Government 'profits' from investment in university sector

August 18, 2000

The Australian economy receives more than A$20 billion (Pounds 8 billion) a year from the activities of its universities, according to new research.

Higher education's direct contribution is almost A$11 billion - 2 per cent of gross domestic product. Another A$9 billion is derived from "net human capital" gains, while A$2.2 billion a year comes from flow-on effects from research and development.

A report commissioned by the Business and Higher Education Roundtable that says export earnings generated by universities selling education to foreign students are worth almost A$2 billion a year - more than 2 per cent of Australia's exports.

The roundtable comprises university vice-chancellors and chief executives of Australia's largest companies. The research was conducted by Curtin University's Institute for Research into International Competitiveness.

Launching the report in Perth last week, federal education minister David Kemp said the estimate of higher education's A$22 billion contribution to the national economy was probably conservative.

"I will make sure this report is known to those who speak on behalf of the sector in the prime minister's science, engineering and innovation council," he said.

The nation's 700,000 university students spend A$1.8 billion on education and related activities, while staff contribute A$70 million through consulting work.

The economic impact of international students and their families rivals that of wool as an export industry, the report says. For every dollar the government spends on a student's education, it gets back about A$1.10 in net present value terms, plus tax revenue from the enhanced salaries that graduates earn.

The council's report confirms research by academics at the University of Melbourne that showed the federal government made a "profit" of A$2.7 billion a year from its investment in higher education. The research found that income was derived from the Higher Education Contribution Scheme, under which students pay a proportion of the cost of their tuition, plus the tax revenue raised from graduates' enhanced earnings.

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