03. Re-Organisation

Education to remain a major export but there are lessons to be learned

The Australian higher education sector has become increasingly reliant on international students with enrolments reaching record levels in 2019. However, the swiftly imposed travel restrictions during 2020 had an enormous impact on the sector, with international student arrivals from November 2019 to November 2020 dropping by 99.6%.1

While the sector was able to successfully pivot to remote and online learning, the financial implications for providers have been challenging, with an estimated revenue gap in the billions of dollars. The 2020-21 Federal Budget released in October does, however, offer some relief with support for early childhood education and care, schools, vocational education, and higher education. Whilst the lingering impact of COVID-19 is uncertain, education is expected to remain as one of Australia’s major exports over the next five years.

Although many higher education providers have strong asset balances, the fall in international students had a significant revenue and profit impact in 2021, and managing cash flow will be a critical concern. The JobKeeper program has helped, but with its end date approaching on 31 March 2021, higher education providers may be forced to look at other ways to generate cash. This could include asset sales, equity and debt injections, and cost reduction strategies.

With the risks of foreign interference increasing, the Parliamentary Joint Committee on Intelligence and Security is holding an inquiry in 2021 into the higher education and research sectors. This comes on the back of the Australian Government’s Counter Foreign Interference Strategy, which provided guidelines for universities to manage the associated risks.

The Australian Government is also providing free or low-fee training courses across the nation through its $1 billion JobTrainer Fund. This will benefit a number of RTOs but, as seen in the past through Commonwealth funding into the VET-FEE HELP program, it may also increase the risk of training providers inappropriately accessing funding for training not provided, or training provided to ineligible participants – something the Government will need to keep a close eye on.


1 https:/www.abs.gov.au/statistics/industry/tourism-and-transport/overseas-arrivals-and-departures-australia/latest-release#arrivals-international-students