It’s often said that we are in an information age and a services economy. If you were to make an argument that that’s the case, education earnings would have to be at the top of your list.
Iron ore nets Australia $100-160 billion depending on price fluctuations. Coal and gas fluctuate similarly, earning the country between $30-120 billion in exports each.
But education earnings – that is, revenue from international students – supposedly account for a remarkable $50.5 billion of Australia’s “exports” in FY24. How is such a figure reached?
A statement from the ABS last year raises questions about the way education as an export has been calculated. According to the ABS, “All expenditure by international students studying in Australia is recorded as an export in the Balance of Payments statistics.” It includes tuition fees and all money spent by international students in Australia.
The calculation’s rationale is that international students are not treated as residents. Like tourists, they are conceptualised as having their “predominant economic interest” in their home countries.
The calculation method is an international standard, used by organisations like the IMF. The purpose of the ABS statement is to call it into question.
The ABS asks: when international students earn money in Australia that is spent in Australia, how can that be considered an export? At present, approximately $13 billion in international-student wages currently count as export earnings.
More broadly, if international students take degrees as a pathway to immigration, at what point do they stop being considered foreign residents?
Much of student spending goes on basic cost-of-living with relatively inelastic supply, like housing. At present, 7% of renters in Australia are international students, with obvious impacts on housing affordability in the metropolitan areas where most students live.
Late last year, the Greens and the LNP combined to vote down an ALP proposal to cap the number of international students in the country. The Opposition Leader appears to have had a change of heart, proposing his own new cap last week.
International student numbers of course enrich the universities. But their overall effects on the economy should be considered in light of the costs and benefits of immigration.
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