When I was a teenager starting to take an interest in economics, I remember not really understanding how education was an “export”, as nothing at all appeared to be physically being sent overseas except the students when they finished their courses.
Later I learned about the wonders of “service exports”, of which education is Australia’s biggest, supposedly worth $54bn ($38bn “higher” education) a year, as the sector chirps endlessly.
It was disappointing to see South Australia’s Labor Premier, Peter Malinauskas, parrot the industry’s talking points in a speech to the Sydney Institute on Wednesday evening as part of tone-deaf defence of mass immigration.
It turns out my teenage intuition was better than I later thought about education “exports”: the benefits touted are significantly overstated and ignore an array of costs that are more difficult to quantify.
The misleading headline figure comes from the international balance-of-payments convention that treats virtually everything spent in Australia by foreign students, including on tuition fees, rent, groceries and public transport, as an export.
The tuition fee component has been about $25bn recently, or about half the headline total.
Moreover, whether the money to fund all this spending was brought from overseas or earned here doesn’t matter. A student can earn money driving an Uber in Adelaide, spend it on rent in Adelaide, and Canberra will record the expenditure as an Australian export.
Subtracting spending that was earned domestically lowered the headline export total by about 32 per cent, according to landmark IPA research based on the 2024 financial year. The work prompted the ABS into what appeared to be a humiliating clarification afterwards, where it conceded a quarter of headline education exports were derived from money earned in Australia. Even on that more conservative estimate, education exports shrink from $54bn down to about $40bn.
And naturally these estimated reductions didn’t include any informal cash earnings, which would probably be quite large based on anecdotal evidence.
That’s not all, though. It’s worth considering how much money students send home to their families abroad. According to World Bank data $US14.3bn ($19.8bn) of net remittances left the country in 2024, the bulk going to India and China, up from only $US784m in 2004.
Not all of that money would be from foreign students given the three million-plus non-citizens living here but it would be highly significant. And recall students from those two nations made up 40 per cent of international enrolments in May 2026, according to the Department of Education.
Of course, no one is blaming students for working or sending money home. But can we please stop kidding ourselves about a $54bn bonanza, when it’s more likely to be well under half of that sum.
No politician would assess the benefits of an iron ore project by announcing its revenue and refusing to count its costs. Yet that is precisely how the university lobby and its political outriders promote international education.
Then what about the obvious costs, if harder to quantify: international students add to the growing strain on housing, transport, electricity, water, hospitals and other infrastructure. State governments are accumulating huge debts at ever higher interest rates to keep up.
Students also work (the chief reason many of them come to study in the first place), putting downward pressure on wages in retail and hospitality sectors. That saps the earnings of nativeborn Australians working in those industries.
To be sure, Australia’s university administrators, among the highest-paid in the world, and academics do very well out of international students. As do better off Australians who directly or indirectly enjoy the services of students who work as drivers, cleaners or restaurant hands.
Finally, what about the quality of education provided? Regulators have investigated hundreds of private training providers over alleged bogus qualifications, fabricated assessments, ghost colleges and migration fraud. At least 30,000 vocational qualifications have been cancelled, while about 150 dormant providers were struck from the register in 2024 and another 140 put on notice.
The fact senior politicians and journalists parrot the $54bn claim without having a clue how it’s derived suggested the educational rot set in some time ago.
Where I was quaintly wrong in my youth was in assuming students went home after finishing their courses. More than 271,000 former students and their families were still working in Australia (subclass 485 holders) as of the middle of this year, up 19 per cent over the previous 12 months.
That’s on top of the 680,000 students currently studying (holders of subclass 500 visas), according to Department of Education data. No other significant Western nation has such a high proportion of current or former foreign students studying or working.
Canada has shown that the economic sky doesn’t fall in following drastic cuts to international student numbers. Even the centre-left Liberal governments there have cut new international student arrivals from 293,000 in 2024 to just 115,000 in 2025.
And arrivals in the first half of 2026 were down 67 per cent compared with two years earlier. Universities and dubious private colleges have certainly complained, but Canada’s economy and higher education system continue to function. The lesson for Australia is obvious: governments can curtail an immigration-driven education industry without causing the economic catastrophe its beneficiaries routinely predict.
South Australia’s Premier remains a cut above his Labor peers in his sensible advocacy of nuclear power but on the benefits of “education exports” he’s way off the mark.
