Negative Forecast for Australian University Sector: S&P Report

Negative Forecast for Australian University Sector: S&P Report
Students sit next to The Quadrangle at The University of Sydney on May 8, 2013, in Sydney, Australia (AAP Image/Paul Miller)
Rebecca Zhu

As the international student cohort in Australian universities shrinks and border policy continues to turn prospective new students away, the sector may experience a heavier loss this year than last, a report says.

An analysis by S&P Global, which forecasts the future of the higher education sector, has said that the impact of the decreasing  international enrolment numbers, political tensions, and more is causing a significant issue for the sector.

“Our overall sector view remains negative,” the report said, but also noted universities had responded swiftly to the unforeseen circumstances of 2020.
Universities Australia, the peak body for the higher education industry, revealed last year that the sector lost at least $1.8 billion (US$1.4 billion) in revenue compared to 2019 and estimated it would lose a further $2 billion this year.

“Because tertiary degrees are usually at least two years in duration, a diminished cohort of commencements in one year will have a pipeline effect, depressing revenue in future years, too,” the report said.

Australian universities have a higher reliance on international students, as they make up a considerable portion of the tertiary student population compared to university sectors in the United Kingdom (UK), the U.S., and Canada.

The Group of Eight universities, which are considered Australia’s most prestigious, have significant numbers of international students.

“Strong reputations also mean that if student demand were to wane, they could tweak their fees or entry standards to cannibalise demand from lower-ranked peers,” S&P reported.

The Australian National University (ANU) logo is seen on a building at the campus in Canberra, Australia, on Sept. 16, 2020. (AAP Image/Lukas Coch)
The Australian National University (ANU) logo is seen on a building at the campus in Canberra, Australia, on Sept. 16, 2020. (AAP Image/Lukas Coch)
Former Australian Catholic University vice-chancellor Greg Craven told The Age that his fears on the issue had been vindicated.

“Universities with big brands... can predate on other universities,” Craven said. “The very universities that have caused this crisis will get out by victimising other universities.”

The report also raised concerns that “education could be next” to suffer from Beijing-imposed restrictions in its ongoing economic coercion campaign against Australia.

“We see the escalating Australia-China quarrel as a downside risk, with potential to severely amplify the fallout from the pandemic,” the report wrote.

A survey by Navitas, a private education provider, confirmed earlier fears from the tertiary sector that Australia would lose their students to Canada and the UK if borders remained closed.

It found that interest in Australian and New Zealand universities had waned considerably compared to one year ago, where students considered both countries attractive study destinations due to the great handling of COVID-19.

“While Australia and New Zealand continue to be perceived as ‘safe and stable due to their elimination strategies and very low case numbers, this perception is increasingly irrelevant to a country’s reputation as a study destination,” Navitas head of strategic insights and analytics Jonathan Chew said.