Chinese students provided Sydney¡¯s biggest universities with almost one-third of their revenue last year, in a sign that the federal government¡¯s international education crackdown has not eased the sector¡¯s reliance on Australia¡¯s combative near neighbour.

A from the New South Wales (NSW) auditor general says Chinese enrolments accounted for 78 per cent of international education revenue at the University of Sydney in 2024, and 77 per cent at UNSW Sydney. This translates to about A$1.25 billion (?599 million) at Sydney and A$1.087 billion at UNSW, representing 32 per cent of each institution¡¯s overall earnings.

Chinese students at the two institutions delivered 16 per cent of the revenue of all 10 New South Wales universities combined, the figures suggest. Without them, the state sector¡¯s net A$583 million surplus might have been a A$1.754 billion deficit.

The prominence of Chinese enrolments constitutes ¡°a concentration risk for each university and for the NSW university sector as a whole¡±, the report warns. ¡°Unexpected shifts in demand arising from changes in the geopolitical or geo-economic landscape, or changes to visa approval rates or travel restrictions, can impact revenue, operating results and cash flow.¡±

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The report says the consequences of ¡°a lack of diversification in the countries of origin¡± became evident during the coronavirus pandemic. ¡°While almost all universities¡¯ revenue from overseas students was negatively impacted in 2020, there was a greater initial impact and less resilience in student revenue from some countries of origin over the following two years.¡±

The two institutions¡¯ financial reliance on China has increased since the pandemic. In 2019, Sydney earned about 75 per cent of its international education revenue, or A$796 million, from Chinese students. At UNSW, the corresponding figures were 74 per cent and A$645 million.

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Critics have warned that the government¡¯s international education policies would intensify the concentration of enrolments. Chinese students were considered more likely than other nationalities to weather Australia¡¯s increases to visa application fees, while the now superseded ministerial direction 107 ¨C which favoured visa applications from countries of low immigration risk ¨C also benefited Chinese applicants.

Chinese students also proved unexpectedly willing to continue their courses remotely ¨C a factor that contributed to Sydney¡¯s steady increase in international education revenue during the pandemic, despite border closures that stranded thousands of foreign students offshore.

The auditor general found that Vietnam had replaced Nepal as the third top source country for NSW universities¡¯ foreign students, after China and India. International enrolments rose about 19 per cent across the 10 institutions, and 46 per cent at UNSW. Domestic load rose just 4 per cent and remained marginally below 2020 levels.

Half of NSW¡¯s universities showed ¡°indicators of financial sustainability risk¡±, with six lacking the cash reserves to fund three months of operations. The 10 universities also shared liabilities of A$164 million for historical underpayments, down from A$183 million in 2023.

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The report recommends that universities take action to avoid underpayments and prioritise repayments to affected staff. Three of the other five recommendations relate to cybersecurity, with the auditor general finding that universities have not consistently followed their own procedures for recording breaches.

The analysis found that cybersecurity incidents had affected seven of the 10 universities last year. Four had been hacked, four had experienced data breaches, and user accounts had been compromised at three. Emails with suspicious attachments were easily the top cause of cybersecurity incidents.

john.ross@timeshighereducation.com