Sydney University V-C Sees Danger for Future of Overseas Student Income. (July 20, 2009)

The University of Sydney's vice-chancellor, Michael Spence, has warned that Australia risks squandering its $15.5 billion higher education export industry within 10 years, unless the Federal Government takes urgent action.

In a report by The Sydney Morning Herald he pointed to the immediate problems of continuing reports of racist violence, shonky private colleges providing dubious diplomas and visa abuses which are damaging the good reputation of Australia's education industry.

Further down the track and ultimately of greater importance he noted that China, the main source of Australia's international students, would increasingly educate its young people at home and look to England, Canada and the United States where the post September 11, 2001 decline of Chinese student enrollments had all but disappeared.

According to the SMH: "The big universities such as Sydney, NSW, Melbourne, Monash and Macquarie each have more than 10,000 international students on campus, paying on average between $20,000 and $30,000 a year. This guarantees $200 million to $300 million a year for each university - in some cases over 20% of total revenue."

Professor Spence told the Herald: "This is an enormous resource for Australia which we cannot afford to squander. These are concerns I have spoken [about] with the Prime Minister and Deputy Prime Minister … They understand the importance of this sector to the Australian economy and Australian innovation, especially now. As the universities of east and south-east Asia become more internationally competitive, Australia is going to have to work hard to ensure it remains an attractive destination. We have a reputation for a high-quality education in a safe environment. We need to ensure our education provision remains high quality and Australia remains a safe and attractive destination for international students."

The point has been made by more than one vice-chancellor that overseas student fees are used in part to cross subsidise less popular degree programs, PhD scholarships and research -- hardly a stable source of income. In fact what is required is to set up a buffered system whereby universities have a stable basic income which includes adequate resourcing of those facilities appropriate to the university to provide. Income derived from overseas' student fees then goes to the commonwealth buffer.

A good "quant" should be able to design a workable system within a month or two.