Via The Guardian:
Tanya Plibersek has called on the Morrison government to provide low-cost loans and guarantee universities’ funding, warning some are at risk of collapse due to falls in international enrolments during the Covid-19 crisis.
Ahead of the education minister, Dan Tehan, taking a support package to cabinet to be announced as early as next week, Plibersek told Guardian Australia that there are “now serious concerns that without federal government action some leading institutions could collapse”.
Universities, many of which rely on international students for more than a third of their revenue, are currently engaged in cost-cutting including asking staff to use up leave and instituting hiring freezes.
But representatives of the sector have played down the risk, with Universities Australia chief executive, Catriona Jackson, insisting they are “not asking for a bailout” from government, only “support to help us weather the period ahead”.
Bailout in other words. Who is to say it is temporary? What if the community decides that we’ve become too reliant on Chinese bribes and the international student trade is curtailed?
The unis should collapse. It will impose market discipline on them for the future. The alternative is to embed a toxic moral hazard we’ve seen on display throughout the crisis as:
- the universities trashed the community by working around travel restrictions;
- lobbied and fought against all anti-virus measures.
It was the universities that made the choice to expose themselves to market risk, especially Chinese, and management gave itself the pay rises to match. Now they must pay for it so that they manage it better in the next cycle.
All of the universities can cut costs and have deep asset pools to repay creditors or sustain day-to-day operations. Sell some property. Sack the VCs and others that overleveraged the businesses.
Otherwise, they’ll only be worse in the next cycle and may jeopardise the national interest as it recalibrates post-Wuhan flu.
