The Economic Benefits of CQU Melbourne Campus to Victorian GDP
Published on 07 May, 2007
An abstract from a paper by Liz Sidiropoulos, CQU Melbourne Campus.
International education has been one of the fastest growing sectors of the Australian economy, rising from over $2 billion in 1995-96 to almost $10 billion in export revenue in 2005-06 (Dodd, 2006).
According to Australian Education International (DEST, 2007a), student enrolments in 2006 reached 383,818 (up 10.9% on the previous year), of which:
- 172,297 (45%) were in the Higher Education (HE) sector with more than half being in the fields of study "Business Administration, Management" and "Computer Science, Information Systems";
- Vocational & Technical Education was the fastest growing sector; and
- India is the market fastest growing market (42% compared to previous year) Victoria accounted for 31% (53,801) of total enrolments in the HE sector, with China and India being the leading source markets (Australian Education International (DEST, 2007b).
Activities at CQU Melbourne Campus closely reflect these trends in relation to both the courses offered and composition of student enrolments. In 2007, student enrolments at CQU Melbourne Campus totaled 2,637 and this report provides an estimate of the contribution of this campus to the Victorian economy.
Methodology / Calculations
Several studies have estimated the economic impact of international education to local, regional and national economies. These appear to vary in approach as follows:
- using a Computable General Equilibrium (CGE) Model (AEI- DEST, 2003) to assess the flow-on impacts of initial spending by international students; and
- ascertaining the direct spending by students and then estimating the flow-on effects by using expenditure multipliers.
The methodology used in this report relates to the latter and is based on the approach adopted by Infometrics (2003) to calculate the economic benefits of international students for Auckland city in New Zealand.
The multipliers cover 3 dimensions of economic activity: gross output (equal to sales or turnover); value added (GDP); and, employment (Infometrics, 2003). The value of the multiplier used in this study is 2.0, compared to the value of 1.9 used by Infometrics.
Estimates of international student spending in Victoria are based on survey results reported by UQSRC (2005), who were commissioned by Australian Education International (AEI) to survey non-tuition fee expenditure by international students across a variety of educations sectors in 2004.
UQSRC estimates were then compared with other estimates of higher education student spending (Queensland Government Treasury, 2004) and found to be broadly consistent in magnitude.
The UQSRC estimates for average weekly expenditure on non-fee goods and services by international students in 2004 was $539 across all sectors in Australia compared to $599 in Victoria. For the higher education sector, the average weekly expenditure in Australia was $597. The value of weekly expenditure in 2007 used in this study in $627 and is based on the UQSRC value of $597 extrapolated to 2007 using a factor of 1.05 (significantly below the actual compound inflation rate between 2004 and 2007 and is also an underestimate as Victoria is higher than the national average and because some students at CQU have families that involves higher direct spending)
Table 1 shows the estimated tuition fees in 2007 for CQU Melbourne Campus.
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Table 1. Estimated tuition fees for CQU Melbourne Campus in 2007 |
|
|
Item |
Value |
|
Number of students enrolled |
2,637 |
|
Average course cost /student |
2,100 |
|
Average terms/ student/year |
2.3 |
|
Total tuition fees |
12.7 million |
The estimate of direct spending by CQU Melbourne Campus students is based on a simple formula below and also presented in Table 2.
Total direct student spending = Number of students * Average weekly expenditure * number of weeks
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Table 2. Estimated direct spending by CQU Melbourne Campus students in 2007 |
|
|
Item |
Value |
|
Number of enrolled students |
2,637 |
|
Average weekly expenditure |
$ 627 |
|
Average no. of weeks/student |
32.2 |
|
Total direct spending |
53.2 million |
Table 3 shows the estimated economic effects for Victorian GDP of export education services provided by CQU Melbourne Campus.
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Table 3. Estimated Economic Impact of CQU Melbourne Campus to Victorian GDP in 2007 |
|
|
Item |
Value |
|
Tuition Fees |
12.7 million |
|
Direct spending (goods & services) |
53.2 million |
|
Total spending by students |
66.0 million |
|
Multiplier |
2.0 |
|
Full Economic Impact |
132 million |
Conclusions
An estimated $132 million is added to Victoria's economy through the delivery of education services at CQU Melbourne Campus. If anything, this estimate is likely to be an underestimate of the full economic impact.
For the full paper, please contact Liz Sidiropoulos, CQU Melbourne Campus, via l.sidiropoulos@mel.cqu.edu.au .