Report finds extra value in international education

International education contributes nearly A$1 billion (US$764 million) more to the economy than previously estimated, according to a report by Deloitte Access Economics, commissioned by the Department of Education and Training, which was released on Friday.

The government described the analysis as a landmark report that puts the current real value of the industry closer to A$21 billion.

Also, for the first time, this report provides an estimate of the national economic contribution made by Australian education providers delivering Australian courses offshore, which was over A$400 million in 2014-15, with A$382 million of that earned from higher education.

Senator Richard Colbeck, minister for tourism and international education, said: “International education is already one of our top two services exports, along with tourism, and is one of five key super-growth sectors that will support our transitioning economy into the next decade.

“The growing importance of international education to Australia is evident from the more than 130,000 jobs it creates and the businesses that benefit from it – directly and indirectly across the retail, hospitality, property sectors and more.”

He said the new report identifies a number of additional revenue streams not routinely captured by the Australian Bureau of Statistics or ABS, which reported the value of international education to be over A$19.5 billion in 2015, making it one of Australia’s largest export earners.

The analysis encompasses international students studying at schools, vocational education and training providers, higher education providers and those studying English Language Intensive Courses for Overseas Students.

It examined an ABS valuation of exports from international education in 2014-15 and built on these figures with avenues of revenue not captured in the ABS report. This brought the value of exports up from the ABS estimate for 2014-15 of A$18.8 billion to A$19.7 billion.

The newly-identified revenue streams, in addition to revenue earned offshore, include nearly A$300 million that students’ visiting family and friends contribute to Australia’s tourism industry each year.

This figure is based on 109,103 travellers who came to Australia for a holiday or to visit friends and relatives who stated that a reason for their trip to Australia was to visit an international student friend or relative studying there. This is a subset of the broader visitor population of 544,949 who visited an international student at some point during their trip to Australia but may not have come to Australia for that reason.

In addition, education-related spending by those on non-student visas studying English is estimated to contribute an additional A$205 million in export revenue.

The report says it is estimated Australia’s current stock of international students will contribute 130,000 skilled migrants to the workforce after they graduate. This represents a 3% increase in the share of Australia’s current workforce with a tertiary education.

Deloitte Access Economics estimates that this increase in human capital would result in an increase to Australia’s gross domestic product of approximately A$8.7 billion.

“While part of this reflects the benefits to Australians from having a more skilled population,” the report says, “it does not capture other potential spill overs from having former international students as part of Australia’s workforce, including increased international collaboration and trade and investment links.”

It said from consultations to inform the study it is apparent that the wider benefits would include economic benefits stemming from increased entrepreneurship, knowledge exchange and international collaboration; economic benefits derived from trade and investment links and soft diplomacy (generated both in Australia and in source countries); and social benefits flowing from improved cultural literacy, stronger cultural linkages and enhanced cultural capital (generated both in Australia and in source countries).

Contribution not appreciated

The report warned that the significant role and contribution of international education to the Australian economy and society is “not necessarily widely appreciated”. It advised that the “messaging” should focus more on the social and cultural benefits of international education rather than just its role as one of Australia’s largest exports.

The report said information and media campaigns should highlight the positive stories and achievements of former international students as well as the benefits of initiatives such as homestay to the local community.

“Community awareness campaigns should highlight the role of international students in creating a more diverse community. Education providers and government should look to build more community interaction between international students and local communities,” it said.

A number of stakeholders highlighted the role played by international students in addressing workplace shortages in certain sectors. In particular, a number mentioned the key role of international students in providing a casual workforce for the hospitality sector during the course of their studies and also providing a permanent workforce for the sector after graduating, the report said.

Some major chains such as Accord, for instance, were particularly interested in hiring international students because of their language skills and cultural connections to tourists from their home countries.

Other stakeholders noted that international students could play an important role in addressing skills shortages in areas such as nursing, care for the elderly and accounting, the report said.

Volatility in enrolment

The report said there has been considerable volatility in enrolment numbers of international students in recent years reflecting that an increasing number of countries are now competing for international students.

A rapid rise in enrolment between 2007 and 2009 was followed by plunging enrolment in 2009 to 2012.

Deloitte Access Economics said this was driven by a range of factors including a stronger Australian dollar, global economic downturn, concerns about student safety and more stringent requirements for student visas.

Since 2013, there has been a recovery in international student numbers. By 2015 there were 585,846 international student enrolments in Australia, the highest levels seen to date.

In 2015, Chinese students made up 26.6% of all student enrolments, Indian students 11.2%, Vietnamese students 4.6%, South Korean students 4.4%, and Thai students accounted for 4.2% of all enrolments.

Deloitte Access Economics said a substantial part of the increase in overall enrolment figures from 2007 to 2009 was driven by increases in the number of Indian enrolments, which declined after 2009.

There was also a decline in Chinese enrolments after 2009, although enrolments from China have now returned to their previous peak. Enrolments of students from South Korea have fallen since 2009, while enrolments from Vietnam have grown. Enrolments from Thailand have returned to the level they were in 2009, the report said.

Colbeck was upbeat about the rising numbers of students and the value to the economy. He said: “The [Malcolm] Turnbull government recognises that Australia’s knowledge and innovation boom has just begun.”

On Saturday in Launceston, Tasmania he is due to release the government’s National Strategy on International Education, laying out a framework for the future of the industry.