The great “$35b” international student export myth

One of the biggest myths surrounding Australia’s international student industry is the claim that it is Australia’s fourth biggest export and worth more than $35 billion in 2018, as illustrated in the next table from the Department of Foreign Affairs and Trade (DFAT):

In a recent speech, Australia’s trade minister, David Coleman, spruiked the immense export benefits arising from the international student trade, repeating the claim that it is Australia’s fourth largest export:

Let’s be clear: international education is extremely good for Australia. It’s a $35B export industry, which employs more than 200,000 Australians. It is one of our largest export markets, behind only iron ore, coal and natural gas. To put that $35B in perspective, last year our total wheat exports were worth $4B a year, our total beef exports were worth $8.5B.

As noted previously, this $35 billion ‘export’ claim is highly dubious because it “includes international student expenditure on tuition fees and living expenses” (footnote C above).

Therefore, to the extent that this export figure counts expenditure by international students from income generated while working in Australia, it is not actually an export, but rather economic activity.

Remember, international students are permitted to work 20 hours a week, and many also work extra hours illegally. However, when this income is spent it, is erroneously counted as an ‘export’ by the Australian Bureau of Statistics (ABS).

Such spending is actually no more an ‘export’ than expenditure by domestic students living away from home that is paid for via income earned through paid employment.

Professor Salvatore Babones’ excellent paper, released last month by the Centre for Independent Studies, also debunked this $35 billion ‘export’ claim:

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…

The below charts derived from ABS data hammers the above points home. As you can see, spending on “goods & services” by international students ($20 billion in 2018) outweighs spending on enrolment fees ($15 billion in 2018):

Again, much of this spending would have been earned through paid work within Australia, which is not actually an export. A significant share of this spending would also have been on imported goods, which actually worsens Australia’s trade balance.

There’s one final point that should be acknowledged by those making this false $35 billion export claim: that any money earned in Australia and sent home by international students represents an import and should also be deducted from the export count.

In 2017, there was a US$5 billion net outflow of migrant remittances from Australia, according to the World Bank, a share of which would have originated from international students studying in Australia:

Like many of the arguments used to support Australia’s world-beating concentration of international students, the $35 billion ‘export’ claim is unambiguously false. The true value, while unknown, is likely much lower, and so too are the benefits.

Comments

  1. In 2016 or 2017 I calculated how many goods the average foreign “student” will import during a lifetime if he is given an Aussie passport:

    A car every 15 years, a phone every 4 years, a television set every 15 years, petrol every month, furniture, clothes, fridge, oven, etc.

    More than offsetting the “export” cash he allegedly brings in.

  2. Yes, but you can’t put a value on vibrancy.

    The cultural benefits are tremendous. You can always measure a country’s worth by how many distinct ghettoes it has.

  3. Not only do these students add nothing to “exports”, they are a big part of the reason that our degrees are now worth much less.
    The same thing is happening in the UK:

    “Universities do nothing for basic skills,” says Simon Field, co-author of the OECD report Building Skills for All: A Review of England. “No one in the university world sees [developing students’ skills] as their job, but on the other hand, they’re quite happy to take anybody.”

    https://www.newstatesman.com/politics/education/2019/08/great-university-con-how-british-degree-lost-its-value

  4. The real benefit of flooding this country with gormless Chinese and Indian and Korean 20 year olds ?

    Boosting land values and construction activity, and allowing the Feds to cut University funding.

    Priceless.

    Never mind the slow destruction of education standards and a plague of useless graduates who can barely speak English.

  5. Stewie GriffinMEMBER

    As I’ve said since I first heard this nonsense about ‘education as an export industry’…. “If they never leave it is hardly and export is it?”

    • Especially if what comes in, soon leaves in remittances (plus interest). That’s just in purely basic accounting terms, not including wider economic and social costs.

  6. Diogenes the CynicMEMBER

    All that said the effect on domestic students going to those universities is terrible not only whilst there but the dilution of their degree. That whole sector needs thorough reform – what are our universities really for? My answer is that it should be centres of educational excellence for a limited set of domestic students only (ie based on the highest academic standards) and we need government funds for TAFE to give people who are not cut out for uni actual skills for the workplace. Keep banging the drums guys.

  7. in an economy addicted to debt where people are drowning in debt only imported students (with no debt) willing to subscribe to Australian dream of lifelong debt slavery can provide so desperately needed debt growth
    foreign students provide much more to our economy than those $35b, after few years here they get million dollar mortgages pouring tens of billions of newly created money into the ponzi economy

  8. For this myth to be well and truly busted, you need to include the staggering remittances going out (to pay back loans to agents and families overseas) as well as the other costs borne – emergency room impacts, unemployment rates of locals going up (higher Centrelink costs), infrastructure costs et al.

    I would be surprised if the it was a positive after a full analysis.

  9. There’s 500,000+ overseas students – swelling of our population by this number of people requires about $120 billion of additional public infrastructure. – no one seems to talk about over seas student contributing to crush loading Australian cities and the mitigation costs.

    • Giving them work rights (and their partners full work rights) also means pushing more onto social security.

