By Natassia Chrysanthos and Lucy Carroll
A proposed levy on the almost $10 billion universities make each year from international student fees could be used to pay for student housing or research, Education Minister Jason Clare said as he unveiled ideas to fund 1.8 million more tertiary students by 2050.
But Australia’s top universities are resisting the levy proposal. University of Sydney vice-chancellor and Group of Eight deputy chairman Mark Scott warned it could deter international enrolments, sending prospective students to North America or Europe.
The Group of Eight universities describe the proposed levy as a tax on high-achieving institutions.Credit: Peter Braig
An interim report from the first major review of the university system in 15 years, released on Wednesday, found funding relied on volatile revenue streams, lacked transparency and required a redesign.
The report slammed the former Coalition government’s funding reforms, which hiked student fees for humanities subjects and slashed them for science subjects, and said they risked causing “long-term and entrenched damage to Australian higher education”.
Clare told the National Press Club in Canberra on Wednesday that a levy on international student fee income could create a fund “a bit like a sovereign wealth fund” that was used to cover shortfalls in tertiary education.
Universities are at odds over the idea. The Group of Eight universities that earn the most money from international student fees have described it as a tax on high-achieving institutions.
Fees from international students are the second-largest contributor to overall university revenue and were worth about $8.7 billion in 2021.
Scott said if students were deterred from enrolling, Australian universities could fall in international rankings, damaging their research culture.
“You’d really need to be careful in thinking through this kind of reform, firstly that that level of tax didn’t provide a disincentive for people to come to Australia in the first instance, and that it didn’t cut the amount of money that was available at the big research universities,” Scott said, noting that Australian institutions were competing with the US, UK and Canada for enrolments.
“That would have a spiral effect that could come off the back of that. Australian universities could fall in the rankings. We attract fewer international students and there’s less of a research culture that’s evident in our universities, which is absolutely vital.”
Jason Clare told the National Press Club that a levy on international student fee income could create a fund “a bit like a sovereign wealth fund”.Credit: Mick Tsikas
A levy could be imposed on universities that earn revenue above an agreed threshold to create a shared or pooled fund. It would probably draw the most money from wealthy universities and funnel it across the sector, including to regional institutions.
The big city universities earn the most: Sydney University collected $1.4 billion in overseas student fees last year, while UNSW recorded $753 million, UTS reported $338 million and the University of Newcastle just $90 million.
In Victoria, Monash University reported $906 million in international student revenue, Melbourne University collected $877 million, RMIT reported $335 million and Swinburne University made $148 million.
Andrew Norton, professor of higher education policy at Australian National University, said international student fees had widened the resource gap between institutions and enabled the universities with high enrolments to vastly increase their research output.
But he is opposed to a levy on international student fee income. “A levy is likely to play badly in the international student market and reinforce the perception that they are perceived as cash cows,” he said.
“International students are paying premium fees to attend Australian universities to share in the prestige of that institution. Although the fee money is only partly spent on students themselves, it is spent on research that drives up university rankings.”
But University of Newcastle vice chancellor Alex Zelinsky said a levy on international student fees could help universities in regional areas. “It can’t just be stamped out or buried just because some people don’t like it,” he said.
“Some universities have all the geographic advantage. A lot of the regional universities are setting up smaller campuses in the city to capture more of the international market and not doing it very successfully.”
Catriona Jackson, the chief executive of peak body Universities Australia, said a more sustainable model for funding research was needed. “Whether this is it is a matter for debate,” she said.
The education minister welcomed the debate.
“Government can’t fund everything. And there are things that people in this room want funded. Whether it’s research, or whether it’s more infrastructure, whether it’s student housing,” Clare said.
“And so I genuinely want people to have a conversation about, one, is it [a levy] a good idea or not? And two, if it is an idea that’s got some merit, then what might it look like and what might it do?”
The expert-led Universities Accord panel has been charged with sparking discussion about how universities can accommodate 1.8 million more students by 2050 and boost participation from disadvantaged students.
Its report cautioned that funding stress was driving the continued growth of international student numbers. “Australia’s higher education system is incentivised to maximise the intake of international students and produce large student cohorts. This can be detrimental to the student experience for both international and domestic students,” it said.
The report suggested improving language testing and admissions benchmarks for international students, but its final recommendations will be handed down at the end of the year.
Other ideas the panel will probe include whether state governments and private companies should start contributing to their employees’ university fees.
The report floats the idea of a “universal learning entitlement” for all students to ensure they can access higher education. That would involve a combination of public subsidy, student contributions paid through a loan and an employer contribution.
It said healthcare and education students undertaking mandatory workplace placements should receive financial support, while state governments could help pay the university debts of nurses and teachers.
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