Australian exporters cut it at the chalk face

“There’s a sheriff in town,” I was told. I never thought I’d hear those John Wayne-like words in real life, but it was Austrade’s education adviser Peter Mackey who uttered them.

Peter had a real live sheriff – the Sheriff of Mumbai not the Sheriff of Nottingham – in Sydney to sign a memorandum of understanding (MOU) with the University of New South Wales.

The Sheriff of Mumbai, Indu Shahani, who had a high level delegation with her in tow, was keen to forge a strong partnership with UNSW. Shahani, who is also the Dean of Commerce and Economics at the University of Mumbai, sees university exchange as more than just “swapping notes and students” but about forging “long term relationships in innovation, research and development”.

As it happened, Shahani was in Australia during the terrible terrorist attacks on her home city Mumbai, which cost so many lives – including some members of visiting Australian trade delegation.

In fact, as a result of the MOU, a team of safety and risk experts from UNSW visited Mumbai to help. Paul Barach, director of the NSW Injury Risk Management Research Centre and head of UNSW’s School of Safety Science, was quick to offer the UNSW’s expertise in these areas and the Sheriff of Mumbai wasted no time in putting the MOU into place in the face of the terrible crisis affecting her city.

The visit of the delegation from India is an example of the growing importance of China and India, or “Chindia”, to Australian education exports. In a recent research report by the Reserve Bank of Australia (RBA) on education exports, the bank notes that Australia has been experiencing a major boom in the export of education services to both China and India.

According to the RBA, China and India’s combined share of Australia’s education exports are now a third (on 2006-07) compared to just under 9% a decade or so ago (on 1995-96). The RBA paper was keen to point out that Australia’s export relationship with Chindia was not just “rocks and crops” (mining and agriculture) and that the services sector in terms of professional services, financial services and education, were also doing their bit as well.

The RBA data shows that Chindia is making a difference to Australia “at the chalk face” as well as at the coal face, and that medium term prospects were still solid despite the global slowdown.

But Chindia hasn’t always dominated the overseas student community on Australian campuses. The chart below, created by the RBA, shows that this is a relatively recent phenomenon.

harcourteducategph

For example, when I was at university, most overseas students were from the ASEAN nations – made up of a mixture of Colombo plan scholarship and private students. In fact, in the book The Airport Economist, in the chapter “Everyone loves Raymond”, I tell the tale that in the honours year above me in economics at the University of Adelaide, 11 out of 15 students were from Singapore and Malaysia.

For some reason the Singapore Government sent a bunch of crack nuclear physicists who were meant to go to Oxford or Cambridge to be rocket scientists but they all ended up at Adelaide doing economics.

There were enormous spillover benefits for me then (as the Singaporeans were very good at econometrics) and now, as many of these students have become senior politicians in Singapore and Malaysia (such as Raymond Lim in Singapore, the focus of the above mentioned chapter).

But whether it’s rocket scientists from ASEAN or engineers and IT students from China and India, international students are well and truly part of Australia’s schools, TAFEs and campuses, and are enriching us culturally and helping to forge trading relations with many economies.

But how will the global financial crisis affect this mutually beneficial arrangement?

There are four key points that can be made:

First, all sectors of the Australian economy are being affected in some way, so the $14.2 billion Australian international education sector will not be immune from the crisis.
Second, the financial crisis is (unfortunately) a synchronised downturn, with most economies entering recession at the same time, so Australia’s education competitors will also be affected.
Third, thanks to the floating exchange rate, we have seen an adjustment downwards of the Australian dollar compared to 12 months ago, so the relative competitiveness of Australian education providers has improved. In the past year, the dollar has fallen against the currencies of eight of our top 10 source countries, and against our main competitors as well.
Finally, in a downturn, the economic evidence suggests that there is a flight back to education to re-train and upgrade qualifications to improve employment prospects. This is good news especially for universities and TAFEs in terms of income, but it could also potentially put pressure on places.

For the most part, however, international education often gets through crises (such as the Asian financial crisis) in much better shape than other export sectors, as education is seen as a long term investment that will benefit workers and the nation as a whole when times improve.

In short, the long term future is one of moderate growth and the education revolution is well and truly part of “the export revolution” and vice versa, given the importance of investing in education for long term productivity growth.

And when all is said and done, I can say that I not only went to uni with several cabinet ministers from Singapore and Malaysia, but I have now also met a real live sheriff!

*Tim Harcourt is Chief Economist with the Australian Trade Commission and the author of The Airport Economist (see www.theairporteconomist.com).

Thanks to Peter Mackey, Purnima Ganapathy and Theresa Fairman for their assistance with this article.