Overseas students as good as gold

♦ The commercialization of education was the subject of the article summarized in this “box” on September 7, Profit motive can spoil university sector.” The two articles summarized, and linked, in today’s post show how far this process has gone in Australia. They also show how vulnerable commercialized education can be to economic ups and downs and to changes in government immigration policy.

§ In an article published on November 30, 2009 in The Sydney Morning Herald, Overseas students are as good as gold,“ Heath Gilmore uses recent statistics to show the economic importance of Austrailia’s education industry. Mr Gilmore states that “in the past financial year” the whole education sector contributed $AUS16.6 billion to the economy. (On the date of this posting, one Australian dollar was equal to .985 American dollars.) Only the coal, iron and gold industries, he says, make larger contributions. He also points out that in New South Wales, which is the most populous of Australia’s eight states, education is the second most important contributor, surpassed only by coal. Of the $16.6 billion dollar overall contribution from education, $9.5 billion came from international students.

• Mr Gilmore apparently does not think that the worldwide economic crisis which began in 2008 is likely to have much effect on the profitability of the education industry. In fact, he quotes Stephen Conolly who is president of the Educational Association of Australia as saying, “International education and the brain industries generally are on the right side of history. International education has proven to be largely resilient in a recession, while minerals tend to be subject to boom and bust.”

• Heath Gilmore does, however, mention some negative aspects of the situation. He points out, for example, that the boom in international education has led to “visa abuses” (he does not give details) and that this has led to a “tightening of student visa practices” which might, in turn, lead to a reduction in the number international students entering Australia. And he mentions, too, that a series of apparently racist attacks on Indian students in the city of Melbourne could have a similar effect.


§ In September, in the aftermath of an extremely close election, Julia Gillard became the first woman ever to be elected Prime Minister of Australia. During the campaign both she and her opponent, Tony Abbott, had promised to reduce the number of immigrants entering the country, and after the election it seemed invevitable that reductions would soon take place. In an article published on September 4, 2010 in The Sydney Morning Herald, Immigration cuts would hit University funds,“ Malcolm Maiden expressed concern about the effect that such a development would have on the finances of Australian universities.

• Mr Maiden says that in 2008 about half of the approximately 277,000 immigrants entering Australia were foreign students and he expects that the new government will soon limit immigration to around 140,000. He says it is not possible to say exactly what effect that will have on Australian universities, but he is sure they will be seriously hurt. To back up this opinion, he points out that in 2009 about 30% of the revenue of the University of Ballarat came from foreign student fees and at the University of Melbourne about 18% came from that source.

• In Mr Maiden’s opinion, it is mistake to reduce the number of foreign students coming to study in Australia. He mentions that some people argue that foreign students take university places away from Australians but, he says, this is not true: in fact the money the foreigners bring in makes it possible for the universities to provide more places for foreign students. He also makes it clear that generally speaking, he approves of immigration. He says when universities start losing money because of the new immigration policy, this ”will show how xenophobia constrains business activity and economic growth.”

• In the last part of his article, as an example of how reduced government support has forced universities in other countries to become commercialized, Malcom Maiden provides some interesting details about Harvard’s investment strategies and about the effect that the economic crisis of 2008 had on that university.