International education added $12.1bn to Aus economy in Q3


International education added $12.1bn to Aus economy in Q3

Australia’s international education exports outstripped major goods exports in the latter part of 2023, adding $12.1 billion to the economy in the September quarter.

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In total, education had added $34bn to export revenue by September

Stakeholders are urging government to not introduce new policy to counter challenges around housing and net migration that will deeply impact the sector, especially as the sector remains in its recovery phase. The government has already announced measures that have not yet been fully felt, such as closing a “concurrent visa” loophole and solutions to onshore student poaching.

Canberra is due to reveal new immigration policies later this month.

Australian Bureau of Statistics numbers show that while total exports dropped by 4.7% in the year to September, education values surged by 68%.

In total, education had added $34bn to export revenue by September, meaning it is on track to eclipse the record $41bn it earned for the nation in 2019, Universities Australia said.

“Education is the biggest export we don’t dig out of the ground,” Universities Australia chief executive Catriona Jackson reminded, and one that “supports tens of thousands of jobs and helps pay for the essential services all Australians rely on”.

The news comes as Australia’s international education sector is facing challenges from some parts of Australian society.

Last week, IEAA’s CEO, Phil Honeywood, confirmed that Australia will not introduce a cap on international student numbers – some in Australia had called for limits to deal with what they claim as soaring net migration figures.

One of those calling for limits to be introduced is economist Chris Richardson, who says the country should welcome fewer overseas students as it grapples with accommodation shortages.

Writing in The Australian, global head of insights and analytics at Navitas, Jon Chew, said that such a solution would be both “premature and unnecessary”.

Chew describes the V-shaped recovery Australia is currently witnessing – the recent surge in numbers is not a new trajectory, but catch-up rebound, he said.

“The fundamentals dictate that we are due to drop back to more normal numbers of student arrivals very soon”

“There may be at best one more year of high student visa numbers, but the fundamentals dictate that we are due to drop back to more normal numbers of student arrivals very soon,” he noted.

There is likely to be limited growth in government funding and depressed domestic volumes, so universities “will be counting on continued growth in international student enrolments to offset their fiscal woes”, Chew said.

The latest drivers of the “sudden boom” stem from student arrivals returning after borders re-opened post-Covid, a large number of students who deferred entry during the pandemic and others attracted to work opportunities in a “very strong labour market in Australia” enrolling via ‘ghost colleges’.

The Government has already made announcements to tackle the final issue, reinstating a 24-hour a week work cap that the previous administration lifted during Covid, as well as introducing a “range of integrity measures to address the students, providers and agents who may be abusing the student visa”.

The UK sector is facing a similar challenge, where authorities have announced measures to cut net migration figures. However, the ban on postgraduate taught students bring dependants will come into force in January, meaning its impact has not been felt.

Stakeholders are currently lobbying the government to not make any other rash policy decisions – especially around the Graduate Route – which they successfully protected under the last home secretary Suella Braverman, but which is now being reviewed under the current incumbent of that office, James Cleverly, as he revealed a five-point plan to reduce overall net migration.

In a new report, real estate agency Savills Australia says that the forecast for international student arrivals in Australia will surpass 2019 levels in 2024 and “grow to close to one million by the end of the 2025 academic year”.

The Australian Student Accommodation 2023 Report says that construction costs and the price of debt continue to hinder new PBSA developments, but PBSA “remains extremely attractive to investors”. Demand remains at its most feverish point and is tipped to further increase, the estate agency notes.

Paul Savitz, Savills’ director of Operational Capital Markets, noted that the boost in international student arrivals comes as Australian universities advised a return to in-person course delivery and Chinese government request its students to return to destination universities.

“This catalysed a rapid bounce-back in demand for higher education in Australia, which has caught many universities by surprise,” Savitz said.

Savills noted that the absence of international students negatively impacted the national budget by $40bn between January 2020 and the end of 2022.

“An absence of sufficient, suitable student accommodation is a major roadblock for the aspiration of universities to further grow international student enrolments,” its report notes.

The private sector and investors “wield the power to redefine the very landscape of student accommodation and to support the economic prosperity of universities, local communities, and all levels of government”, it adds.

The Savills report also warns that just 7,770 new PBSA beds are forecasted to become operational in Australia’s capital cities by 2027 – which is equivalent to a 52% decline compared with the 2020-2023 period, and a 64% fall from 2018-2020 levels.

However, Chew is adamant that “there cannot be an expectation that we will see further growth anywhere near the levels we experienced last year and this year”.

Bar China, which could see some finishers or deferrers still to come through the system, Australia “should expect an imminent normalisation in the numbers of students”, he noted.

“Student numbers will be a more modest contributor in the future”

“As it grapples with a housing crisis and uncomfortably high net overseas migration figures, the government will need to be examining other drivers of migration; student numbers will be a more modest contributor in the future.

“The measures already announced will have a substantial cooling effect and, with time, we will also start to see more students graduate and return home, which will further reduce the inter­national student component of the vexing net overseas migration figures.”

Jackson concluded that Australia has “developed a strong, competitive edge in the global battle for international students through our careful and strategic work over many decades”.

“Any changes that restrict the movement of these people to our shores need to be weighed carefully against the enormous benefits they bring, during and after their studies,” she said. 

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