THE BUSINESS OF EDUCATION HITS ROADBLOCKS IN VICTORIA

UNCLAS SECTION 01 OF 02 MELBOURNE 000089

SENSITIVE

SIPDIS

STATE PLEASE PASS TO DEPT OF EDUCATION

E.O. 12958: N/A
TAGS: ECON ETRD SCUL AS
SUBJECT: THE BUSINESS OF EDUCATION HITS ROADBLOCKS IN VICTORIA

REF: MELBOURNE 65

MELBOURNE 00000089 001.2 OF 002


Summary
--------------


1. (SBU) The international education sector is Australia's third
largest export, behind only iron ore and coal. In Victoria,
providing higher and vocational education to foreign students is the
state's largest export, worth approximately A$4.5/US$3.6 billion
each year. The GOA is actively seeking to wean its economy off of
its dependence on commodities, and the knowledge based sector of
international education is often held up as an enviable supplement.
The "business of education," however, has hit obstacles in Victoria
such as a perceived tradeoff between higher education quality and
the number of foreign students, student integration and fraudulent
vocational schools. End Summary.

Not on the Same Page
--------------


2. (SBU) International students are immensely important to the
Australian economy, bringing in approximately A$26.7/US$21.4 billion
each year. One study suggests that every four international
students create one job in Australia, due to fees and peripheral
spending. The GOA, including the recently promoted Parliamentary
Secretary for Innovation and Industry Richard Marles, actively
encourages international students to come to Australia to study, and
wants the industry to grow. Vocational schools also share these
sentiments. This is at odds, however, with what we heard from the
universities, who instead of increasing international student
enrollment would like to become less dependent on it. University
administrators instead highlight the need for more government
assistance. (Comment: There are very few private universities in
Australia. The GOA heavily supports public universities already and
it may be difficult for the universities to successfully lobby for
additional funding. End comment.)

Breakdown of Students
--------------

3. (U) According to the Victorian government, the number of students
coming to Victoria has doubled over the past five years. In 2008,
there were close to 162,000 international students studying in the
state, comprising roughly 33 percent of the 494,000 total
international students in Australia. By contrast, in 1987,
Australia had only 667 international students. In South Australia,
there are 25,000 foreign students, representing five percent of
Australia's overseas student population. In Victoria, Chinese and
Indian students make up half (approximately 30 and 20 percent
respectively) of the total overseas student body. South Koreans,
Malaysians, Thais, and Indonesians also represent significant shares
of international student enrollment. The national breakdown of
international students is 27.2 percent Chinese, 13.3 percent Indian,
7.9 percent South Korean, 5.5 percent Malaysian, 4.1 percent Thai,
and 4 percent Indonesian. Indian and Chinese students are
experiencing the largest growth rates of any national group.

Lack of Integration - A Growing Problem
--------------


4. (SBU) A growing challenge facing this industry is the ability of
foreign students to integrate into Australian society. Despite
Victoria's oft-touted status as a multicultural paragon, problems
persist. According to contacts within Melbourne's universities and
the Victorian government, a lack of student accommodation is the
primary culprit. Unlike their U.S. counterparts, Australian
universities seldom provide on-campus housing to their students,
reducing the likelihood that students from different socio/cultural
background will choose to live together. This includes both major
universities and vocational educational training (VET) schools.


5. (SBU) The recent protests by Indian students in Melbourne
(reftel) highlight the negative impacts of this failure to
integrate. The Victorian government fears that these protests may
lead some countries to conclude that Australia is an unsafe place to
send their students to study and may damage revenues. Advisors in
the office of Jacinta Allan, Victorian Minister for Skills and
Workplace Participation, recognize that a lack of student housing
contributes to integration troubles, but have not yet found a
solution. In addition, prestigious universities such as the Royal
Melbourne Institute of Technology (RMIT) and Melbourne University
have placed a high priority on improving student accommodation, but
lack the resources to act.

Predatory Vocational Schools?
--------------


MELBOURNE 00000089 002.2 OF 002



6. (SBU) Education "exports" in Australia are divided into
secondary, vocational and tertiary schools/universities. Secondary
education plays only a minor role in the "business of education" in
Victoria; approximately 8,000 foreign students are enrolled in
Victorian secondary schools. Vocational schools provide degrees in
fields like hairdressing, hospitality and pastry-making.
Increasingly, questions surrounding the bona fides of a number of
Australia's vocational programs are being raised. In recent days,
police have called into question a number of VET schools'
credentials and the GOA is under growing pressure to crack down on
predatory vocational schools that misrepresent themselves to foreign
students. A recent audit by the GOA revealed 17 "high-risk"
colleges that are in danger of forced closure. The Victorian
government has also formed an Overseas Student Education Experience
Taskforce to identify shortcomings and to assist foreign students
displaced by school closures.

A Question of Funding
--------------


7. (SBU) Recent student protests and the potential for the global
slowdown to decrease international student enrollment in future
years highlights the need for income diversification in the higher
education sector. In conversations with Melbourne's major
universities, administrators highlighted the need to become less
dependent on international student numbers. RMIT's international
office told post that it would prefer to have fewer foreign
students, and instead focus on the quality of education it delivers
to these students. Melbourne University's Director of International
Programs, Karen Gould told post that foreign students comprise 28
percent of enrollment and that the University's leadership considers
this to be an ideal percentage. Universities here posit a
connection between very high numbers of foreign students and an
erosion of students' experiences.


8. (SBU) Both Melbourne University and RMIT are looking to increase
alumni fundraising in order to reduce their dependence on foreign
student fees. According to Chris Nyland, Professor of International
Business at Monash University, these schools have tried to build
alumni donations for the better part of a decade, with little
progress. In addition to an inability to tap alumni funds,
Victorian universities look longingly at the U.S. model with its
propensity to access business money and corporate connections.
Until universities and schools can diversify their fundraising
capability, they will remain dependent on the lucrative
international student market. As one contact told Consul General,
"Foreign students' fees are subsidizing Australian students."

Comment
--------------


9. (SBU) The GOA is keenly aware of its dependence on commodities
exports. It sees strengthening its knowledge-based economy as a way
out of the "iron-age." In Victoria, however, higher education
exports have hit a ceiling. University administrators are
increasingly worried that student numbers have grown beyond their
ability to adequately monitor the quality of their students'
experience and vocational schools are coming under increasing fire
for fraud. While Australia has a substantial edge in the "business
of education," significant roadblocks such as student accommodation,
integration and long-term funding will limit the capacity of this
sector to supplement commodity revenues.

THURSTON