Professor Warren Bebbington

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The coming decade is likely to see step change expansion in Asian student mobility throughout the world. But if Australia is to capture its share of the growth, it will need to improve the student experience it offers, and avoid diminishing the reputation for university quality on which its success depends.

This year, Australia will reach a new record in its international student numbers, and five years of pessimism about its future while the AUD climbed ever higher seem to have evaporated. Now the nation’s third largest export, international education brings in $17.6 billion p.a., and is expanding by $1 billion a year, adding some 5,000 additional jobs a year to the 120,000 it has already generated.

Truly, our university sector has become the goose that lays the golden eggs.

And there could be more eggs on the way. A Deloitte study Positioning for Prosperity identifies international education as one of four Australian sectors that will grow at least 10% faster than GDP over the next 15 years. It predicts that by 2030 half of the world’s entire middle class will be in China, India and Asia: and that would mean nearly 1 billion more Asian families affluent enough to send their children to study at universities abroad.

To be sure, Asian governments are keen to develop their own universities to stem the flow of bright students and their course fees abroad. Especially in China, the number and quality of local universities is rising rapidly. But this expansion is not likely to catch the demand for university education, which is growing at a staggering rate. At the top end in China, PKU (Peking University) now receives more than 200 times the number of applications it can admit, and no amount of growth in the array of alternatives seems likely to ease this extraordinary pressure. India has demand developing almost as fast; clearly, there will be an expanding market for international students for a very long time to come.

The challenge for Australia will be maintaining its share as the market expands. Not long ago, Australia (with the UK) was an undisputed leader in the Asian student market, offering education that was of high quality, relatively inexpensive, and close by. But now many US universities have sought to replace their own declining government support with income from international students, and an increasing number of American universities now compete with us for students in key Asian cities. They too offer high quality, often at a lower price than we can. Moreover, Australian universities have become massive, offering ever larger classes and less personal experiences, while many American campuses can still boast a small-class, personalised experience. The threat to our market position is thus significant.

What must be done to ensure Australia continues to share in the coming expansion? Firstly, we will need to improve the experience that we offer international students here in our universities. With the high cost of living and fees in Australia, the sometimes mixed educational outcomes, and the often sub-optimal accommodation, travel and support arrangements, we are exposed to being overtaken by more attractive alternatives. As the Commonwealth’s new National Strategy for Higher Education points out, we need to take a stronger role in ensuring for students we recruit adequate language proficiency, affordable and appropriate accommodation options, better interactions with Australian families, and more opportunities for relevant work placements.

To take the accommodation options for instance, we have left too much to the private sector, with some uneven, and at times exploitative outcomes. Some developers produce student complexes which charge inflated rents for tiny living quarters, while some landlords offering modest rents crowd students into regular apartments in numbers well beyond their legal capacity.

Clearly the student accommodation sector is ripe for the entry of more responsible, sophisticated operators, who will take a more integrated, community approach to creating student living, and can do so at an affordable price. The entry of the UK-based Scape Student Living to Melbourne and Brisbane promises to be a game-changer: Scape typically includes teaching rooms and business incubator spaces in their student developments, as well as gyms, cafes and communal areas, and well-appointed apartments.

Governments can help. In South Australia, the State Government has recognised the sector as one of its ten economic priorities, setting growth targets for international student numbers and a plan to establish for them a State-wide accommodation guarantee. With State encouragement, a number of student accommodation developers are in discussion with local universities about increasing Adelaide’s student housing capacity in affordable and imaginative ways. In its 2015 budget, the State has provided $5.7 million for an array of measures to stimulate the sector, notably by increasing destination marketing through Education Adelaide and through international scholarships.

But there is a more critical factor to ensuring our future as a student destination than improving the student experience. University reputation remains the leading criterion for Asian students deciding where to study. They take the international ranking tables very seriously, and in the past Australia has benefitted from having an unusually well-ranked university sector. But with declining government funding and both major political parties having proposed more cuts, the challenge of sustaining the world-class research, staff and infrastructure on which this reputation depends may soon become extreme.

Clearly, our Senate must soon resolve a way to adequately fund our universities into the future, and unpicking the current Government’s higher education reform package is not likely to achieve that outcome. The 20% cuts to CSP grants proposed in the Budget, if passed without the Government’s associated proposal to deregulate fees, would be a disaster for the university sector, destroying its capacity to collect sufficient income to operate competitively. Our Senators all seem to understand that higher education has become a major revenue generator for the economy, and are keen to see that flourish. But like the greedy farmer in Aesop’s fable, who in his impatience for more golden eggs ends up tearing open the goose that lays them, our Senate’s dissection of university reform may end up tearing apart the universities on which one of our leading export industries depend.
–wb

Published today in The Australian

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I was pleased to talk with Radio Adelaide’s Ewart Shaw about our Experience Adelaide initiative which connects international students with local alumni, domestic students and staff families.

