Australian education exports: the challenges ahead: education has been on the rise in the past decade, but the industry is becoming increasingly concerned about how strong export growth can be maintained - Cover Story - Statistical Data Included

Business Asia, June, 2002 by Randolph Ramsay

Education exports have been, without a doubt, one of the brightest spots on the Australian trade map in recent years.

Student numbers have been steadily increasing, both on-shore and off-shore, with the growth of the education export sector outstripping those of Australia's other major service exports of tourism and transportation services.

But beneath the impressive growth figures are growing concerns that not enough is being done to ensure the industry's future success. Tightening funds, a shortage of quality staff and a lack of focus could relegate Australia's education sector to the bottom of the world heap, critics say.

Positive growth

By all accounts, education exports have boomed in the past 10 years, growing from almost nothing to become one of the country's leading export industries.

The value of the sector grew 10.8 per cent last year, and is now worth $4.12 billion to the Australian economy, according to the Australian Bureau of Statistics (ABS). The ABS figures represent the total value of education provided to international students, including tuition fees and living expenses.

Education still has a long way to go before it catches up with our key service sectors of tourism and transport services, but the gap is slowly closing. Over the same 12 month period, tourism's value to Australia fell slightly (by 1.2 per cent) to $9.57 billion, while transport grew by only 8.7 per cent to $8.1 billion.

IDP Education Australia chief executive Lindy Hyam said the recent figures underlined the fact that education remained one of the vibrant export performers for Australia.

"Last year's strong growth occurred primarily in the first half of 2001. More than 80 per cent of the total annual growth took place between January and June," she said.

The outgoing trade in education from Australia also grew strongly last year. Compared to the $4.12 billion that incoming international students brought to Australia, the dollar value associated with Australians travelling overseas for educational purposes--in other words outbound students--was only $736 million in 2001. "Nevertheless that figure represents a 20 percent growth from 2000," Hyam said.

"The internationalisation of Australian education is not only reflected in the growth in the value of the education export sector and the increasing number of international students who are studying in Australia. It is also reflected in the growing number of Australians who are choosing to study abroad."

Our export growth rate, averaging in at about 15 per cent annually for the past decade in the face of stiff competition from education stalwarts such as the USA and the UK, have not been surprising due to the relative youth of the industry, IDP's deputy chief executive Greg Gallaugher says. "It only became an industry by about the turn of the '80s into the '90s. The growth rates themselves are not so surprising due to the relative youth of the industry," he said.

Stretched

It is this recent success, in part, which has contributed to the education sector's most pressing problem in the short term--how to continue to grow with increasingly tight resources.

The concern that Australia is not keeping pace internationally has been heard from many varied sources. Reserve Bank Governor Ian McFarlane caused a fuss earlier this year when he said: "Australia no longer has a university that could be ranked in the top 100 in the world. At the highest level of higher education, we are not keeping up."

University of New South Wales dean for the Commerce and Economics Faculty Professor Greg Whittred says the problems of universities across Australia are essentially the same: growing numbers, growing expectations and stretched resources.

"Consider our `onshore' position first. There are at least three major impediments to further growth in this way," he said.

"First, if the experience of my own University is any guide we are at physical capacity. I run what is one of the largest faculties of its kind in Asia. As we speak I am in the process of shrinking--not growing--my international enrolments. Prices and entry standards have risen each year for several years; and in each year demand has grown--demand that it presently impossible for me to service.

"Second, even if the physical constraints were solved, the binding constraint to growth in this fashion is the availability of quality faculty. The high demand areas--finance, accounting--are chronically understaffed; to the order of around 20 to 25 per cent.

"Finally, there is a politically reality; imagine if you would the consequences of any Dean filling classes with international rather than domestic students."

More competition

Not only are our on-shore resources at capacity, but Australia is also facing stiffer competition from both old and new adversaries.

IDP's Gallaugher says education export giants the USA and the UK are becoming more aggressive and pro-active in their marketing, whilst other English speaking countries are also beginning to enter the fray. "We compete with the English speaking countries such as New Zealand and Canada, both of which have gained strong growth from their reasonably low basis," he said.