New Zealand’s international market standing is growing …
In a market thrown into disarray by the pandemic, New Zealand just keeps getting more attractive as a destination for international students.
A survey by higher education consultancy QS suggests that half of all international students would consider changing their choice of destination in response to how well countries have managed the pandemic. And those students rated New Zealand’s government as being, by far, the most effective in managing the response to COVID-19. A survey of agents for recruitment firm Navitas shows New Zealand is the most attractive destination for international students because of its handling of the pandemic.
Modelling by international education consultancy IDP suggests that New Zealand – along with Canada and Australia – stands to increase its share of the world market, at the expense of the UK and the US. While Canada’s share is predicted to gain an extra 6% of the market and Australia 2%, New Zealand’s share is forecast to rise from 2% in 2019 to 3% by 2024. A very significant rise.
Despite the recent second wave of the virus, we went more than 100 days with no community transmission and life was close to normal. If we can contain the current outbreak, we will be able to return to a life with minimal restrictions.
But one restriction will remain. The price of elimination of COVID is tight border controls. In the absence of a vaccine, everyone who comes across the border will be shipped off for 14 days’ strictly enforced isolation. Those found to be affected by the virus will be sent for supervised quarantine, again under strict management.
A double-edged sword …
This means that, for New Zealand’s international education providers, success in the fight against the virus is a two-edged sword. Three months ago, talks were underway between universities and the Ministry of Health with a view to using student accommodation to manage isolation for incoming international students. But the difficulties of managing isolation and quarantine in hotels, the speed and severity of the second COVID wave in Melbourne and the new Auckland cluster have led to a loss of confidence; what seemed in April to be a logical next step has begun to look highly risky. Student accommodation is now seen as unsuitable for managed isolation. And can the defence force and the police – already stretched by the 5,500 people now in isolation in 31 hotels in five cities – cope with tens of thousands of university students isolating for two weeks?
A new direction …
On 27 July, the government announced that no international students would cross the border in 2020. But work is underway to see how to open up to some international students in 2021. High-value, low-risk students.
High value means studying programmes of good quality, culturally as well as financially. It also means bringing in students who are not dependent on the need to work while studying, thus not placing even more pressure on a labour market facing a major down-turn. It means students prepared to pay the full cost of their managed isolation. It means a more diversified intake, with less reliance on China and India.
Low risk? Victoria University of Wellington/Te Herenga Waka vice-chancellor Grant Guilford told Stuff that this means “from countries that have the virus under control” – a requirement that would likely eliminate recruitment from NZ’s second and third largest markets – India and the USA. Applying a country-of-origin virus management test to the international students in New Zealand in 2019 would disqualify more than a third of them. Low risk also depends on bringing on stream more isolation and quarantine facilities.
Vice-chancellors have renewed their calls for the government to allow universities to set up and manage safe, secure isolation facilities, subject to audit and oversight.
The implications …
But even if all that does come to pass, even if facilities are found for an expansion of managed isolation, even if the constraints on enforcement are resolved, the government’s call for high quality and low risk implies a much reduced volume.
The problem is that international student revenue is integral to the operating model of many of New Zealand’s tertiary education providers.
Governments have seen growing international student revenue as the prerequisite for university financial strength, while universities see international revenue as essential, the most profitable part of their business. In the universities, international enrolments have grown much faster than domestic; between 2007 and 2018, international students grew by 17% while domestics grew by less than 4%. Each international student now delivers more than 50% more revenue than a corresponding domestic student, up from 35% in 2007. International revenue has grown steadily from 8.7% of total revenue in 2009 to 12% in 2018. It’s the international student revenue that has allowed universities to deliver the financial surpluses that have been channelled into stronger infrastructure and better research.
Polytechnics are equally – or even more – dependent on international student fees. In 2018, international student fees contributed 17% of polytechnic revenue and each international student contributed nearly 30% more than a corresponding domestic student. And more than 40% of 2019 international students at the polytechnics were from India.
Much of the private sector is also heavily dependent on the international market, with language schools having no real alternative source of revenue. The government has given them $10 million as short-term assistance.
The outlook …
While Canada has significant community transmission, its government is fast-tracking visa processing in an effort to get new international students on shore in September. The NZ approach is rightly more cautious.
But is it too cautious?
Cutting out valuable source countries, cutting out those students who can’t survive in New Zealand without working, and the inevitable capacity constraints on managed isolation are likely to reduce numbers.
IDP may think that New Zealand will capture a greater market share; more international students may decide to apply for a New Zealand provider. But, on the basis of what we know now, it is likely that fewer international students will make it to New Zealand’s shores in 2021. And, even if fees go up and even if the margin on each student increases, it may mean less revenue, lower surpluses, and so, less scope to invest in strengthening quality.
References and data sources:
Provider-based Equivalent Full-Time Student Enrolments: https://www.educationcounts.govt.nz/statistics/tertiary-education/participation
TEI financial performance: https://tec.govt.nz/funding/funding-and-performance/performance/financial/
A postscript
Have a look at my account of the situation of the universities, written for a foreign readership and published on Times Higher Education.
Strategy, Policy, Analysis | Tertiary Education 