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CQU ponders float or buyout to combat downturn

Guy Healy | October 10, 2007

DRAMATIC change may be about to descend on Central Queensland University as it confronts a sharp decline in overseas student demand and the contradictions of its unusual campus model.

The joint-venture partners in CQU's privatised international campuses are awaiting the outcome of a Queensland Treasury review of options.

These could include a buyout leading to the exit of either partner or even a float.

CQU vice-chancellor John Rickard told a staff meeting last week that a collapse in international and domestic students numbers meant consultants would carry out another university-wide review of academic and general staff jobs.

The result could be more job cuts.

Professor Rickard blamed a "very dramatic downturn" in demand on changes to federal immigration law that would favour vocational courses. He also cited bad publicity arising from student complaints about teaching at CQU campuses in Melbourne and Sydney.

In a videoconference address from a packed auditorium in Rockhampton to CQU's domestic campuses in Bundaberg, Emerald, Gladstone, Gold Coast and Mackay, Professor Rickard said in recent years the university had been in failed negotiations to publicly float Campus Management Services, the corporate entity that ran its international campuses in the east coast capitals.

CMS is owned jointly by CQU and Mark Skinner's Global Campus Management. Last year the Australian Universities Quality Agency was highly critical of the CMS arrangements, citing a potential conflict of interest.

Professor Rickard said the Queensland Government supported a proposed long-term joint management agreement - which could lead to an initial public offering and float - subject to due diligence into Mr Skinner's CMS interests.

Mr Skinner said he had favoured a float but in July the CMS board had decided the proposal no longer made sense in light of the declining demand from overseas students. Professor Rickard said CQU had therefore put the issue directly to the Queensland Treasury Corporation "to have a look at what options they see as available".

A source close to the deliberations told the HES a decision by QTC was close and could involve:

* A university buyout of Skinner's share of CMS.

* A buyout of the university's shareholding by Skinner.

* A third party buying both interests.

* An IPO and float.

* Some variation on the above.

Mr Skinner told the HES he had made three offers to buy the university's stake in CMS, but that "if someone is interested in my 50 per cent shareholding in the joint venture company, CMS, I would listen to an approach".

"One or other or both of the shareholders needs to exit the company because of the legal and fiduciary difficulties in running a business whose other equal partner is a public university," Mr Skinner said.

National Tertiary Education Union Queensland president Margaret Lee told the HES the case of CQU highlighted the dangers of being exposed to the volatile overseas student market.

The union would prefer to see CQU buy Mr Skinner's interests, returning the operation to public hands.

Professor Rickard told last week's staff meeting CQU had delivered about 70,000 courses to overseas students last year. However, this was to drop to 50,000 courses this year and just 40,000 next year, representing a blow to CQU's most important income source.

CQU is the institution most heavily dependent on foreign students; it earns 50 per cent of income from that source. Professor Rickard also proposed a shift to an open admissions policy. ``By the large number of people we take in we are unfairly judged a bottom-feeder. I would rather have an open admissions environment, which is fraught with danger unless we do it well because it could just magnify rather than reduce how we are seen.

``(But) I'd rather stand up and defend the fact that we will let anyone come to the university and our job is to help that person to identify their readiness for university studies and help work out quickly if they need to do some TAFE or study elsewhere,'' he said.

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