There has been push-back against a proposal to tax international students and redistribute the funds across the tertiary sector.
International students have raised concerns about a proposal to impose a new tax on their studies.
Primarily, they believe it would reinforce an existing perception that Australia views the visitors from overseas as cash cows, who prop up Australia’s resources-deprived higher education sector.
A levy on international students is one of 70 policy ideas put up for consideration and further discussion in the interim report of the Australian Universities Accord, a major Commonwealth government review into higher education in this country.
Under the levy proposal, universities would pay a portion of the fees they receive from international students into a central fund to be managed by the government.
The accord’s interim report argues that accumulated funds could: “provide insurance against future economic, policy or other shocks or fund national and sector priorities such as infrastructure and research.”
If the tax proceeds, highereducation experts predict the funds raised will be redistributed across universities, mainly to bolster research activities.
Critics have described the levy as a GST on education.
Despite heightened awareness of the importance of international students to the economy during the pandemic when our borders were closed, many still underestimate the extent to which the university sector relies on their tuition fees.
Data summarising international student enrolment in Australian universities presents a striking picture.
In 2023, universities hosted an estimated 360,000 international students, who contributed an aggregate $10 billion to the sector (about 25 per cent of the sector’s total budget).
For some universities, international student revenue can amount to as much as 40 per cent of their total annual operating budget.
Modelling undertaken by the University of Melbourne’s Melbourne Centre for the Study of Higher Education – using 2021 international student enrolment data – has revealed the full extent of the contributions individual universities might make to a government fund.
The Melbourne Centre flagged that a 5 per cent tax on international student revenue would contribute $430 million to a government fund.
The biggest contributors would be the University of Sydney ($68 million), Monash University ($46 million), the University of Melbourne ($43 million), the University of New South Wales ($35 million) and the University of Queensland ($32 million).
In this state, the University of Western Australia and Curtin University would each pay about $7 million, Edith Cowan University almost $5 million and Murdoch University $2.7 million.
A rising number of overseas students already hold the view they are the cash cows who subsidise a financially challenged education sector.
If the levy is introduced, they fear some universities might increase tuition fees to pass on this new tax, rather than absorb the extra charges themselves. This will make an Australian education for students from overseas increasingly unaffordable, opponents say.
But it not just international students who think the proposed levy could depreciate the educational currency of Australia’s third-largest export industry.
Some vice-chancellors have described the notion of redistributing revenue from a levy on international students as abhorrent, claiming it would lead to universities that were the most successful at recruiting international students having to help pay for research at other universities.
In addition to undertaking modelling based on the proposed levy, the Melbourne Centre laid bare a raft of other issues in its report, What Are the Implications of a Levy on International Fees.
“The new levy implies issues around equality between students and raised key questions about whether it is acceptable to impose a levy on international students’ fees but not on domestic students’ fees, and whether the levy should be imposed on all international students or limited to those in particular types of education providers,” the report says.
The Melbourne Centre’s report also highlights the issue of redistributing tax generated from private-fee income among public universities. The report challenges the fairness and practicality of shifting financial resources from wealthier to less-affluent universities.
It remains unclear whether the levy will be a recommendation in the accord’s final report, which is due to be released early in 2024.
What is clear, however, are the substantial challenges of implementing such a levy in the context of Australia’s higher education system and its global reputation as a major educational hub.
• Professor Gary Martin is chief executive officer of the Australian Institute of Management WA
