New modelling has been released by Victoria University’s Mitchell Institute, which predicts losses of up to $60 billion for the Australian economy from the sharp drop in international student numbers:
[The modelling] projects that Australia’s university sector will lose between $10 billion and $19 billion between 2020 and 2023, depending on how quickly the nation’s borders are reopened to students.
A further $20 billion to $38 billion in wider benefits to the national economy would also be lost.
The overall projection could result in a hole in the economy of between $30 billion and $60 billion…
“International university students are a pipeline, so if you miss a six-month intake it is revenue that is not going to be in the system for two to three years,” [author Peter Hurley] said.
“It really is a worst-case scenario for universities”…
Victoria and NSW combined draw slightly more than two-thirds of total Australian revenue from international students, claiming $5.99 billion out of a sector-wide $8.76 billion in 2018.
This is what happens when you allow international student enrolments to grow to such an absurd level of nearly one million as at December 2019:
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Australia’s concentration of international students dwarfs other developed nations, at roughly 2.5 times the UK and three times Canada:
While this extreme growth delivered almost exponential growth in education tuition fees and expenditure (see next chart), it was always unsustainable and destined to fall.
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Allowing international student numbers to fall to sustainable levels would be good for Australia. Dumbing down degrees and diplomas to sell for profit, often as middle-men to Australia’s mass immigration system, has destroyed pedagogical standards.
As well, the short term damage bill is likely to be much smaller given a lot of what is counted as “export” revenue is just activity that would happen anyway, instead conducted by locals that are not displaced.
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Universities’ central role in the economy should be education, not behaving like rent-seeking corporations.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
