International fee levy ‘will sap student sentiment’

International students in Australia contribute billions of dollars to services that they cannot access, and a proposed levy on their fees would make things worse, according to new research.

University of Melbourne academics estimate that Canberra collects more than A$2.6 billion (£1.4 billion) a year from foreign students and graduates via income and consumption taxes and visa fees. Yet despite being taxed at the same rate as Australians, international students and post-study work visa holders are ineligible for public services such as welfare support and subsidised healthcare.

Now a mooted international education levy could see them paying out hundreds of millions of dollars more. “Students might rightly ask whether they are receiving value for money,” observes a paper published by the Melbourne Centre for the Study of Higher Education (CSHE). “Were a levy to cause a major drop in Australia’s share of the international education market, it may ultimately be a self-defeating policy.”

The interim report of Australia’s major higher education review, the Universities Accord, says a levy “could provide insurance against future economic, policy or other shocks, or fund national and sector priorities such as infrastructure and research”. To achieve such aims, it would need to dwarf current mechanisms such as the Tuition Protection Service (TPS), which collects around A$6 million annually to finance refunds for students of bankrupt colleges.

By contrast, a 5 per cent fee levy would cost individual universities up to A$68 million a year, the CSHE paper estimates. The accord panel is rumoured to be contemplating a levy of 15 per cent of international education earnings above some threshold.

It is unclear whether the threshold would apply to individual fees or aggregated institutional earnings. Chris Ziguras, co-author of the CSHE paper, said there would be “complications” either way.

“The problem is that we’re taking money from international students to fund things that there’s no reason…they should be paying for,” he said. “They’re a convenient group that can be taxed, and they don’t vote, to put it bluntly.”

Professor Ziguras warned that the proposal would have an “enormous” impact on student sentiment while undermining a policy push to reconceive international education as more than a commercial enterprise. “It runs the risk of taking us a long way backwards in that whole effort to broaden our thinking about the benefits of international education.”

The levy proposal would differ from mechanisms such as the TPS in that the revenue would be redistributed among institutions rather than funnelled into public revenue.

“It will be a difficult task to explain to international students why they should be paying fees that will be transferred to support other universities in which they will not be studying,” the paper notes. “If there is a funding shortfall, international students may reasonably ask, why are we the ones that will be taxed to fund it?”

The paper estimates that half of the levy would be collected from just five institutions, and almost three-quarters of universities could be net beneficiaries from the proposal. “Despite this, very little support for the levy has been forthcoming from any quarters.”

Professor Ziguras said the lack of institutional supporters reflected “wariness” about how the proceeds might be spent. “That pot of money is very vulnerable to the government steering it to other purposes [outside] the sector,” he said.

“Until there’s [a] more concrete idea about what that fund would do, transparency about where it’s going to be spent and guarantees it is going to be spent that way for the foreseeable future, I don’t think any institutions are going to be coming out in support of it.”

john.ross@timeshighereducation.com