billion a year and if we take Chinese students out of that equation for first semester, you would be looking at a minimum $8 billion budget hit for the international education sector and the wider economy”…
Yesterday, the University of Sydney released modelling claiming New South Wales faced a $2.2 billion economic hit and announced a series of austerity measures to help balance the University’s budget:
The University of Sydney has modelled a worst case scenario for coronavirus which would slash $2.2 billion from NSW’s gross state product and affect more than 15,000 jobs.
The university also announced it was facing a $200 million budget shortfall and would immediately introduce savings measures.
This would include deferring spending on all non-essential projects, suspending most recruitment and limiting short-term capital expenditure, the university said in a statement…
In a worst case scenario under the university’s modelling, 15,000 international students would defer study for all of 2020, hitting retail, accommodation, scientific and support services with effects that would reverberate until 2026.
In a less drastic scenario, 8700 students fail to arrive for semester one, resulting in a $1.4 billion hit to GSP and 10,700 state jobs impacted.
Dr Spence pointed out this was the effect of the virus to only one of the NSW’s universities.
Advertisement
Data released recently by Professor Salvator Babones that Sydney University is the most exposed to a collapse in Chinese international student enrolments, followed by the University of New South Wales:
The table below presents best-available estimates of Chinese student numbers and revenues at Australia’s G8 universities plus the University of Technology Sydney. Only columns (1), (2), (6), and (7) are exact figures; all other columns are best estimates based on publicly available data…
The University of Sydney and UNSW lead the country in numbers of Chinese students, with roughly 17,000 and 16,000, respectively. Both universities depend on Chinese student tuition for as much as one-quarter of their total revenues from all sources. Other highly exposed universities include UTS and (probably) Melbourne. Chinese students account for more than 13% of total enrolments at all G8 universities except UWA. For comparison, the most China-exposed public university in the entire United States, the University of Illinois, enrols 5,845 Chinese students, who make up 11.3% of its student body. Considering this concentration to be extremely risky, in 2017 the university prudently took out insurance against any sudden decline.
These findings are broadly supported by the Department of Education’s international student database, which shows that New South Wales (101,000) had the highest number of Chinese student enrolments in calendar year 2019, followed by Victoria (88,000):
Accordingly, Australia’s two biggest states are most exposed to the fallout from the coronavirus (COVID-19), and this is being led by the elite universities located in Sydney and Melbourne .
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
