John Menadue. A night with the Vice Chancellors – the export of education services.

Jun 19, 2015

Current Affairs

Education services earn an export income for Australia of over $16 b. p.a. Those export services are expected to increase to $31 b. p.a. by 2020 from about 600,000overseas students. Education is now our fourth largest export behind iron ore, coal and natural gas. It is our major services export, ahead of tourism.

The benefits from our export of educational services have been spread across Australia. It is estimated that each international student spends over $40,000 p.a. in fees and living expenses. Chinese and Indian students represent over 30% of overseas students. The top 10 source countries for overseas students are all from our region. The growth has been extraordinary and is likely to continue.

This spectacular increase in education exports is far beyond anything that we imagined when we first considered this subject in the Department of Trade in 1984.   As a percentage of total exports they hardly appeared on the graph.

With our export of education services in its infancy we examined in the department our poor performance in exports generally and how we could respond. We continued to rely on resources booms every decade or so. The inflated dollar had put our manufacturing sector under great pressure. Between 1965 and 1982 we had not created one new job in manufacturing. Our economy as well as our society was insular and inward looking.

Whilst we had a large services sector in Australia, particularly in education and health it was overwhelmingly focused on the domestic market. Our exports of services were very low in world terms. Yet we had world-class education institutions and the middle class of Asia was growing. We were not taking advantage of that opportunity and we compared very unfavourably with educational institutions in the US and UK who were performing much better than we were in expanding their role in our region.

In the Department of Trade we could see clearly that we were missing out and we focused our attention on how we could lift our exports from our well-reputed institutions and particularly our universities.

In addition to seeing the possible economic benefits of expanded education exports, I also saw increased numbers of Asian students as a way to improve Australians attitudes to Asia. As a student at a university college in Adelaide, I had roomed with students from Malaysia. They changed my attitudes on White Australia and relations with our region. My experience with these and other students who came to Australia under the Colombo Plan was I believe an important factor in helping to transform community attitudes about Asia and opposition to White Australia. Until those Asian students came to Australia there was a fairly widespread view of Asians as poor and unskilled and a threat to our living standards. But the Asian students studying here in the 1950’s and 1960’s were young, well educated, spoke good English and not at all threatening.

So I saw Asian students at our universities and schools as offering both economic and social benefits.

But to get the ball rolling we had to convince Australian universities about the possibilities of substantially increased Asian students on their campuses. In my autobiography in 1999, ‘Things you learn along the way’, I wrote about my first approach to Australian Vice Chancellors.

‘In the department in 1984, we commenced a study on the export of educational services. After we had completed the study, I spoke at a dinner with 19 vice-chancellors of the major Australian universities in the Scarf Room at the ANU about our thinking and plans for the export of educational services. I outlined ways in which I thought we could promote education services offshore and encourage more Asian students to come to Australia. The Americans and British had been doing it very successfully. We were not serious competitors. With the universities under financial pressure, this was a commercial opportunity for them. It would also transform university campuses and, hopefully, student attitudes towards Asia.

The dinner turned out to be a frost. The vice-chancellors were not impressed with my commercialism. My main critic was Professor Peter Karmel, Vice-Chancellor of the ANU. He had been my mentor from Adelaide University days. We held similar views on most public issues but we didn’t agree on this one. He was upset at commercially exploiting educational services on such a scale. After the dinner, Karmel buttonholed me on my proposal. His concerns also came back to me through an old friend, Frank Hambly, Secretary of the Vice-Chancellors’ Committee: ‘What is Menadue up to in advocating selling overseas educational services in this way?’, he had asked his colleagues.

You always remember the speeches that don’t go well but in retrospect it helped quicken reform. In the mid-1980s education exports were minimal. They now have grown to $3 billion annually with almost 150,000 foreign students in Australia each year, mainly from Asia. The Australian International Education Foundation estimates that educational exports will be worth $5 billion in 2001.’ (p.245-6)

In fact in recent years there have been over 600,000overseas students in Australia each year, earning $16b pa for the Australian economy.

The remarkable growth in education services has not been trouble free. With cutbacks in government funding mainly for our universities, institutions have become too dependent on fee-paying overseas students. In some cases I think academic standards have been compromised.

But in 1984, when I spoke to the 19 Vice Chancellors, I could not have envisaged the dramatic changes that were to come. The seed I sowed with the Vice Chancellors fell on stony ground but it survived and flourished.

John Menadue was Secretary Department of Trade 1984-86.

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