Yesterday, Crikey reported on how the sudden collapse of the Indian export education market has caused consternation among Australia’s vice-chancellors. This is part two of our special report…

Three years ago, a House of Representatives education committee warned of a threat to Australia’s multi-billion dollar education export industry from growing international competition. The committee said this meant institutions needed to develop new strategies, including diversifying the source countries and the fields of studies chosen by foreign students.

“Clearly, more source market diversification will need to occur in the future as competitive pressures affect our traditional markets,” the committee said. It noted that in 2006, almost 384,000 foreign students were enrolled with Australian education institutions and of these, 45 per cent were in higher education.

But, despite a 49 per cent increase in foreign enrolments in universities alone in the four years to 2006, the committee said five of Australia’s top 10 markets had been in decline over recent years.

Since that time, the total number of foreign students undertaking Australian education courses has jumped to more than 560,000 with 38 per cent, or 215,000, now enrolled in universities. Yet far from a diversifying market, more than one in three students are from China and one in 10 is from India so these two markets have become so large, now almost 46 per cent of the total, that any fall-off has serious consequences.

Although Monash University is not as exposed to the Indian market as others are, it is heavily reliant on China and some South-East Asian countries. As noted yesterday, the university hit the headlines when news broke that 300 or more of its staff could lose their jobs because of a $45 million budget shortfall as a result of plummeting income from foreign tuition fees.

Monash vice-chancellor Professor Ed Byrne says the university generates some $450 million a year from its overseas students, out of an annual income of around $1.6 billion. A significant proportion of the students’ fees comes from Monash College where students undertake pre-university study before enrolling in their degree courses. It is the dive in these numbers that Byrne says helped contribute to next year’s projected budget shortfall.

“If we thought the projected fall in student numbers in 2011 was an aberration we could ride it out,” Byrne says. “But we think the years ahead will be tougher in the international market place than the last few years have been.”

Although reluctant to confirm the Tertiary Education Union’s claim of 300 job losses, he says Monash is having to make an adjustment “that other universities have already had to.” That is, job cuts have been occurring on other university campuses across the country for the past 12 months and more losses are likely.

The academics and general staff most at risk at Monash are in the country’s largest economics and commerce faculty because of its high proportion of foreign students. The two fields are among the most popular with overseas students because graduates stand a better chance of gaining permanent residency.

Writing in his blog, dean of the faculty Professor Stephen King says the federal government has three choices to prevent a funding crisis for universities: “Fix the visa issue so the Australian education system remains internationally competitive and the cross-subsidy to domestic students can continue.

“Or massively increase the funding per domestic student so it covers the true cost of that student’s education…; or prepare to inject billions of dollars into the tertiary sector in the form of bailouts over the next two to three years.”

King believes option three is “the default option” and he expects bailouts will occur, declaring: “If it does, the federal government will be responsible for trashing the reputation of our universities and killing a viable long-term export industry in education.”

Monash’s dean is hardly alone in attacking the government for tightening its student visa and skills migration policies. The powerful Group of Eight research intensive universities along with individual vice-chancellors and their own lobby group have all been protesting for weeks and their cries are becoming louder.

But the government acted to stop what had effectively become illegal backdoor migration and to prevent foreign students obtaining permanent residency visas who lacked the skills Australia desperately needs or who didn’t have the right one, such as the ability to speak English properly even after graduating from an Australian university.