Australia Trumps Brexit

Educational exports are the third largest sector in the Australian economy as the following figures show:

 

• Value $21.8bn [1] in 2016/17
• 700,000 international students, 300,000 in the higher education sector
• Strong sector growth at 14% (2014), 15% (2015) and 17% (2016).

 

Australia’s educational success hasn’t happened overnight and there have been plenty of ups and equally several crashing downs, such as the closure of the Vocational Training HELP loans scheme thought to have cost taxpayers $6bn!

 

Given the interrelationship between economics, education and politics, it’s perhaps unsurprising that one of the trade bodies representing the sector, International Education Association of Australia, (www.ieaa.org.au), is led by Phil Honeywood – a former high-profile politician – while another, Universities Australia, is led Belinda Robinson who spent 9 years in senior positions at the Department of Prime Minister and Cabinet.

 

In early 2016, an article in the Australian Financial Review pushed the line that Australia’s success in attracting foreign students was directly correlated to the weak Aus$, with Heywood saying, “We can’t take for granted the annual growth we’ve had in recent years”.

 

In retrospect the predictions of both Heywood and the AFR were wrong, i.e. growth accelerated despite the Aus$ strengthening significantly against the UK pound and by around 10% against the US dollar.

 

There are three other factors that seem absent from most analysis of why the sector continues to grow so strongly.

 

1. Australia’s National Strategy for International Education 2025: an ambitious plan that now has a strong cross-sector body of support from the eleven expert members of the new Australia’s Council for International Education.
2. The important role in Australia’s education export success story played by IDP: now an ASX-listed company, IDP was founded in 1969 as the Australian Asian Universities Cooperation Scheme to help deliver higher education assistance to South-East Asian universities. This far-reaching plan was part of the Australian government’s involvement in the Colombo Plan. Renamed the International Development Plan (IDP) in 1981, it the refocused on recruiting foreign students for Australian universities. In 1989 IDP was one of the founding partners of the IELTS English test, with Cambridge University and the British Council (they all still own the test). After rapid growth, things went awry in 2006 leading to the resignation of IDP’s CEO Lindy Hyam and Chairman, Lance Twomey, rapidly followed by the sale of 50% of IDP to listed recruitment company SEEK. IDP’s decade-long partnership with SEEK proved to be highly successful but in December 2016 SEEK sold out of IDP when it was listed on the ASX with a market cap of A$660m. The money from the listing was partially returned to SEEK’s shareholders and has also been partially used to fund an expansion of SEEK’s educational recruitment businesses in Mexico and Asia. IDP’s current market cap of around A$1bn makes it the most successful Australian education listing for a decade, but also underlines the importance of IDP to Australia’s educational export success story.
3. The potential impact of Brexit and the election of President Trump in the US: these two unexpected political events will likely make Australia an even more attractive destination for international students from growth markets in Asia and the Middle East. While Australia is some way off rivalling the US, these events could conceivably see Australia overtake the UK to become number two in the international education market.

 

What was seen as an unachievable dream just five years ago now looks very possible.

 

The real irony in the UK is that Brexit may have been totally avoidable had Theresa May as Home Secretary taken frequently-repeated advice and removed international students from migrant numbers. Had she done so, particularly during the Brexit campaign, I think the Remain campaign would have won handsomely (and I write this as a voter for Brexit).

 

I may never understand politics. In 2014 David Cameron sacked Michael Gove from the education portfolio based on a narrow political calculation that Gove was an electoral liability for the Tories in the upcoming general election. He then replaced her with the more electorally palatable, but vacuous Nicky Morgan and left Theresa May as Home Secretary.

 

Cameron’s tin ear and lack of interest in the detail of education and migration policy seems to have been a major factor in the woeful strategy behind the Remain campaign. Had he been as tough and politically ruthless with Theresa May as he was with Gove, then I really believe the leave/Brexit campaign would have failed and Cameron would still be Prime Minister. Perhaps it was a fitting political irony that his replacement as Prime Minister then immediately sacked both Michael Gove and Nicky Morgan.

 

The Machiavellian nature of politics in 2016 was something Australia’s National Strategy for International Education 2025 could never have predicted, but they will take the benefits all the way to the bank.

 

 

 

[1] Australian Bureau of Statistics http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5368.0Dec%202016?OpenDocument