Australia / Coronavirus Insights
Schooled: Travel Restrictions Are Shaking Up Universities

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by IBISWorld
Apr 29 2020

Over the past decade, Australian universities have increasingly come to rely on international students and the higher fees they pay compared with domestic students. Prior to the COVID-19 outbreak, IBISWorld estimates that the University and Other Higher Education industry generated 24.8% of total revenue from international students. However, travel restrictions associated with COVID-19 have cut off foreign students from Australian universities, and will likely result in revenue and profit declines across the higher education sector.

Universities threatened

Industry lobby group Universities Australia expects that travel restrictions will cause revenue losses of between $3.0 billion and $4.6 billion across universities in Australia. Additionally, IBISWorld anticipates that industry-wide profit margins will contract to 5.7% of revenue in 2019-20. These declines have put nearly 140,000 jobs in jeopardy across the industry.

While larger universities rely more heavily on international students than their smaller counterparts, they also tend to have more resources to draw on to remain viable. As a result, larger universities are unlikely to fail due to the travel restrictions associated with the COVID-19 outbreak. Instead, they will likely cut back on staff or courses to save costs. In contrast, smaller universities will likely be harder hit, despite relying less on international students. These universities tend to have lower financial reserves and have fewer available options when making financial cutbacks.

Online education

While many universities were already taking up aspects of online education, social distancing measures and travel restrictions associated with COVID-19 have encouraged universities to invest more heavily in online learning platforms. The Online Education industry is anticipated to benefit from these recent changes, with revenue expected to rise by 10.1% in 2019-20, and 13.2% in 2020-21.

Many education providers across Australia, including universities and schools, have had to rapidly move most of their courses online in response to social distancing restrictions. While most schools will likely return to normal classroom learning following the winter break, education providers are anticipated to keep many courses and classes available online. In 2019, an estimated 950,000 international students were enrolled across Australian universities. As a result, universities are expected to maintain their online channels to meet the needs of international students that cannot enter the country.

Government assistance

As the universities sector contends with the new challenges associated with social distancing and plummeting international student numbers, the Federal Government has stepped in to offer assistance.  The government has offered $18.0 billion in funding to universities, and will provide $100 million in regulatory fee relief to the tertiary education sector, including private vocational education and training providers.

Despite widespread uptake of the JobKeeper wage subsidy program across the country, some large universities may be unable to access this program. JobKeeper provides a fortnightly $1,500 payment per worker to businesses that can demonstrate a projected revenue loss of at least 30% in 2019-20. This amount must be passed on in full to the employee. However, businesses that earn over $1.0 billion in annual revenue, which includes many large universities, must demonstrate revenue losses of over 50%. While the government has indicated that it will not provide assistance to international students remaining in Australia, some universities are attempting to support students facing hardship by setting up emergency student funds.

IBISWorld reports used to develop this release:

For more information, to obtain industry reports or to arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647