Recent debates have emerged surrounding the economic contribution of international students to Australia, with some critics claiming that the often-cited $48 billion figure is overstated. These claims, particularly by Dr. Kevin You, Senior Fellow at the Institute of Public Affairs, suggest that the figure is a myth. However, a closer look at the numbers and the broader contributions of international students paints a very different picture. The impact of these students on Australia’s economy and society goes far beyond tuition fees and includes significant contributions to local economies, job creation, cultural enrichment, and long-term economic benefits.
In this article, we will explore the many ways international students contribute to Australia's economy, debunk the myths surrounding their economic impact, and highlight the cultural and societal benefits they bring to the country.
Economic Contributions: More Than Just Tuition Fees
The most direct contribution international students make to the Australian economy is through tuition fees. In 2024, the number of international student enrollments reached 810,960, a 17% increase from 2019 levels. These students pay substantial tuition fees, which provide critical funding for educational institutions and support staff. However, the economic impact of international students extends far beyond this single metric.
International students spend heavily on living expenses such as accommodation, food, transportation, and daily necessities. In cities like Melbourne and Sydney, this spending significantly boosts local economies, particularly in the hospitality, retail, and real estate sectors. The influx of international students provides consistent business for these industries, especially in areas where local demand alone may not be sufficient to sustain them.
Moreover, the multiplier effect of international student spending means that the money they spend circulates throughout the economy, creating additional jobs and supporting a wide range of businesses. For every dollar spent by international students, several more are generated in the wider economy. This creates a positive feedback loop, wherein their presence fosters economic growth across multiple sectors.
Real-Life Economic Impact: Small Businesses and Local Economies
To truly understand the impact of international students, one only needs to look at the real-life stories of small business owners and host families. In city centers, cafes, retail shops, and grocery stores depend on the patronage of international students. These students become part of the community, contributing to the local economy by spending on goods and services that many local businesses rely on for survival.
Families who offer homestays for international students also benefit. The income from hosting students helps many families pay mortgages, manage household expenses, and even save for future investments. This economic activity often goes unrecognised in broader economic calculations but is vital to the fabric of local economies.
A Key Export: International Education as a Driver of Economic Growth
According to the Australian Bureau of Statistics, international education contributed AUD 36.4 billion to the Australian economy in the 2022-23 financial year, making it the fourth-largest export behind iron ore, gas, and coal. The breakdown of this contribution reveals the far-reaching impact of international students:
- Tuition fees accounted for approximately AUD 16 billion.
- Living expenses averaged AUD 43,000 per student annually, covering accommodation, food, transport, and other costs.
- Tourism spending by visiting family and friends added a significant boost to the tourism sector.
International education has become a cornerstone of Australia's economy, providing crucial revenue streams for universities and supporting a broad range of industries that benefit from student spending.
Employment and Job Creation: A Key Economic Driver
The international education sector plays a critical role in supporting employment across Australia. In 2019, it was estimated that international education supported around 250,000 jobs nationwide. For every dollar collected in tuition fees by universities, an additional two dollars were generated through other economic activities.
These jobs extend beyond the education sector itself, with a ripple effect reaching industries such as hospitality, retail, transportation, and real estate. By supporting international students, Australia’s economy is able to maintain a high level of employment in sectors that might otherwise struggle, particularly in city centers where student populations are concentrated.
Research and Innovation: Supporting Australia’s Global Standing
International students are not just contributors to the economy; they are also pivotal to Australia’s research and innovation ecosystem. Nearly 50% of all postgraduate research enrollments in Australia are filled by international students. These students bring with them diverse perspectives, expertise, and research ambitions, which are crucial for maintaining Australia's position as a global leader in academic research and innovation.
The contribution of international students to postgraduate research supports the development of cutting-edge technologies and scientific advancements, many of which have long-term benefits for Australian industries and society. In fields such as biotechnology, engineering, and information technology, the contributions of international students are indispensable for driving innovation and sustaining Australia’s reputation as a hub for world-class research.
Regional Development: Supporting Growth Beyond Major Cities
While international students are often associated with large urban centers like Sydney and Melbourne, their impact on regional development should not be overlooked. For every dollar spent by international students in Melbourne, for example, 30 cents of indirect gross value is generated in regional Victoria. This contribution includes spending on tourism, goods, and services, which directly benefits regional economies.
In 2022-23, international student expenditure in Melbourne alone contributed AUD 888 million in indirect value and supported more than 5,400 full-time equivalent jobs in regional Victoria. For smaller communities and towns, the presence of international students provides economic stability, ensuring that regional businesses can thrive and local employment opportunities are sustained.
Long-Term Economic Benefits: Addressing Skill Shortages
Beyond their immediate contributions, many international students remain in Australia after graduation, contributing to the economy in the long term by filling critical skill shortages. As highly trained professionals, these graduates enter industries where their skills are in demand, such as healthcare, engineering, information technology, and education.
By remaining in Australia, international graduates pay taxes, contribute to the social security system, and help drive productivity and innovation. In regional areas, where skill shortages are particularly acute, international graduates play a key role in filling gaps and supporting the local economy. Their presence ensures that regional communities have access to essential services and a highly skilled workforce, addressing both short-term and long-term economic needs.
Cultural and Diplomatic Benefits: Building International Bridges
The value of international education extends beyond economics, playing a critical role in fostering cultural exchange and diplomatic ties. With students from over 144 countries, Australia’s international education sector helps build a more diverse and inclusive society. These students bring with them unique cultural experiences, enriching the educational environment for domestic students and fostering cross-cultural understanding.
International students often become informal ambassadors for Australia, promoting the country as a welcoming destination for education, tourism, and business. By building strong connections with students who eventually return to their home countries, Australia strengthens its diplomatic and trade relationships, enhancing its standing on the global stage.
Sector Resilience and Adaptability: Bouncing Back from Crisis
Despite the challenges posed by the COVID-19 pandemic, the international education sector has shown remarkable resilience. The sector has bounced back strongly, with export income recovering to around AUD 36 billion in 2023. During the pandemic, universities swiftly adapted by providing online learning options, which generated nearly AUD 12 billion over three years.
This resilience underscores the sector's ability to adapt to changing circumstances and continue delivering value to the Australian economy, even in the face of global disruptions. As the world navigates the post-pandemic recovery, the international education sector remains a vital pillar of Australia’s economic prosperity.
Recognising the True Impact of International Students
The claim that the $48 billion economic contribution of international students is a myth overlooks the broader reality of their impact. The contributions of international students to Australia’s economy extend far beyond tuition fees. From living expenses and job creation to long-term economic benefits and cultural exchange, international students are integral to the nation's prosperity.
The narrative that international education merely benefits a select few elite universities is both reductionist and misleading. International students play a vital role in supporting Australia’s economy, enhancing its global standing, and fostering cultural diversity. As Australia continues to navigate global challenges and economic uncertainties, the international education sector remains one of its most valuable assets.
By recognising and valuing the true contributions of international students, Australia can ensure that it remains a destination of choice for generations to come, building on the foundations of diversity, innovation, and economic opportunity.
