Make universities pay if international students import virus

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A new survey shows that nearly three quarters (73%) of Australians believe that Australia’s international border should remain largely closed until at least mid-2022, or until the pandemic is under control globally:

Australians want the international border to remain shut

Nearly three-quarters of Aussies want the international border to remain shut.

Yet, with tens-of-thousands of Australian citizens remaining stranded abroad, Prime Minister Scott Morrison said that the return of international students was now the priority:

“We are always working on the next step and the next step is how we can safely have international students come back,” Mr Morrison said on Sunday.

“I welcome the fact that universities are stumping up to work with state governments to put those facilities in place to support those customers coming back, the students coming back.”

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This statement directly contradicted the Morrison Government’s statement last week that Australia’s international border would remain shut indefinitely:

“We cannot afford to take the risk right now to open our borders in a way that would compromise the health of Australians. So, we’re unapologetic about putting the health of Australians first,” Mr Frydenberg said.

It also follows the NSW Government last week stating that it would begin accepting international students into separate quarantine facilities within months:

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The proposal, accepted by the NSW Department of Premier and Cabinet, will permit overseas students to enter NSW and quarantine in Sydney using purpose-built housing…

The plan deviates heavily from the federal government’s intention to prioritise stranded citizens abroad…

Unlike the many returned citizens who have been fortunate enough to land back in Australia, and who have faced sizeable out-of-pocket costs for their time in quarantine, the student proposal will most likely see payment assistance provided by universities.

This plan is dubious on multiple levels.

First, there are still tens-of-thousands of Australians stranded abroad. As a matter of principle, their needs should be met before non-resident foreign students.

Second, it is scandalous for universities (read taxpayers) to subsidise the importation of foreign students when actual Australians have to pay steep quarantine fees and hefty airfares.

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Third, having thousands of international students quarantining in hotels or student accommodation risks further virus outbreaks and hard lockdowns, which would cost the entire economy billions as well as put lives at risk.

This plan reeks of moral hazard. The edu-migration industry want to privatise the financial benefits from having international students return, while the costs and risks are borne by Australian taxpayers and the broader community. It is classic heads I win, tails you lose situation.

What happens if these international students breach quarantine and leak virus into the community, causing more lockdowns? Will the universities then be sued by the government and forced to pay reparations to Australians forced to endure costly shutdowns? Obviously not.

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Given universities stand to be the main financial beneficiaries from this plan, they should sign an agreement promising to pick up the cost for any failures that result in virus outbreaks.

That’s the only way to balance benefits with risks.

About the author
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.