New independent analysis has revealed that the government’s proposed introduction of caps on universities’ international student enrolments would seriously damage the Victorian economy, strengthening calls for a review of the proposal.
The analysis, prepared by SPP Consulting for the University of Melbourne and Monash University, has found Victorian public universities contribute $27.4 billion to Victoria’s economy. Students and staff at Victorian universities contribute around $15.4 billion in consumer spending on food, clothing and entertainment in the state.
This economic benefit is under threat with the Australian Government pushing ahead with its proposed international student caps. Slashing enrolment numbers would jeopardise many small businesses still recovering from the COVID-19 pandemic downturn, putting a range of service industry jobs at risk.
Deputy Vice-Chancellor, Global, Culture and Engagement at the University of Melbourne, Professor Michael Wesley reiterated the significant harms the proposed caps could cause for the state’s economic health.
“Victorian public universities’ direct contribution to gross domestic product in 2023 was $6.7 billion, representing 1.2 percent of total economic activity in the state. The potential loss of income from the proposed caps will place an additional burden on our federal budget, which will in turn impact our state’s budget, and our ability to fund important services and infrastructure for all students.
“Critical services like healthcare are already being cut in Victoria due to funding pressures. These proposed caps will only do more harm to our state”.
Monash University Deputy Vice-Chancellor (International) Professor Craig Jeffrey said the report highlighted the role international students play in supporting the economy. “Limiting the entry of international students to world-leading universities risks damaging the Victorian economy, vital research, and our standing and impact in the region,” said Professor Jeffrey.
“Capping international students will deprive the sector of revenue and thereby undermine life-saving medical research. We depend on a flow of brilliant international students for this vital research to be funded and delivered.
“One of the wonderful things about living and working in Victoria is that we get to interact with international students. They are crucial to the social, intellectual and cultural life of our state – and this report demonstrates they are also absolutely critical for our economy.”
Professor Wesley urged the Australian Government to reconsider the caps or risk damaging the nation’s reputation as a first-choice higher education destination.
“Trust, confidence and interest in Australia as a high-quality higher education provider has been built up over decades. What the Australian government is proposing is being interpreted as a major new source of sovereign risk that is spooking prospective students and their parents, as well as investors and credit rating agencies. Instability from sudden policy changes in visa settings and costs will drive students to study in other countries”.
Key findings from the SPP Consulting report “Economic Impacts of Victorian Public Universities”
Economic impact:
- Victoria’s public universities contribute $27.4 billion in total economic impact.
- As measured by economic value added, Victorian public universities’ direct contribution to GDP in 2023 was $6.69 billion, representing 0.3% and 1.2% of total economic activity in Australia and Victoria respectively.
- International education accounted for 48% of Victoria’s services exports and 19% of total exports in FY 2022/23.
- There are 399,000 students enrolled at Victorian public universities (including 130,000 international students) and more than 36,000 academic and non-academic staff directly employed by these institutions. Students and staff at these universities indirectly support 89,000 jobs.
- Students and staff at these universities generate around $15.4 billion in spending on food, clothing and entertainment.
- Australia is reliant on public universities for R&D investment – in Victoria the contribution of over $3.6 billion is more than twice the State’s second largest sector.
- Victorian public universities R&D investment represents almost a third (32%) of Victoria’s R&D efforts.
- A 2018 report estimated that for every $1 spent on research at the Go8 Universities, approximately $10 in benefits was realised by the private sector.
- For every $1 million invested into infrastructure, eight construction jobs are created. Over the last 3 years, capital expenditure on building and construction at Victorian universities ($1.4bn) has created 11,574 jobs.
Impact of international students
- With more than 130,000 international students studying in Victoria every year, international education generates $10.0 billion in economic value and is Victoria’s largest export.
- It is estimated that for every international student, an additional $66,000 of economic benefit is generated, with 68% driven by non-tuition spend over and above tuition fees, driven by student and visitor spend.
- For every $1 million spent by visitors, three full-time jobs are created. In 2023, visitor spending was $1 billion, directly impacting over 3,000 jobs in hospitality, retail and tourism sectors.
- International students comprise 38% of enrolments at Victorian public universities. One-third of international students in Australia choose to study in Victoria.
- Restricting Victorian international student enrolments by 30,000 students per annum would reduce the contribution to the Victorian economy by more than $5.9 billion over three years and cost at least 12,000 jobs.
