Australia's borders are about to open for... international students?

While Australia’s borders remain firmly closed to overseas visitors, the government plans to make a notable exception as it races to save its fourth-biggest export: education.

In time for the new semester, authorities are working on a plan to allow 350 international students to be flown into Canberra, the nation’s capital, later this month to resume classes. Under a trial program that could be rolled out nationally, the universities and territory government will foot the bill for their two-week mandatory quarantine in hotels.

It’s a sign of just how reliant Australia’s higher education sector has become on overseas students, who make up roughly a quarter of all enrollments – the second-highest ratio in the world after Luxembourg – and 40% of student revenues due to the higher fees they are charged.

But the extraordinary steps to help the $38 billion export industry recover from the coronavirus lockdown may not be enough to guarantee its long-term future.

Australia has fallen behind the U.S., U.K. and France in the highly competitive market by opening fewer offshore campuses. And with 37% of its international students at universities coming from China in 2019, it serves as a warning to other nations of the perils of growing too dependent on a single market.

Relations with Beijing are in the deep freeze after Prime Minister Scott Morrison led calls for an inquiry into the source of the Covid-19 outbreak. China has since warned its citizens they face the risk of racist attacks in Australia if they study or holiday there.

“It’s a really risky situation for Australia’s universities because we’re dealing with two very major events” with the virus and increasing diplomatic tensions, said Angela Lehmann, education analyst at the Lygon Group, a Melbourne-based consultancy. “We are on a precipice at the moment.”

It may be several months before the impact of China’s warning shows up in enrollment numbers, which had already been plateauing for the past three years, but the education sector’s most pressing concern is to get as many overseas students as possible into Australia in time for the July semester.

“We don’t have a one year problem – we have a two-, three-, four-year problem,” if students are unable to return to Australia and the delays drag out across their degrees, said Catriona Jackson, chief executive of Universities Australia, the peak body for the sector. The group forecasts lost revenue of as much as $16 billion by 2023.

The clock is ticking

From a pool of thousands, the two universities participating in the pilot program must whittle the list of students down to 350 through an online application process.

Those chosen will have to make their own way to a departure city, presumably somewhere in Asia, that’s not yet been named for a chartered flight to Australia, before completing the mandatory two-week quarantine ahead of the semester starting on July 27.

The program could yet come adrift if final approval isn’t granted by the federal government.

Morrison insists that states and territories that have closed their borders must first reopen to ensure domestic students from other parts of the country can return to class before international students are allowed in. That may scupper South Australia’s own plan to fly in international students, after it backflipped on a decision to lift border restrictions.

The importance of the sector to the Australian economy is clear. As an export, education ranks only behind iron ore, coal and natural gas.

A 2018 London Economics report showed that every $1 spent on research at Australia’s Group of Eight Universities produced almost $10 back in benefits to the private sector and the wider economy.

The fees paid by overseas students help prop up “a lot of the fundamental research” in Australian universities, said Michael Spence, vice chancellor of the University of Sydney, where nearly a quarter of the entire student cohort come from China. “The current situation has revealed how vulnerable to shock the system is.”

The University of Sydney has enough cash reserves and borrowing capacity and is undertaking significant savings measures including reducing capital expenditure, said Spence. As it stands, many institutions have slashed subject offerings while others have axed hundreds of staff.

Still, Australia has a compelling advantage over global competitors, according to Phil Honeywood, chief executive of the International Education Association of Australia – the country's success to date in containing the coronavirus to just over 7,500 cases and 104 deaths.

Provided the pandemic eases, Australia’s academic year beginning in February should also give it an edge over Northern Hemisphere institutions that typically begin in August or September, with students keen to get their studies underway.

If Australia can “provide a more comprehensive narrative about our genuine care for international students’ welfare, then we’ll be better placed against many other” countries, Honeywood said. “If we move quickly.”