CQU in student number crisis

CENTRAL Queensland University, once the most aggressive player in the degrees for visas market, is running out of cash and has little ability to withstand further blows to its high-risk business model, an official report warns.

The Queensland Treasury Corporation report says sharp declines in student numbers, chiefly caused by a change in skilled migration rules, may exhaust cash for general operations at the university some time in the 2011 financial year.

Domestic student numbers at CQU are 16 per cent below the level for which the university is funded, under a three-year agreement to be reviewed next year. If the federal government cuts funding to the forecast number of students, the cash deficit for the university may rise by $26million over the 2009-12 financial years, the report says.

CQU vice-chancellor John Rickard said any cash crisis could be postponed to 2013-14 by deferring spending on maintenance and capital works. The university has a capital works backlog of $70m.

Asked whether government would bail out the university if needed, he said: "That's always the $64,000 question (but) I don't believe a bailout will be necessary. Both the federal and the state governments have reiterated their strong commitment to the university."

Lynn Meek, a higher education commentator at the University of Melbourne, said the "political fallout would be too great" were either government to allow any university to go to the wall.

But a financial crisis could be an opening for governments to rethink the role of a university.

At CQU, fees from overseas students in capital city campuses underwrote loss-making domestic operations with campuses in Rockhampton and other Queensland towns.

After record growth, overseas student numbers suffered dramatic declines in the 2007 and 2008 financial years.

The main reason was a federal government rule change meaning that foreigners could get permanent residency more quickly and cheaply through vocational roles, rather than higher education, according to the Treasury report.

"Instead of trying to motivate students to study degrees in accounting, the government in its wisdom decided that we were short of people in the hospitality industry and (that) it should skew things towards people studying in the vocational sector (in) hospitality and things like hairdressing," Professor Rickard said. "That had a dramatic impact on the number of students from the (Indian) subcontinent, in particular, who were coming to us to study accounting and, to a lesser extent, information technology.

"Because we had more of those students we felt the impact more than anyone else."

Acting Education Minister Mark Arbib said the federal government was "determined to address the decline in regional student numbers" and would work with the university and the state government "to strengthen higher education in Central Queensland". Reviews of higher education provision and funding in the regions would begin later this year.

The Treasury report says overseas student operations made the university riskier but had allowed its five domestic campuses to survive, despite their competitive disadvantage. But the overseas business was no longer generating enough income to make up for cash shortfalls in the local business.

"The really good news for us is that in the last three intakes, our international commencing students have been growing very strongly," Professor Rickard said. However, this growth was not enough to compensate for the loss of large numbers of graduating students.

The new growth appeared to be less driven by visa seekers.

"There isn't the high proportion of students sitting there who are seeking permanent residency and in many cases not especially interested in what they're enrolled in," Professor Rickard said.

The report notes the university has adopted a new brand name, CQ University Australia, "emphasising the terms 'university' and 'Australia', which is expected to increase the appeal to international students".

It says the university will struggle to lift full-time domestic enrolments because of some run-down campus facilities, a low academic ranking and the preference of students for capital city institutions.

Professor Rickard said the trend during the past five years had been towards part-time study and it would be "gross optimism" to say the university could lift domestic numbers to eliminate the 16 per cent shortfall in time for the funding review.

But he said regional universities could play a bigger role than capital-city institutions in helping the government meet targets to dramatically expand the number of young people, especially those from disadvantaged backgrounds, with tertiary qualifications. The government, however, would need to lift funding for each student.
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16/07/2009