Steven Joyce: Slamming the door in overseas students' faces

Welcoming students from other countries delivers financial benefits — and less tangible gains. Photo / NZME

OPINION:

There have been some very visible winners and losers in the New Zealand economy over the past few years, most but not all driven by the pandemic.

We are all aware how tourism has been trashed by the border closures, similarly the impact of lockdowns and restrictions on the broader hospitality sector and personal services like hairdressing.

Big winners have included construction and real estate services as ultra-low interest rates sent house prices soaring and, unsurprisingly, the health sector. International economic stimulus has kept our commodity exports afloat.

A greater or lesser surprise, depending on your politics, is that public administration has been easily the fastest growing part of the economy since the change of government at the end of 2017, expanding by a whopping 17 per cent in the past three March years. I suspect people will increasingly ask where all that money has gone, given that we've hardly seen a commensurate improvement in core public services.

One sector whose parlous state has received less attention than it should have is education. It has shrunk by roughly 4 per cent since 2017, much of it in the past two years since the pandemic struck.

Most of the decline is down to the collapse of our international education industry, which was previously this country's fifth largest export earner.

Before the pandemic, International education brought many benefits to our country — financial and non-financial.

There was the direct income it brought to our schools, universities, polytechs and private training providers, which allowed them to deliver a higher quality education than would otherwise be possible. There were the economic benefits of attracting intelligent, highly motivated young people to study and reside here, and then supplement our local talent pool once they graduated.

And, not least, there were the strong people-to-people links which developed between our country and each student's home country, which continued for a lifetime once the student eventually went home, as the large majority eventually did.

I speak about the sector in the past tense because increasingly it is vanishing in the rear view mirror. While student numbers held up relatively well early on in the pandemic, they are now dropping rapidly as each year's graduating students leave and are not replaced by new ones coming into the system. Its called the "pipeline effect", and it means that even if the number of new international students returned to pre-pandemic levels overnight, it would take several years before total numbers of students return to previous levels.

Which makes it all the more astonishing that on her much-heralded first post-pandemic trip to Asia in the last fortnight, the Prime Minister largely ignored the education sector.

Unlike most previous prime ministerial trips to the region, there was not a single education provider CEO in the Prime Minister's entourage. No vice-chancellors, no private sector CEOs and no principals.

There were no initiatives announced to try to attract Asian students back to New Zealand now the borders have opened and the sector warranted only a one-word reference in each of the two formal communiques with Singapore and Japan. Japan in particular has in the past been a very important source of international school students for New Zealand.

Sadly, this is only the latest visible indicator that the current Government doesn't care much for international education. While it makes noises about letting students back in, they are well down the batting order of Government priorities.

Apart from the odd small cohort, students won't be allowed to come in again until October. Visa processing delays are likely to push things off further. Meanwhile the Government is planning new restrictions on school students and diploma-level (level five and six) students.

Behind the scenes, officials are working on other ways to make New Zealand less rather than more attractive to prospective students. They have plans to almost double the amount of money each student must bring to New Zealand for each year's study, and heavily restrict post-study work rights. This is all part of the Government's immigration re-set, more correctly called an anti-immigration re-set.

The countries we compete with to attract the world's best and brightest young people, namely the UK, Canada, the US and Australia, are bending over backwards to make themselves more attractive to study in, to make up for lost time.

There are those who argue that international education should not be used to prop up our education sector, which should instead be better funded by taxpayers. The proportion of government spending devoted to education is of course a valid debate, but international education provides an income stream to schools and universities that improves their ability to provide a quality education, whatever the level of domestic funding.

It's not as if New Zealand's education system is a stellar performer with its current lower level of resourcing. All the key international performance comparators in areas like science and maths continue heading south, and truancy and non-attendance is on the rise. It would seem a strange strategic response to accept a 4 per cent shrinkage in the sector's funding by shutting the door to international students.

International education has been largely seen as a "good thing" and to be encouraged by governments of all stripes since the early 1990s. Yes there have been a few high-profile abuses of the system, but regulators had become much better at nipping such issues in the bud.

The sector has been a successful part of diversifying our country from a pure commodity play towards more knowledge-based industries, something we used to care a lot about.

It's also part of the solution to expanding our talent base and increasing productivity, which is something we still pay lip service to.

More broadly, we are going to need some sectors to rise up and take up the slack as we try and deal with this post-pandemic inflationary hangover. The necessary interest rate rises to counter inflation are going to put a big handbrake on the residential construction sector and the business of buying and selling houses. Many consumers are going to be pulling back too.

If we are to avoid a recession, which is looking an increasingly difficult goal, we need to encourage more outward facing sectors to grow, rather than be always putting up new barriers to their success. International education is one of the best placed to resume pulling its weight, to the benefit of our country's education system and the wider economy and society. The Government needs to get over its ambivalence to it.

- Steven Joyce is a former National MP and Minister of Finance.