Ideas@TheCentre – The Centre for Independent Studies

Ideas@TheCentre

Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Unis’ Chinese 'cash cows'

Salvatore Babones

23 August 2019 | Ideas@TheCentre

Australia’s universities are taking a multi-billion-dollar gamble with taxpayer money to pursue a high-risk, high-reward international growth strategy that may ultimately prove incompatible with their public service mission. Their revenues are booming as they enrol record numbers of international students, particularly from China. As long as the China boom continues, the universities’ gamble will look like a success. If and when the China bubble bursts, taxpayers may be forced to step in to clean up the mess.

The CIS Analysis Paper The China Student Boom and the Risks It Poses to Australian Universities published this week pulls together data from universities, state and Commonwealth agencies, foreign governments, international organisations, and press reports to present a full picture of the risks being taken by Australian universities in enrolling unprecedented numbers of Chinese students.

While the report was being researched, ABC’s Four Corners came out with its own investigation into international students, ‘Cash Cows’ (aired May 6, and now available online). The documentary uncovered weak international admissions standards at Central Queensland, Southern Cross and Murdoch, but our report shows that the potential exists for similar problems even at highly respected institutions like Sydney, Melbourne, ANU, UNSW, UTS, Adelaide, and Queensland.

Even more worrying, these seven universities have become so reliant on Chinese student money that it may pose a serious financial risk to the universities’ continuing operations. At these seven universities, Chinese students seem to account for more than 50% of all international students. All seven have higher proportions of international and Chinese students than any university in the entire United States. And they rely on Chinese student course fees for anywhere from 13% (Adelaide and ANU) to 22-23% (UNSW and Sydney) of their total revenues.

The University of Sydney alone seems to generate more than half a billion dollars in annual revenue from Chinese student course fees.

Chinese enrollments are particularly unstable because of macroeconomic factors like the slowing of China’s economy, the lack of full convertibility of the Chinese yuan, and fluctuations in the value of the yuan versus the Australian dollar.

Australian universities, and particularly the seven leading universities spotlighted in our report, should act now to mitigate the risk of a sudden revenue collapse by raising admissions standards and reducing international student enrollments. They should make, publish, and implement plans to reduce their reliance on international students (and Chinese students in particular) to manageable levels, with targets set both for the university as a whole and for individual programs.

Australia’s universities are taking massive financial risks in pursuit of international student revenues. As the world’s leading banks in 2008, they must be aware that they are ‘too big to fail’. As public and publicly-accountable institutions, they enjoy an implicit guarantee that if things go wrong, the government will come to the rescue. The government should step in now to ensure that the universities change course before it is too late.

ASIC v Westpac

Simon Cowan

23 August 2019 | Ideas@TheCentre

The recent furore about Justice Perram’s remarks that “borrowers ditch wagyu steaks and shiraz for cheaper food” to meet loan repayments not only fundamentally misunderstands what he was saying — misrepresenting the substance of the case — it also ignores that the judgment holds the line on a significant point about personal responsibility and autonomy.

The case involved ASIC alleging that Westpac had breached responsible lending standards in every single loan it issued between 12 December 2011 and March 2015; some 261,987 times. Specifically, ASIC claimed Westpac had to consider the declared living expenses of loan applicants, and that Westpac had not done so.

Importantly, the judge found this was incorrect on the facts — Westpac did consider the declared living expenses of applicants — but also incorrect at law. Westpac did not need to consider whether the loan met some vague concept of ‘affordability’ with respect to the applicant, only whether the applicant would be unable to meet the repayments, or ‘could only comply with substantial hardship’.

As any recent home purchaser can attest, seemingly small luxuries like take away dinners add up to substantial expenses over time.

It would be possible to take this too far — there is a reasonable minimum below which it would be unreasonable to expect households to tighten their belt — fortunately, this too is recognised in the objective Household Expenditure Measure (HEM) standards.

The bank can’t assume you’ll live like an impoverished university student stretching a packet of noodles out into two meals.

But there is no good reason to impose a legal obligation on banks to delve into the personal habits of applicants to see what expenses could be reasonably trimmed and by how much.

We know from this case that Westpac alone made more than 250,000 loans in three and a half years. Do they have to make these assessments every time or is it just marginal cases that get this paternalistic treatment? Given the likely racial, gender and age make-up of borrowers on the margins, won’t this end up appearing horribly bigoted?

Specifically, imagine the outrage if Westpac had denied a middle-class Indigenous family a loan until they proved they could live up to Westpac’s budget.

It’s far from clear it’s a good idea for the government to prevent a willing borrower, and a willing lender, from entering into what they believe is a mutually beneficial transaction.

Requiring a lender to second guess a borrower’s decision about their financial circumstances and capacity — when the lender can never know the borrowers’ position as well as the borrower does —must result in a less economically efficient outcome more often than not.

The last thing we want is for banks to be dictating to borrowers how much they can spend, and on what. Nor do we need another paternalistic apparatus cooked up by government designed to protect the minority of the population who are incapable of making rational decisions about their living situation.

Left-wing Antisemitism rising

Peter Kurti

23 August 2019 | Ideas@TheCentre

Evidence is mounting that antisemitism is on the rise. For a recent example, a CNN poll found that “more than a quarter of Europeans say Jews have too much influence in business and finance, while one in five said Jews have too much influence in the media and politics.”

Antisemitism has, in the past, frequently been associated with the political Right; but the rise of antisemitism on what is frequently called the ‘New Left’ is closely linked to the combined forces of identity politics, anti-colonialism, and anti-imperialism unleashed in the 1960s and 1970s.

Left-wing antisemitism is not new. What has made it front-page news is the manifestation of blatant, institutional antisemitism in the British Labour Party under the leadership of Jeremy Corbyn. Repeated failures to address antisemitism within the party has now brought Labour to the point where even its supporters believe the party to be systemically antisemitic.

Left-wing antisemitism is intimately linked to a fervent form of anti-Zionism — the view that the State of Israel should not exist — which denies both the very concept of Jewish peoplehood entitled to self-determination. This form of anti-Zionism arose from a determination amongst a generation of people who came of age after WWII to oppose racism and colonialism.

Israel, according to the New Left, is an illegitimate remnant of Western colonialism in the Middle East — a view endorsed by the United Nations as it added newly decolonized states to its membership. Opposition to racism and colonialism — and thence, to Israel — is also interwoven with a deep-seated hostility to the USA and its allies.

Yet Corbyn refuses to concede the existence of antisemitism within Labour ranks because he refuses to accept that opposition to racist colonialism is equivalent, in the case of Israel, to Jew hatred. As Labour’s scandal of antisemitism worsens, many Jewish leaders in the UK now consider the party — long the home of British Jewry — a threat to Jewish life in that country.

Labour’s antisemitism is not an isolated instance. Extreme antisemitic views are also being expressed more frequently on the Left of American politics — as in the case of the so-called ‘Squad’ of Democratic members of Congress. And although the Australian Labor Party has been spared the scandal of its British counterpart, antisemitism still seeps into our political life.

Writing in The Australian recently, James Kirchik warned ALP leader Anthony Albanese of the dangers of associating himself with Jeremy Corbyn, a man, who, Kirkchik noted, “leads an institutionally racist party.” Albanese and the ALP now have a vital opportunity to keep a commitment to justice and equality free of the ugly taint of antisemitism.