Steven Joyce: Cashing in on overseas students

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Overseas students bring in revenue and also contribute to the economic and social wealth of host cities. Photo / Greg Bowker
Overseas students bring in revenue and also contribute to the economic and social wealth of host cities. Photo / Greg Bowker

As a country built on innovation we obviously need to keep lifting investment in our universities, both for the teaching of our best and brightest, and for the research that assists with innovation.

That is one reason why the Government in this year's Budget is going to ask graduates and ex-students to pay off their student loans faster, so that we can invest more in the next generation of students, particularly in areas like engineering, science and research.

However, Auckland University vice-chancellor Stuart McCutcheon did not refer in his column to the single biggest opportunity that universities in New Zealand can avail themselves of right now to significantly grow their incomes, without relying on the Government for more money, or charging domestic students more.

The biggest difference in income between the Australian universities he cites and his own is the amount that each university obtains from international students.

All three universities have similar numbers of domestic students - between 33,000 and 36,000. However, New South Wales has 13,000 additional international students, and Queensland about 10,500. In contrast Auckland has 4800.

As a result the University of New South Wales sources around 19 per cent of its income from full fee-paying international students, which equated to A$256 million ($328 million) in 2010.

The University of Queensland sources 17 per cent, or A$237 million, in 2010. The figure for Auckland University is 8 per cent - or $68 million in 2010.

If Auckland University was able to match the New South Wales contribution its total income in 2010 would have been $124 million higher than it was. Based on the university's just released 2011 report, to be comparable with the University of New South Wales, Auckland's international revenues, and total income, would be $146 million higher. Think what that would do for the university.

However, attracting international students is not just about revenue for the host university. International students also live in their host cities and add to the economic and social wealth of those host cities.

But most importantly, international students provide life-long social, cultural and economic links with the countries from whence they come. Many become ambassadors for New Zealand. International education is a lifelong benefit for the host country.

New Zealand's future is about being a nation of innovators, exporters, and traders, that effectively leverages its geographical position and moves easily between the Asian, Pacific and European worlds. That means more rather than less inter-country mingling and strong personal links with our Asian neighbours. Our universities can make that happen.

And the good news is that the opportunity to grow our international education sector is there right now.

I know from personal experience that the New Zealand tertiary education system is very highly thought of across the high-growth developing countries like China, Indonesia and the Arabian Gulf. And developing countries the world over are currently making a big investment in improving the education of their citizens.

Our universities need to compete effectively with Australian universities for the top students and the top academic talent. However, they can't compete if they don't pay sufficient regard to one of the key income streams that Australian universities have.

They may argue they need more government support to market themselves internationally. Well, the Government has just added an extra $10 million a year to the national education marketing budget, and in any event Auckland University believes its brand to be truly international in scope right now, and less dependent on riding along behind the broader "New Zealand" brand.

Surely the additional income is sufficient motivation, and indeed Auckland is starting to work harder to grow its international revenues. However, the alternative is sobering.

No government in the foreseeable future will be able to bridge the gap between what New Zealand universities earn from international education versus what Australian universities earn.

If we want New Zealand universities to become stronger and more competitive with both Australian ones and more broadly, they have to aggressively seize the opportunities that exist in international education.

And the good news is the country will benefit too.

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