International students are essential to the Australian economy, greatly influencing consumer demand and providing valuable labour. Following the resurgence of international travel post-COVID-19, the number of international students in Australia has surged, making education one of the country’s largest exports, worth about A$50 billion in 2023/24. They also significantly contribute to net overseas migration and the country’s GDP growth.

Growth in Student Numbers

Before the pandemic, the demand for education in Australia was on the rise, thanks to factors like increasing incomes in Asia and favourable migration policies. However, the closure of borders in March 2020 drastically slowed student arrivals. After the reopening in late 2021, international student numbers quickly rebounded, rising from just under 300,000 to 560,000 by the end of 2023. This growth has driven half of Australia’s total net migration during this period and boosted consumer spending significantly.

Student Demographics

Most international students come from Asian countries, particularly China and India, which constitute a substantial proportion of those enrolled in higher education. Recent trends show an increase in students pursuing higher education courses, while enrolments in vocational education and training (VET) have declined.

Changes in Visa Regulations

In mid-2023, the Australian government implemented tighter regulations for international student visas, raising proof of savings requirements and reintroducing work hour caps (48 hours per fortnight during terms). These changes could affect future visa grants, particularly for VET students, yet the current student population remains robust.

The Economic Impact of International Students

International students not only contribute to demand through their spending on education and living expenses but also influence the supply side by participating in the workforce. They generally spend more than local residents due to higher tuition fees, and their spending habits significantly impact various sectors, particularly education, accommodation, and food services.

Spending Habits

Estimates suggest that international students spend twice as much as Australian residents weekly, primarily due to tuition. The majority of their expenditure is spread across goods and services, although tuition accounts for the largest share. Their influx is vital for boosting demand across various industries.

Labour Market Contributions

Before the pandemic, international students made up just 2-3% of the Australian workforce. Post-COVID, their participation in the labour market has increased due to relaxed working hour regulations and greater participation rates. As of 2024, they are expected to work approximately three-quarters of the hours of an average working-age Australian. Many students transition to temporary graduate visas, allowing them to stay and work in Australia once they complete their studies, further contributing to the labour market.

Housing Market Influence

International students significantly impact the housing market. They are more likely to rent in the private sector than the average Australian. Increased student numbers can place upward pressure on rental demand, especially in areas near educational institutions. While their presence can influence rental prices, it’s just one of several factors that shape the housing landscape.

Conclusion

International students contribute more to Australia’s economy than they take out. Their spending and participation in the labour market drive significant demand, helping to stimulate economic growth. Although there are potential pressures on the housing market and challenges in adapting to new visa regulations, the influence of international students remains a strong component of the Australian economy.

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