You can listen to the podcast or visit our Experience Adelaide website for more information on participating in this wonderful program.

–wb

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CEDA – State of the State luncheon address by Professor Warren Bebbington
Adelaide Festival Centre
Tuesday 9 June 2015

Transcript  — check against delivery—

Craig [Craig Lockhart, Chief Executive Officer, Babcock Australia] began by telling us which “Babcocks” he gets confused with. I can assure you with a name like “Bebbington” you never get confused with anybody!

As Craig knows, my University is involved with more than 30 defence research projects with the defence industry including stealth technologies, cutting-edge radar and other things.
And most of them are classified so I can’t talk about them.  As James Bond says, if I told you, I’d have to shoot you.

Let me talk about something else.

I was talking to one of our recent graduates a few days ago. His family grew up in the coastal region just south of Shanghai in China—a region which in the space of 10 years changed from farmland to a vast residential and industrial estate. The work his parents did also changed and in the same period their income trebled.  So, they got to the point, where like so many other middle-classed families, they could aspire to send their son to university, and he came here.  He was about to go home to work in the same province but at a salary 50% greater than his father was earning because university degrees in China make an enormous difference to the incomes of young people.

Now his story is not unique. Across Asia there are now tens of millions of families affluent enough to aspire to send their children to university.

It’s no wonder then that in this country, international students are big business.

International education in Australia has just become the third largest export industry, bringing in nearly $16 billion a year. And South Australia has a share of that.

But there is much more to come.

Demographers tell us that by 2030 half of the world’s middle class will be in Asia. More than a billion new families affluent enough to be able to send their children to university.

International education in countries like Australia is going to expand for a very long time. Now it’s true Asia has its own universities. They’re growing… they’re improving every day. But they simply can’t keep up with the demand. We have a part to play.

With some 23,000 international students in this state, we already have our fair share of the existing market.  But will we be able to keep growing as things expand?

Now Adelaide, as a city, would be a great story for international students. It is pollution free, it’s safe, compact, offers the same lifestyle as the eastern states but at a more affordable price. Interestingly though, in the QS World Rankings of student cities, Adelaide is ranked behind Canberra. We’re 29th and they’re 21st. Now how could this be? One reason of course is that Adelaide is less well known internationally than capitals in the eastern states.

But that’s not the main reason.

The main reason is that going to study in Canberra for a foreign student, by and large, means going to the ANU [Australian National University]– one of the top two ranked universities in Australia.

And Asian families read the international rankings before they make their decision about where to send their children.

So the character of a university, its reputation, its ranking – is critical.

And this is one reason why my University has spent so much effort over the past three years to drive ourselves up the international rankings.
And we’ve had some success.  In the two key rankings, we are 50 places higher last year than we were three years ago.

But we face a threat.

In Asian cities, where Australia and the UK were dominant in student recruitment, the United States is everywhere.  And the US can offer many excellent, highly-ranked universities and also personalised education: small classes, on small campuses, taught by professors who are focused on teaching.

Meanwhile in our uncapped environment in Australia, many universities have become huge. Offering a very impersonal education, in vast lecture theatres, taught by professors who are pressured to get research grants rather than take any interest in teaching.

Now each university in South Australia needs to face these challenges in its own way.

In my case, at the University of Adelaide, we took a decision to stop growth three years ago and instead to change… to go back to small-group classes and to stimulate the focus on teaching amongst our staff. In fact, we recently announced 100 new teaching-focused positions.

The other threat we face is the American providers of the MOOCs—Massive Online Open Courses—where first-class content from great universities is available online, globally, at very, very little cost. For that reason, my University joined the Harvard MOOC platform, edX, and we now have 60,000 students registered online in 120 countries—three times as many students registered online as we have on campus.

Thus the changing narrative in international student recruitment.

While South Australia’s universities make a big contribution here through international students, we don’t do nearly so well when it comes to commercialising our research—working collaboratively with business and industry to get practical, saleable outcomes out of the things we discover.

This is not simply a SA failing. Australia’s national record in this is poor.

We are 29 out of 30 OECD nations in our university/industry collaborations. You probably all know the Wi-Fi story where the critical piece of technology was developed by an Australian scientist working for the CSIRO who then couldn’t find a firm in Australia to sell it to.

The rest as they say is history.

Within three years nine American companies marketed Wi-Fi and it’s now found on three billion computers around the world leaving the CSIRO to spend a decade in the courts trying to get some royalties out of the companies who made the money. They have already got themselves half a billion and, when the current round of law suits finish, they’ll have more than a billion of their share of royalties.  That’s less than 30 cents a computer.

But you know there is much talk at the Federal Government level about ways/incentives to get universities to the table to talk business about commercialising research.

But it takes two to tango.

My impression is that we need to think about incentives for business to come to the table too.

