VZCZCXRO9714
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHBN #0089/01 2110213
ZNR UUUUU ZZH
R 300213Z JUL 09
FM AMCONSUL MELBOURNE
TO RUEHC/SECSTATE WASHDC 4976
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZU/APEC COLLECTIVE
RUEHPT/AMCONSUL PERTH 1593

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