Australia’s $37.6b international student export con

Australia’s Education Minister, Dan Tehan, issued a media release spruiking that Australia’s education ‘exports’ surged by $5 billion in 2018-19 to a record high $37.6 billion:

International education contributed $37.6 billion to the Australian economy last financial year, which was a $5 billion increase.

Australian Bureau of Statistics figures released yesterday found the economic contribution of the international education sector had grown by 15 per cent.

Minister for Education Dan Tehan said the figures confirmed Australia was a world-leading study destination.

“International education has experienced its fifth year of consecutive double digit growth, highlighting the strength of Australia’s higher education system,” Mr Tehan said.

“Australians should be proud of our innovative international education sector.

“It is our largest service-based export and supports 240,000 jobs, business opportunities and economic growth.

Below is a chart showing the dramatic rise in international student ‘exports’ using the latest available Australian Bureau of Statistics (ABS) data:

And next is the breakdown by the three largest source nations – China ($12.1 billion), India ($5.5 billion), and Nepal ($2.6 billion):

While Australia’s international student ‘exports’ sound impressive, they are wildly exaggerated, since they include both tuition fees and expenditure while studying in Australia.

As shown in the first chart above, spending on “goods & services” by international students ($20 billion in 2018) far outweighs spending on enrolment fees ($15 billion in 2018).

A significant share of this expenditure would have been paid for via earnings by international students from within Australia. To that extent, they are no more ‘exports’ than a domestic university student that lives out of home an supports themselves via paid employment.

A significant chunk of this expenditure also would have been on imported goods, which actually worsens Australia’s trade balance.

Moreover, any money earned in Australia and sent back home by international students also represents an import and should be deducted from the export count. On this point, there was a US$5 billion net outflow of migrant remittances from Australia in 2017, some proportion of which would have originated from international students studying in Australia:

Don’t just take my word for it. Associate Professor Salvatore Babones’ also debunked Australia’s bloated education ‘exports’ figure in a recent paper for the CIS:

International students are clearly important for Australia’s universities, but their importance to the economy as a whole is frequently overstated. One oft-quoted statistic is that educational exports have risen to become Australia’s third-largest export after iron and coal. That doesn’t really capture the full story, since exports in different sectors are reported at different levels of granularity.

Figure 5 compares the size of Australia’s educational exports to that of other major sectors from across the economy, using data from the Australian Bureau of Statistics (ABS). Additional historical data going back to 2002 are reported in Table 5 in the Appendix. Educational exports overtook receipts from all other travel (tourism, family, and business combined) in 2008, but are still smaller than Australia’s exports of agricultural or manufactured goods. Moreover, more than half of Australia’s reported educational exports (53.7% in higher education and 57.2% for the education sector as a whole) consists not of student fees, but of goods and services bought by students while in Australia. Since this spending is at least partly generated by income that students earn from working in Australia while studying, the true net value of education exports to the Australian economy is likely lower than the headline figures reported by the ABS and DET…

Like most arguments canvassed to support Australia’s extreme concentration of international students, the $37.6 billion ‘export’ figure is a mirage. The true value, while unknown, is likely much lower, as are the purported benefits.