Mark Twain famously popularised the saying, ‘There are three kinds of lies: lies, damned lies, and statistics.’ Here he referred to the persuasive power of statistics to bolster weak arguments.
The claim that Australia’s annual international education export was valued at $48 billion in 2023 is one such statistic.
New research from the Institute of Public Affairs has recently called into question this figure and its role in justifying the massive increase in international student numbers seen in recent years, putting the value of the sector closer to $31 billion.
The claimed $48 billion figure exceeds the actual value by approximately $16.5 billion, which is more than 50 per cent of its true worth.
The main cause for the inflated $48 billion figure is that approximately $16.5 billion of the total should not be counted as an export because it consists of revenue earned and spent by international students domestically through part-time work. Spending in Australia using money earned while in Australia is not an export.
This was acknowledged by the Australian Bureau of Statistics shortly after the IPA released its analysis. It stated in a post to its website in relation to the 2024 financial year that, ‘While it is not possible to be precise, ABS estimates suggest around a quarter of the expenditure … is funded by international students working in Australia for Australian employees.’
The Department of Education recently trumpeted the $48 billion figure, and it has a clear incentive to do so. Capturing the overseas student market has become a key source of revenue for the nation’s universities over the past two decades – especially the ‘elite’ Group of Eight (G8) universities.
The more students they bring in, the more money they make and reinvest in research, which enhances the prestige of the institution and, in turn, brings in more international students.
Today, international students make up the largest single source of income for many universities, excluding government grants. The latest figures, from 2022, reveal Australian universities earned $8.57 billion from international student fees.
G8 universities profit the most, with the University of Sydney collecting $1.4 billion, the University of Melbourne $877 million, and Monash University $906 million.
Increasing the international student intake clearly benefits tertiary institutions which rake in millions this way. However, the benefit to the economy is limited and the downstream effects are increasingly problematic. This was acknowledged in the federal government’s 2023 Migration Review, which said international students place pressure on housing and local infrastructure, especially in communities that do not benefit from the value international education exports. Further analysis from the Federal Education Department shows international students were estimated to occupy 7 per cent of the nation’s rental market.
Higher numbers of international students have also coincided with declining education standards and have heaped further pressure on Australia’s housing market, infrastructure and services.
As IPA research has shown there is something fundamentally wrong with the priorities of Australia’s universities when a record low of just 62 per cent of domestic students have completed their degrees since 2017.
Since the year 2000, the number of enrolments of international students has increased by 370 per cent, compared to an 84 per cent increase in domestic students. It is quite clear the university model in Australia has shifted away from education and towards the business of maximising revenue, which has led to declining academic standards and the prioritising of international over domestic students.
The current model is perpetuating a cycle in which higher overseas student numbers are negatively impacting the university culture, which has led to a measurably higher number of domestic students dropping out which, in turn, encourages a greater reliance on overseas students.
This is supported by the Productivity Commission’s five-year inquiry, which found highly variable and poor-quality teaching was failing domestic students who entered the workplace unequipped to meet real-world demands.
There is a clear motivation for universities to push the narrative that international education is a significant contributor to the Australian economy. However, the reality is the benefits of international education are concentrated in the universities themselves, which don’t bear the burden of added strain on public services and housing.
While international students will remain an important part of the Australian tertiary sector, Vice Chancellors must remember their primary role is to raise the intellectual standard of the country and drive national productivity by educating Australian students. Meanwhile, lawmakers must remember their first responsibility is to the Australian community and ensure the international student intake does not exacerbate domestic problems.
Brianna McKee is a Research Fellow and the National Manager of Generation Liberty at the Institute of Public Affairs
