Some Regional Investment to Refuse?

The Interim Report into International Education from the Parliamentary Joint Committee on Foreign Affairs, Defence and Trade is full of sensible ideas to combat bad practice in our international education industry.  It is a good read, with more than a whiff of Old Testament prophecy in the calls for judgement to be meted out on rorters, exploiters, and unreasonable professional accreditation bodies.

However in the general welcoming of the report one recommendation that I initially missed is worth unpacking (Ravi Lochan Singh thank you for highlighting it).

Recommendation 11 says “The Committee recommends the Government review and consider the desirability of the widespread practice in the university sector whereby universities establish Central Business District (CBD) campuses largely comprising international students and sub-contract the teaching to private institutions. This could be considered as part of the University Accord process and may warrant adjustments to funding formulas to ensure genuine regional universities in particular are adequately funded and not forced in effect to chase revenue in this manner.”

Regional campuses present the best opportunity to deliver the Government agenda of more graduates with the skills needed by communities and the nation for quality of life and growth.  Universities Accord submissions have highlighted that regional campuses have faced additional challenges of higher costs, lower scale, and fewer reserves, in addition to any general short fall in university funding.  Many, including me, advocated for incremental investment to enable regional campuses to deliver the growth and equity agenda. 

This recommendation also suggests the Universities Accord deliver investment in regional universities.  Not as incremental funding but as compensation should the Government decide to require regional universities to change how they engage with the international market.

The argument is that universities in Australia depend on international education for any surplus.  The international students overwhelmingly prefer Sydney, Melbourne, and Brisbane. Students can access those cities through multiple direct international flights, many have friends and family living there already, and historically housing and employment has been more plentiful.  Given this reality some regional universities have packed their belongings in an RM Williams checkered handkerchief, tied it to a stick, and headed to the big cities where the streets are paved with international students. 

The international strategy has been adopted strongly by three regionally headquartered universities, Federation (36% of total income from international students), CQU (27%) and Southern Cross (26%).  Others tried to escape their footprint in other ways.  New England, Southern Queensland, and Charles Sturt by specialising in domestic online delivery, Sunshine Coast by expanded their geography to serve neighbouring periurban growth communities.

A common model for any university seeking to serve markets away from their “home base” is to operate in partnership with a private provider.  This is the model that the Government is being invited to review.  Criticisms are that the model leads to CBD office building campuses, populated by an overwhelming majority of international students, which appears far from the culturally integrative campus experience we might hope for. 

These models do produce concentrations of international students, and often cannot access CSP places for domestic students.  But so do traditional campus models.  The AFR’s Best Business Schools feature last month showed completing business postgraduates were up to 92% international at our most historic and highest fee campuses (HT Bretlyn Bailey).  Government data show a mix of institutions have more than 80% of completing IT students from overseas.  The demographics are the same, even if the architecture is different.

Neither is the model unique to regional institutions.  Domestically, many universities use it to operate interstate or into the city from the suburbs.  It is the dominant model for offshore delivery of transnational education, a key plank in the current Australian Strategy for International Education. 

The benefits of third party provision are flexibility and cost sharing.  The risks are around quality of delivery and experience for the students and reputation for the university.  But those risks are monitored.

Problems with student experience and quality of delivery are monitored by Government through the annual QILT survey.  The latest data on quality of the entire educational experience for international undergraduate students shows that Federation, SCU, CQU are all well above average, and CQU is in the top 3. 

The other mechanism is regulation.  All delivery by Australia universities, whether onshore or overseas, directly or through third party providers, is regulated by TEQSA.  Reregistration is a serious business and universities have faced and responded to conditions arising from third party delivery.  The TEQSA website shows the last reregistration for Fed, CQU and SCU came with no conditions and the maximum duration.  The recommendation impacts institutions that are a long way from the “bottom end” private colleges and visa rorters the other recommendations in the report focus upon. 

Moving away from partnerships has simple economics.  Third party delivery enables a university to avoid the risks associated with owning and operating a campus.  Moving to a direct delivery model requires a much bigger financial and operational commitment for the university, consuming a higher proportion of scarce resources.  The costs to the university increase, particularly set up costs, and whilst there is no sharing of revenue and profit, there is also no sharing of the risk.  These are big decisions in such cash strapped times.

If regional universities withdraw from the CBDs entirely, they not only lose that revenue stream, but also what little scale they had in international recruiting for their “home” campus.  Recruiting only for regional locations will mean fewer interested students, smaller recruitment teams and less resourcing, and further slippage.  Fully offsetting all of this would run into hundreds of millions per year.

The CBD bound students no longer served by the regional universities do not have the paying power for higher fee, higher status universities, so many will end up served by private providers delivering their own courses, and that will include the private providers currently partnered with the regional universities, using the same buildings. 

It is clear there is not going to be all the public investment that people hope for flowing from the Universities Accord.  To deliver both the increased skills we need and equity in who has those skills significant investment is needed to support our regional delivery, and strong governance mechanisms to ensure that investment delivers is important.  But at the same time to reduce access to a key market and redirect scarce funds for investment into compensation is not good policy.  We already scrutinise outcomes and regulate delivery, two key mechanisms to identify and address problems wherever they occur across the entire sector.  We should do that regardless of architecture.