Domestic demand for university education remains weak

This week’s Federal budget reaffirms that we remain in an era surrounded by uncertainty and with numerous economic, social and geopolitical changes.

There is no guarantee that Australia’s ongoing tertiary education success is assured. Let me highlight the demographic challenge through the domestic lens as well as its geopolitical implications.

The report from the Australian Universities Accord panel advocates for higher and more ambitious participation and attainment targets. How these ambitious targets will be achieved is hard to predict given demographic data just released.

The Australian Bureau of Statistics (ABS) estimates that Australia’s population is projected to reach between 28.8 and 29.5 million people by 2030, up from 26 million as of June 2022. The ABS estimates that the current ten-year average annual growth population rate of 1.4 per cent is projected to decrease between 0.2 points and 0.9 points.

Applying the 2022 ABS population estimates to the higher education context, we can expect that the additional number of youths seeking to enter university between 2023 and 2030 will be about 31,700, and this would equate to having the equivalent of one additional university. In 2022, there were 241,651 Year 12 enrolments.

Therefore, we can expect that life-long learners (or those seeking a second and post initial qualification) are more likely to be driving student demand. The domestic commencing student cohort is expected to rise between 49,300 and 57,360 by 2030. This means enrolments to increase from 400,058 in 2022 to anywhere between 449,300 and 457,200 by 2030.

The implications for universities of this reduced population (and therefore enrolment) growth are vastly significant. Back in 2019, I published several observations on what the road ahead was for Australian higher education. Many of the issues identified have materialized and continue to be of ongoing concern.

To add to the uncertainty, the Australian Government’s rapidly changing policy settings pertaining to international education is carving off any sense of stability over the next few years for our universities. International student enrolments have underwritten the growth seen in Australian universities.

Additionally, international student demand remains strong. Globally enrolments in higher education are expected to increase from 254 million in 2022 to 323 million in 2030. Asia’s share of global enrolment will increase from 56 per cent to 62 per cent in 2030. Asia is also the continent from which our universities source students and is also a continent that is rapidly becoming a host to international students. Of the $47.billion earned by Australia’s trade in educational services in 2023, 84% came from Asia. This income subsidies our entire educational system.

Policy responses from government and university leaders will determine whether our universities continue to shine.

The longer the difficult conversations are delayed the longer the pain. Now that university annual reports are out, we are seeing universities’ finances continue to report underlying operating deficits.

The business model by which universities have operated over the past 35 years is no longer fit for its purpose.

Angel Calderon is Director, Strategic Insights at RMIT University.



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