Australian universities are in for a world of pain this semester, with coronavirus likely to cost them billions of dollars in lost fees.
More than 100,000 Chinese students have been left stranded in China after Australia shut its borders to foreign nationals travelling from the mainland.
And the significant disruption could cost the Australian university sector $3.1 billion in lost fees, according to credit agency Standard and Poor’s.
Government figures reveal international students contributed $34 billion to the overall economy in 2019.
Education Minister Dan Tehan told Sky News on Sunday it was too early to tell how much of this revenue would be lost to the virus.
“It really is just watch, wait and see,” he said.
“But really, the next two to three weeks is going to be absolutely crucial as to where we go and what the ultimate impact will be.”
Universities are understandably nervous.
The more than 265,000 Chinese students enrolled to study at Australian universities account for roughly 27 per cent of Australia’s international student population.
Among the Group of Eight (Go8) universities, this figure rises to 60 per cent.
And so universities are offering to extend enrolment deadlines, provide more online courses, and defer classes for a semester to minimise cancellations.
The Sydney Morning Herald reported on Friday that the Go8 universities were also drawing up plans to “quarantine thousands of international students in regional campuses or student accommodation” to mitigate the potential $3 billion blow to their budgets.
But Go8 chief executive Vicki Thomson told Guardian Australia this was untrue.
Australian universities worst hit
Nonetheless, the coronavirus outbreak is still expected to hit Australian universities harder than their global counterparts.
Not only because of their relatively high concentration of Chinese students and close proximity to China, but also because the outbreak coincides with the beginning of their academic year, meaning more students are outside the country than they otherwise would have been.
“If coronavirus is quickly contained – meaning within several months – the effect on Australian universities is likely to be manageable, with revenue deferred (not lost) and no change to credit quality,” Moody’s credit agency said.
“However, if the current outbreak is not contained quickly, the revenue effect and drawdown of cash reserves has the potential to be significant.”
Meanwhile, the International Education Association of Australia predicts the overall cost to the sector will rise from $6 billion to $8 billion if Chinese students can’t enrol for the next six months.
The virus has infected plenty of other sectors, too. Most notably seafood and tourism.
For example, the domestic lobster industry has seen its international exports fall to practically zero after the Chinese government banned all live animal exports.
And the 400 tourism operators comprising Tourism Tropical North Queensland said they suffered 25,000 cancellations worth $10 million in the days following the travel ban announcement – just weeks after devastating bushfires slashed trade by 60 to 70 per cent.
Meanwhile, the price of iron ore, Australia’s biggest export to China, has fallen by more than 10 per cent over the past month.
Reserve Bank Governor Philip Lowe said the central bank was closely monitoring the situation but warned commentators not to “catastrophise”.
Using the 2003 SARS outbreak as a yardstick, ANZ economists said the national economy would contract 0.1 per cent over the March quarter – marking the first quarter of negative growth since 2011.
Westpac economists, meanwhile, said the economy would stall in the March quarter and lose 0.2 per cent in GDP, or roughly $4 billion, over the year.
Dr Lowe told a parliamentary committee on Friday that the precise economic impact remains to be seen and would “depend on the success of the various efforts to control the virus”.