      • 712,000 foreign students and partners (June 2019)

        ▪️615,000 as a primary visa holder
        Most doing very low level nonsense courses with no international recognition or accreditation.
        ▪️58,000 as a ‘partner/dependent’ secondary with full work rights and no English or other check
        ▪️39,000 on special visa / DFAT scholarships.
        89% in Sydney & Melbourne.
        Source VisaSure, DHA, Aust Educ Gov snapshots l.

        Average fees paid $11,600 a year – $260 a week, from money earned here. Source Deloitte Access Economics.
        They are predominately third world unskilled and not young at all. Source DHA.

        Over 75% or 534,000 work illegally. Source Sydney Uni & UTS reports.

        Average ‘economic activity $43.7k. (Source Treasury)

        They lower the entire Australian gdp per Capita by some 3.8% and all wages by 6% as well as creating over 500,000 unemployed Australians costing some $8.6 billion – or more than all their fees paid – from money earned here illegally.

        Our education prostituted as a visa alibi for migrant guestworkers.

  10. You can even say the benefits are even more eroded by the stealing of Aussie jobs, the extra health services needed to support these people, also higher rents for housing, why would you charge $450 a week when you can get 6 Indians paying $200each a week, this results on homelessness and more traffic congestion and the use of kornflake box driving licenses. All I can see is they are a Lose/lose for Australia overall.

    • Here, here. But as long as short-term political leaders get their supposed ‘sugar hit’ in GDP figures, all is good.

  11. The touted propaganda claim.
    “The International Student industry is a $35 billion export”.

    The source.
    A 2015 farrago of lies & omissions / sponsored by the Australian Education Dept / Deloitte. 
    Then prorated each year by growth in numbers to now be a ‘$35 billion export’. 

    https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-growth-opportunity-australian-international-education-011215.pdf

    It describes the foreign student ‘economic activity’ but not their declared funds or their actual source of funds & income which is primarily onshore.
    And then 75% or now 534,000 of these 712,000 foreign students & partners onshore are working illegally. (Sydney Uni & UTS studies)

    712,000 is full number of ‘foreign students’.
    615,000 as the primary visa holder
    58,000 as a secondary / partner visa holder
    38,000 as special DFAT scholarship visa etc.

    Their total fee income paid?
    ($8.2 billion – Mode 2 onshore foreign students in the report, the other modes are fractional).
    All the rest of ‘economic value’ like family visits & so on larded on nonsense. 

    Almost all the money to pay those fees was EARNED HERE.
    Fact check.
    The entire TR cohort of which foreign students are just one subset – only come in with under $2.4 billion in Sekt declared or checked funds & that’s often rorted (DHA declared funds data).

    See mode 2 Fees  :  $4.7 billion – $5.7 billion then, Page 74 footnote 24 hidden down the bottom) /  
    And now with growth of numbers est at $8.3 billion) matching to the costs & profit taken in delivering the ‘education service’.

    The report adds on an arbitrary $8.7 billion human capital value (page 49) as they get the PR.
    But is silent in mentioning that only 3.9% ever progress to a high income professional vocation.
    Which means 96% do not.

    Even the Productivity Commission found foreign students were low quality unskilled & unsuitable intake. 
    And Negative human capital value in reality.

    There is no mention in the report of the social & economic impact in degrading Australian Education, congestion, housing contention & fraud / living illegally.

    No mention of the $9.6 billion in Australian unemployment costs in the 500,000 plus jobs they steal or the tens of billions of lowered wages & other impacts.  
    Which just by itself exceeds the entire ‘fee income’.

    No mention that the foreign students are the epi-centre of crime & the foreign run vice industry being willing participants in that trafficking. 

    No mention of the cost impact to Australians of being denied education as the education sector prostitutes itself as a migrant visa alibi. 

    No mention the vast bulk of foreign students are doing very low level easily cheated courses available in their home country or free online. 

    They are not here for the education which has fallen 10 places & is a laughing stock globally, many on ‘courses’ that don’t even any international recognition. 

    It gets worse.

    A modest goal of 1 million foreign students in Australia in the medium term. 

    Why they say ‘If we took just 1% of the third world seeking a PR – citizenship in a western country via the education racket,  we could take in 11 million foreign students….

    https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-growth-opportunity-australian-international-education-011215.pdf

    It’s may be $35 billion ‘yearly GDP activity’ at $43.7k (Treasury estimate) x the 712,000 foreign students & partners..
    – but the money was EARNED HERE!
    If you add up the billions of cost impact in
    ▪️Australian Unemployed
    ▪️Australian Wages loss
    ▪️Degradation of our education system as it prostituted itself as a migrant visa alibi
    ▪️Housing contention
    ▪️Congestion
    ▪️Water, power & environmental impact

    ➡️ Not an ‘Export’ at all, but massively economically & socially negative.
    Some $17-20 billion negative.

    A fair statement is that each foreign student & ‘partner’ costs Australia some $25k each in economic & social impact – as soon as they walk in thru airport arrivals.

    We need to have a Royal Commission into our broken & corrupted visa system and shut down this foreign student migrant guestworker trafficking racket.