If you’re a big Australian corporation, why would you do your R&D in Australia where you get a 45% concession in tax for R&D (it’s about to go down as some of you know) when you could do it in China or India or Singapore for respectively 100%, 150% or in Singapore up to 400% concession for doing R&D.

Clearly our tax environment for this kind of thing is not competitive.  My University, and the other Group of Eights, have made a submission to the current tax consultation process in Canberra to suggest that we change the R&D concessions for businesses in this country to make them at least competitive with our Asian neighbours.

Mind you, big corporations doing R&D are only 1% of our business environment.
The overwhelming number of businesses in this country are SMEs (small to medium enterprises) and micro-companies involving four or less people. Between all of them they do a negligible amount of R&D.

This is a big challenge for us, especially in SA where SMEs are so dominate.  How do you get those companies sitting at the table with universities to talk about commercialising research?

Again, I think Commonwealth tax law has a role to play—even a 60% R&D concession would change the behaviour for many SMEs I know.

And for the micro companies, even some simple way of getting one research student, or one junior researcher, to come to the company to work on a project would make the difference between an idea and a start-up.

I rather like the EIS in Britain, the Enterprise Investment Scheme, which gives investors who invest in innovative companies a tax concession for doing so.
And it has made a significant difference for university/business collaboration.

If you look at countries where business/university collaboration works better than here, one difference is the tax environment, and another is importance of precincts.

The way in which you locate in one place, business, government and university expertise around a single theme and get critical mass. The extreme example is of course Silicon Valley.

We already have at least one great established precinct in SA—The Waite Research Precinct.

At the Waite, twelve organisations across business, universities and government focus on agricultural science research and have done for decades.  My University earned some $45 million in royalties from the Waite last year which was significant and ranked third in such income nationally.

But there is a tremendous amount more that can be done in the agricultural sciences space.

Another aspect is the enormous expanding middle class in Asia.  They can now afford to change their diet and those depending on cereals, grains, water are now getting interested in dairy, meat and wine.

And of course SA has an enormous amount to offer here. We have the capacity to provide the food Asia needs.  And we already have an enormous reputation for expertise in dryland agriculture, in dealing with poor soils and water shortage among other challenges, as we’ve long had at the Waite.

Our universities today are superior to the way there were when I was small…

The student populations are much more internationally diverse,
They reach a much bigger sector of the population,
Their capacity to solve our problems… to advance our interest in health and prosperity has never been greater,
And, technology has helped with a global reach which is revolutionising our teaching.

But please spare a thought for the university sector which at the moment is in the midst of a huge and difficult financial crisis and a federal reform debate in which the fact that we’re talking about Australia’s largest export industry seems to get lost.

We’re in great need of better policy nationally for universities and, if we get it, I think the next 25 years could rank with the 25 years after World War Two… as one of the most creative and innovative periods in Australian higher education.

Thank you.

ENDS

 

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On Saturday, we commemorate the passing of 100 years since the ill-fated landing of Australian and New Zealand troops at Gallipoli on 25 April 1915. Their hope had been to charge across Turkey, take Constantinople and thus defeat the Ottoman Empire, ally of Germany, in the First World War. In the event, the landing was […]

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Today, I was pleased to welcome the Minister for Education to the University’s student accommodation facility, The Village, for the launch of the Federal Government’s draft National Strategy for International Education. This document is timely and compelling, and offers new ways to improve Australia’s capacity to attract and support the nation’s 4th largest export industry. […]

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Last night the Senate rejected Minister Pyne’s amended higher education reform package. Deregulation of fees, even without the proposed 20% funding cut, did not pass. Students will thus not be asked to pay more. But neither will the taxpayer: those who struck down the reforms have offered no alternatives from the public purse to help […]

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Annual Memorial and Dedication Service for the Body Donor Program Wednesday 4 March 2015 CHECK AGAINST DELIVERY On behalf of the three universities in South Australia, the University of Adelaide, Flinders University and the University of South Australia – I welcome you to this special annual memorial and dedication service, now in its 18th year. […]

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It was wonderful to welcome delegates from Latin America for a symposium at the University of Adelaide and co- hosted with the Department of the Premier and Cabinet together with the Department of Foreign Affairs and Trade and the Council on Australia Latin America Relations. –wb  

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I welcome the Premier Weatherill’s bold vision and agenda announced in the Governor’s speech today at the opening of State Parliament. Our academics will look forward to contributing their expertise to such initiatives as the creation of an Adelaide Green Zone, the review of discrimination through our SA Law Reform Institute, and the Royal Commission […]

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VALE: Sir David Watson Principal of Green Templeton College and Professor of Higher Education at the University of Oxford I was saddened to learn that Sir David Watson, one of the world’s most distinguished experts on higher education, passed away after a short illness on Monday. Sir David visited the University of Adelaide only last […]

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