The coronavirus (COVID-19) pandemic has not been kind to any of us, but for Australia’s higher education sector it has been crippling.
A huge drop-off in international students – which once comprised the nation’s third largest export – has left a $16 billion dent in the industry.
This has prompted the government to reconsider some of its public health measures and recommence international student visa granting from July.
Demands for further policy changes (and funding) from universities have persisted, though, with red tape removal unlikely to be a sufficient stimulus on its own.
With compounding factors, like parental unemployment and an official Australian travel warning from Chinese authorities to its citizens, it is expected that the market will be bruised for quite some time.
Deloitte Partner and Economist, John O’Mahony, is sympathetic to the industry’s struggles, but believes it may be time to re-shift the focus from “How do we survive?” to “How do we help Australia survive?”
“University-developed innovation will play a pivotal role in the pandemic recovery and in curbing the trail of economic damage it has already left behind,” said John ahead of the Australian Financial Review Higher Education Summit.
“Australian universities are creating vaccines; the machine learning tools that help design vaccines and triage patients for urgent care; and a number of experimental COVID-19 therapies.
“Equally, they are developing supply chain innovation, tools to propel digital business, and other technologies that will keep businesses running smoothly, amid social distancing measures.
“Whilst funding is a legitimate concern for university researchers, it is important that the focus is not taken away from what the higher education sector can give during this period.
“In my view, universities are not a passive recipient of current circumstances, rather an active partner that can help lift Australia out of this tough economic downturn.”
Compounding the immediate challenges of the COVID-19 pandemic are knock-on effects for the labour market; and the Education arms of universities will also have a role to play in repairing this damage, said John.
“All the while the COVID-19 pandemic is taking hold, the workforce is being significantly disrupted,” he said.
“At the height of the crisis, there were almost 1 million fewer jobs and next year we will have an unemployment rate of 10 percent. Structurally, many of the jobs we lose won’t come back.
“Let’s not forget also that, before COVID-19, the Australian economy was bracing for Industry 4.0 and the digitisation of the economy.
“Universities will have a huge part to play in repairing this period of weakness in the labour market and reskilling the workforce for 2022 and beyond,” he added.
With these challenges, John believes the traditional three year degree program will come under increasing pressure. As will its syllabus, course structure and delivery method.
Additionally, universities may have to reassess their former priorities, like buildings and infrastructure; and hone new ones, like digital business.
“Universities will need to adapt quickly to withstand the heat. And I believe an assertive mindset and broad outlook is a key ingredient of that,” he said.
“Institutions clearly have the smarts to make sure they are not blown around by the breeze, but the question is, are they eyeing up the right targets and allocating their resources accordingly?
“Short term finite goals, like maintaining viable levels of working capital will of course be a key priority in the short to medium term. But equally institutions will need to be working towards a higher purpose and a longer-term horizon.”
John acknowledges that his views may be “idealistic” in the current climate and admits that the reality for many universities is a difficult, drawn-out road of financial recovery ahead.
“It’s going to be a tough few years for the sector, I have no doubt about that,” said John.
“International student dollars will continue to dry up and probably won’t come back in full force for some time. Logic tells me that people simply won’t be signing up for courses unless they know for sure they’ll be able to attend them.
“On the domestic student front, though, we will be okay. I believe government will continue to support places and that will provide an ongoing revenue stream, lessening the burden on cash reserves.”
Whatever the outlook for higher education in the coming years, the right policy, strategy and mindset will be key.
Join John for more discussion on this topic at the Australian Financial Review Higher Education Summit – held as a virtual event on September 30 – October 1, 2020.
John is a Partner at Deloitte Access Economics in Sydney specialising in digital trends, innovation and the public sector. He has previously served as senior economic adviser to two Australian Prime Ministers, where he had responsibility for communications, infrastructure and innovation policies.
John will explore the impact of various trends and the economic outlook for higher education, giving his expert recommendations on how the sector should respond.
Learn more and register.