The primary school that two of my children attend, in Sydney’s eastern suburbs, is an exemplar of international education. Its pupils come from about 70 different heritages.

Many were born in Australia, scions of a multicultural nation. Others arrived with their parents – Saudi PhD students, say, at the nearby University of New South Wales – speaking barely a word of English.

It doesn’t seem to matter. The six-year-old sponges pick up the language in no time. It must be an amazing experience for these children, as babble gradually takes meaning and the strange behaviour of an alien race morphs into a recognisable lifestyle.

Meanwhile, they provide a powerful lesson for the local kids, who discover that civilisation comes in many flavours. It all adds up to a fantastic recipe for learning, but I can’t help asking myself: is there a tipping point? At some stage, does this rich melting pot become a liability?

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It’s a question that Australian universities should be asking themselves as they ramp up the concentration of – and financial dependence on – overseas students.

At its best, international education is a cross-fertilisation of ideas from dozens of cultural perspectives. At its worst, it’s a dysfunctional monoculture in which Chinese have supplanted Anglos, where minds don’t meet, where discussion doesn’t flow, where the academic glow is smeared by suspicions about soft marking and plagiarism.

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As the proportion of overseas students exceeds 30 per cent and, in some cases, 40 per cent at Australia’s largest universities, institutional administrators should be asking about the educational risks. 

Instead, the focus seems to be on the bottom line. But what choice do institutions have? Australia’s government is taking cash away from its universities, not injecting more, while companies are reluctant to invest in public research. Foreign students, on the other hand, just keep on coming.

The constant flow of students is a testament to the quality of Australia’s higher education, and also to its living standards and migration allure. International education is the country’s third biggest export, earning about A$30 billion (£17 billion) a year, depending on how you measure it.

But like the second biggest export, coal, it has cons as well as pros. 

Australia’s plentiful fossil fuel reserves discourage the development of healthier energy sources in a windy, sun-baked country.

Likewise, the rich vein of willing international students blunts universities’ determination to find alternative sources of cash. And it gives the government a free pass to cut funding.

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How sustainable is this situation? There’s a risk that the torrent of overseas students suddenly dries up, leaving universities stranded. Or that it doesn’t, overloading them to the point of capsizing.

“The question of the tipping point is a really tricky one,” says Group of Eight chief executive Vicki Thomson. “We’re not at that point, and I’m not sure when we decide we’re getting to that point. Domestic students are what we’re here for, and they remain our priority.”

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But the reliability of foreign fee revenue remains questionable. In past decades, student flows were threatened by the 1997 Asian financial crisis and by the 2003 SARS epidemic. From 2009, the industry suffered the combined effects of violent attacks against Indian students, a high Australian dollar and tighter migration rules.

More recently, concerns have mounted that student flows from China could be impeded by diplomatic tensions. Similar geopolitical factors recently disrupted Chinese enrolments in South Korea and Taiwan.

Margaret Crawford, the auditor-general of New South Wales, has become the latest to warn universities about their “revenue concentration risk where they rely heavily on students from a single country”. 

And the former University of Canberra vice-chancellor and now lead education partner with KPMG Australia, Stephen Parker, says that universities could reduce the risk by encouraging international enrolments in regional universities and that the government could help by considering preferential work rights for graduates from country campuses.

But he says that the single biggest boost from government to reduce universities’ reliance on international students would be to fully fund research. 

Meanwhile, the education minister, Simon Birmingham, says that the sustainability of Australian international education has been reinforced through a national strategy and representative council. “I am confident that international students will continue to choose Australia as a study destination due to the quality of our education offerings, our incredible way of life and safety as a place to live.”

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Here’s hoping he’s right. After his government froze teaching grants in December, we can only expect the economic reliance on foreign fees to accelerate.

john.ross@timeshighereducation.com