Is education really Australia’s biggest services export?

According to reports in this morning’s papers, drawing on Monday’s ABS international trade figures, education is now Australia’s biggest services export, overtaking tourism by nearly $1 billion for 2007 ($12.5 billion vs $11.5 billion).

But as the ABS doesn’t follow tourists or students around counting how much they spend, both these figures are estimates of their expenditure while in Australia. The tourism figures are based on the International Visitor Survey, which asks departing international travellers various questions, including about their spending. It is an on-going survey.

The student data, by contrast, is updated much less regularly. It is based on the Survey of International Students Spending (pdf), last conducted in 2004-5, and updated according to the CPI.

Apart from timing issues, the main reason for doubting the international student spending estimate is that it appears to assume that all international student spending while in Australia is financed from overseas. In reality, many overseas students work while in Australia to finance their studies. They are supposed to limit employment to 20 hours a week during term, but that is hard to enforce, especially where students work multiple jobs or have jobs with little supervision, eg taxi driving (I could try claiming my taxi trip costs as ‘international student research’).

Whether deducting spending financed from within Australia from the education exports figure would bring it back below tourism I am not sure; and arguably some of the tourism is indirectly generated by international students, as family and friends come to visit them. But $12.5 billion in education-related exports is likely to be an upper estimate of how much international students really spend in Australia.

4 Responses to “Is education really Australia’s biggest services export?

  • 1
    conrad
    February 6th, 2008 17:32

    Given that so many end up staying, I imagine its even more complicated than that, since then its really more like foreign money and assets moving to Australia without the downside of having to pay it back (excluding a small amount that floats back in remittances).

  • 2
    Tom N.
    February 6th, 2008 17:45

    A complicating factor is that the tourism export figure is itself inflated, as the definition of tourism used by the ABS includes the expenditure international visitors of all persuasions, including those engaged in ordinary business travel and for non-tourism reasons, rather than tourists as conventionally understood. The Productivity Commision’s 2005 estimates suggested that tourism industry output was around one-half or less of that suggested by the ABS stats.

  • 3
    Andrew Norton
    February 6th, 2008 19:06

    Tom – I think the ABS took the PC’s advice on that. There is now a separate category of business related travel, worth about $2.5 billion last year.

  • 4
    Tom N.
    February 9th, 2008 16:36

    Alas Andew, the changes cited are only detail changes to the trade statistics. The problems with the broader satellite-account-based tourism statistics remain. The result is an major exageration of the significance of tourism.