Universities Australia has released a commissioned report forecasting that the impact on the Australian economy of the downturn in international student numbers will be $37.8 billion for the decade to 2020.


Deloitte Access Economics analysed both the total expenditure by international students in Australia, and spending across industry sectors to model the effect of such a downturn on the higher education sector, and the repercussions for the wider Australian economy.


The report models the downturn of international student enrolments over time and estimates that in net present value terms the reduction in GDP over the 2010-2020 modelling period will be $37.8 billion. The modelling also suggests that Australian employment will fall over the period because of a lower number of higher education enrolments.


CEO of Universities Australia, Dr Glenn Withers said the figures show a seriously negative effect in the short and medium term, although fthe report suggests that the appetite for international education is likely to gradually return and grow in the medium term.


However, he said, international competition has increased and has benefitted from the adverse impact of some Australian policy settings, including at the State and Territory level. Some of these latter continue, as with absence of travel concessions in NSW and Victoria for international students, despite their substantial tax contributions while here.


"Importantly however, while the high Australian dollar is considered a further source of pressure, Deloitte believe that this has not been the principal source of downturn, which is an encouraging finding in terms of the prospect for recovery," Dr Withers said.


Deloitte argue that factors that have been most central to the downturn in international student enrolments include recent Commonwealth policy changes to student visa regulations and to the General Skilled Migration program.


"Australian policy previously and deliberately encouraged a migration link and then changed suddenly on this, with many students caught short by the changes," Dr Withers said.


The report also notes that Australia's reputation as a safe destination for travel and study has been damaged as a consequence of some relatively recent high profile student safety issues and the overseas reporting of these.


On the positive side, Deloitte state that the situation can indeed begin to recover in the absence of any policy factors discouraging new students.


"Universities Australia believes that some current policies are discouraging new students and impeding the potential for recovery, and has therefore been working closely with Government to address these issues.


"The Knight Review report presents a unique opportunity for Government to ameliorate some of the problems around higher education student visas. We are looking to important changes in the policy settings especially with regards to up-front financial requirements, work experience opportunities and processing times," Dr Withers said.


Deloitte also note that the Government can make a difference through the overall level and structure of funding support they provide to universities.


"This can be addressed through the current Review of Higher Education Base Funding. Universities Australia has itself calculated that to avoid slipping back in quality of offering, compared to competitors internationally, university funding per domestic student does need a one-third increase and, at a minimum, the 10% interim increase recommended by the Bradley Review," Dr Withers concluded.


The report may be found at www.universitiesaustralia.edu.au/downturn