May 17 2020
Australia’s education sector is expected to come under increasing strain due to the ongoing COVID-19 pandemic. Government restrictions implemented in response to the pandemic have mandated the closure of education institutions across the University and Other Higher Education industry, Technical and Vocational Education industry, and Art and Non-Vocational Education industry.
‘Social distancing restrictions implemented to reduce the spread of the virus have meant traditional face-to-face teaching has no longer been feasible. Additionally, the closure of Australia’s borders has significantly reduced demand from international students, contributing to an expected downturn in sector revenue,’ said IBISWorld Senior Industry Analyst James Caldwell.
No longer counter-cyclical?
The economic impact of the COVID-19 pandemic challenges the long held view that the Higher Education Sector is counter-cyclical. Traditionally, a downturn in economic conditions and a spike in unemployment have encouraged Australians to enrol in higher education courses, with the aim of making themselves more attractive to employers. However, the sector’s increasing reliance on international students over the past five years has left it exposed to the global economic downturn caused by the spread of the COVID-19 virus.
The focus on international student enrolments
Over the past five years, rising global demand for a western education and Australia’s strong reputation as a provider of higher education services have led to a surge in demand from international students. Additionally, the depreciation of the Australian dollar over the period has made Australia’s higher education providers more cost competitive, in comparison with their international rivals.
‘Over the past decade, the Australian Higher Education sector has become increasingly reliant on international student enrolments, which have contributed to its strong revenue growth over the period,’ said Mr Caldwell.
Australia’s higher education providers have increasingly focused on boosting international student enrolment numbers as the tuition fees paid by foreign students are significantly higher than those of domestic students. Consequently, international student enrolments have risen significantly over the past decade, with the ABS estimating that Australia’s higher education sector generated a record $15.9 billion in international student tuition fees in 2018-19.
According to the Department of Education, Skills and Employment, the largest source of Australia’s international students was China, followed by India, Nepal and Brazil. In March 2020, 27% of Australia’s international student cohort came from China. However, demand from international students has plummeted due to the COVID-19 outbreak.
The first travel restrictions implemented in response to the virus outbreak, announced in early February 2020, focused on travellers from China and were enacted before the academic year had begun. Universities Australia has estimated that over 100,000 Chinese international students were unable to return to Australia due to the travel restrictions. The closure of Australia’s borders in late March 2020 further exacerbated the situation, with international students around the globe unable to return to Australia. Additionally, the slowdown of the Australian economy as a result of the virus outbreak has meant many international students who were in Australia have lost their employment.
‘The lack of Federal Government financial support for international students has forced many who were already in Australia to return home, or risk becoming destitute,’ said Mr Caldwell.
Consequently, revenue for operators across the University and Other Higher Education industry, Technical and Vocational Education industry, and Art and Non-Vocational Education industry, is expected to decline significantly in the current year, as the cash flow from international enrolments dries up.
The over-reliance on international student enrolments in recent years has placed the sector in an increasingly difficult position in light of the COVID-19 outbreak. Australia’s borders are expected to remain closed to foreign residents for the foreseeable future, reducing the ability of education institutions to benefit from the lucrative international student sector.
‘Social distancing restrictions have mandated the end of face-to-face lessons, and encouraged operators to increase investment in their online courses,’ said Mr Caldwell.
Australia’s universities, TAFEs, schools and other education institutions are expected to place increased focus on their online operations, in an effort to make up for the decline in revenue associated with the loss of international students. Consequently, revenue for the Online Education industry is expected to increase by 10.1% in 2019-20.
‘Online courses allow international students to enrol in courses at Australia’s education institutions, while remaining in their home countries, as international student mobility declines,’ said Mr Caldwell.
IBISWorld reports used to develop this release:
- University and Other Higher Education industry
- Technical and Vocational Education industry
- Art and Non-Vocational Education industry
- Online Education in Australia industry
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647