Foreign dollars fund Kiwi students

June 2010


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GEOFF VAUSE crunches the numbers and checks the politics of offshore education cash

Export education is recognised alongside tourism and agriculture as a key New Zealand export earner, but it is almost expected to pay its own way.

Tertiary Education Minister Steven Joyce, who says international students could provide an economic lifeline for universities and tertiary institutions, has been criticised for expecting overseas money to prop up the tertiary sector.

Foreign fee-paying student numbers have climbed to almost 100,000. Joyce says while he is looking at ways to fund domestic tertiary education it will not compare with the potential in attracting international students.

Recognising this potential is barely backed by government support. Tourism realises around $8.2 billion in forex each year and receives about $94 million in government support. Education pulls in around $2.5 billion and received just $3.45 million in the Budget. The $2.5 billion includes overall spending, not only study fees, and may well be conservative.

Around $1 is spent in tourism promotion for every $87 dollars generated by the industry, while the export education industry sees $1 in promotion for every $735 it generates.

Education New Zealand CEO Robert Stevens says given the two industries share similar economic dynamics (major market failure issues, free riders and the need for cost sharing), this “stark comparison” can lead to three conclusions:

  • the education export sector has done incredibly well in building such a large and successful export service industry;
  • education represents a far better value for money return on generic promotion investment for the government than tourism;
  • if education promotion was funded on a pro-rata par with tourism, government investment would be in the vicinity of $23.5 million per year.

Not that Stevens begrudges the extra money. “We’re delighted with the additional $2 million and the key to proving that this is public money well spent,” he says, pointing to his organisation’s industry target of 10 per cent growth in revenue this financial year.

He says it’s the institutions driving the growth, and Joyce is happy to let them help fund the domestic tertiary sector. The minister says while universities have caps on students funded by the government, they can enrol unlimited numbers of foreign fee-paying students.

Labour tertiary watchwoman Maryan Street claims international students could squeeze New Zealanders out, but Joyce says they would have no effect on the number of Kiwis in higher learning.

Stevens’ 10 per cent growth target follows a similar achievement last year, when fees cash from international students jumped to $664 million. Numbers of students have been up and down over recent years, peaking at about 121,000 in 2003, falling in each of the following years until a lift last year. Of the current 93,500, 15,400 are in schools and 29,400 in tertiary institutions. The rest would be enrolled with a variety of private training providers.

Joyce may be gazing across the ditch. International students account for 20 per cent of university revenue in Australia, compared with about 12 per cent here.

Recent Australian political decisions may also be in the back of his mind. Australian international student enrolments are tipped to plummet by 20 per cent next year with the Rudd government abruptly tightening immigration requirements, and due to rising competition from other markets in the lucrative student trade.

Joyce may be hoping some of the AUD3 billion worth of students will be looking at New Zealand.