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Smith Speech - International Education Conference

Marketing Education Off-Shore:
More Than an Export Business
International Education Conference
Te Papa
Thursday 19 August 1999

Hon Russell Marshall;

Parliamentary colleagues Trevor Mallard, Liz Gordon and Brian Donnelly;

Chris Milne from ACT;

Ladies & Gentlemen.

The Asian Economic Crisis was the worst trading shock to hit our region since the 1930s.

It had the potential to slash our export receipts dramatically, although in most sectors, overall export receipts have increased.

But in the education sector, indications are that foreign exchange earnings are down, and this should be no surprise.

For merchandise trade - that's trade in goods rather than services - our exporters were able to transfer goods to other markets - the US, Europe, and others.

But for the education sector, the Asian Economic Crisis has bitten deep.

In 1997, when the crisis unfolded, approximately 90% of our foreign exchange earnings from the education sector came from Asia.

Obviously, when their economies suffered, this flowed through into their capacity to send their young people to New Zealand to be educated.

So in 1998/99, international student numbers are down, as are earnings.

But the outlook, in the medium- to long-term, is far from gloomy.

All credible economic commentators suggest that Asia is on the way back, and provided that they remain committed to necessary economic reforms, those economies will experience full recovery within the next five years, if not sooner.

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And it's this picture that we've got to focus on.

Over the past decade, you, our exporters of education services, have been right at the forefront of a wave of tremendous growth in foreign exchange earnings from education.

In the last two years, almost every trade mission I’ve led has included a group of educationalists.

Sometimes, they’ve even taught more experienced exporters a lesson in marketing.

And notwithstanding the Asian Economic Crisis, we’re seeing the results of your work.

Fee-paying foreign students in New Zealand: up from approximately 5000 in 1990, to 35,000 to the year ended June 1999.

Foreign exchange earnings: up from just 55 million dollars in 1990 to an estimated $500 million in 1999 - comparable to earnings from another successful sector, the paper industry.

Your goal of getting to $1 billion a year would put you in the same league as the wool industry today.

I don’t take any credit for that – the credit is all yours.

And I find more and more, as Trade Minister, that that’s the way it is with our fastest growing export industries.

Look at farming.

The National Party tried through the 1970s and early ‘80s to “help” the industry.

Trevor’s Labour Party had the courage to put a stop to that.

That encouraged the long, slow process of thinking about how to get out of commodity trade and into higher value products.

Fifteen years later, and the damage subsidies did to the agricultural psyche means we’re still not all the way there – just consider that you have a chance of overtaking wool.

Using excessive amounts of taxpayers’ money to “help” exporters isn’t just a waste of money that would better be spent elsewhere.

It actually harms our export effort.

Governments of all political philosophies have to be very careful with the sort of “help” they try to provide.

That means I can’t offer you the same commitment as Liz and Trevor to tax working New Zealanders to provide you with cash support.

But I believe what National offers is better: not higher taxes but a total commitment to ensure that the export of education services is fully integrated into our “New Zealand Inc” strategy – positioning education services within our most important export industries.

The Government wants one strong New Zealand brand in overseas markets that our different industries can all use.

We want to make everyone’s efforts more effective by bringing together different New Zealanders with different interests – the agriculture industry, manufacturers, educationalists and the diplomats.

We recognise that if someone buys our lamb, they are far more likely to buy our other products.

It makes them far more likely to come to New Zealand on holiday.

And that makes them far more likely to recommend to family and friends to study in New Zealand.

Looked at from the other point of view, if someone studies in New Zealand, they are far more likely to buy our products when they get back home.

They are far more likely to re-visit New Zealand as tourists, and to recommend us as a visitor destination.

They are far more likely to bring their familties to see where they spent a part of their lives.

They are more likely to invest in New Zealand later on, creating jobs.

National doesn’t see your efforts as some add-on to the education system, for education spokespeople to think about in their spare time.

National sees you as fully integrated into our export effort – every bit as important as exporters of food products, manufactured goods, financial services or anything else.

As Trade Minister, I want to underline that commitment today.

And as Associate Immigration Minister, I'm pleased to say that this Government has done more than any previous Government to remove barriers to attracting new international students.

Take China for example.

In September 1997, we provided 400 places, pre-allocated across secondary and tertiary institutions.

In July 1998, this was extended, providing 600 places on a first-come, first-served basis.

And in November 1998, we extended this programme again, but provided 3,000 places for students from the Peoples Republic of China, each year, every year.

And with the new provisions recently passed through parliament, from 1 October this year, there won't be any quotas.

This offers exciting new opportunities to you as an export industry.

But the export of education services is also about more than dollars and cents, economic growth and jobs.

It’s about the effectiveness of our education system.

Let me tell you why.

Think back to the Kennedy White House – an administration of the “best and brightest”.

Those “best and brightest” decided to launch the Bay of Pigs Invasion of Cuba.

It was a spectacular failure.

All President Kennedy’s advisors were highly intelligent and highly educated.

But they suffered from “group-think”.

They all had a similar perspective on the world.

It meant that, no matter how bright or well educated they were, they got it wrong.

New Zealand’s standard of living depends on our ability to export to the world.

Yet our very small population and our isolation mean we are always at risk of that same “group-think” – on a national scale.

It means international surveys could judge us to be the most highly educated nation on earth.

But we would still not be fully educated unless our young people had direct exposure to the rest of the world.

It’s why the “OE” has always had such an important place in New Zealand society.

The export of education services has a similarly important role.

Overseas students help to bring the world to New Zealand schools, PTEs and tertiary institutions.

The importance of that, in my view, surpasses the dollars and cents.

It is vital for a trading nation in a more globalised world.

Forgive me, Brian and Liz, I don’t include either of you personally in what I have to say next.

But it seems to me that the your parties’ leaders have a vision of two self-sufficient little islands on the edge of the earth.

We’d make all that we need, and keep what we have for ourselves.

I guess that vision has a bit of emotional appeal to some, but I don’t think it’s realistic and nor is it desirable.

Insular attitudes have got this world into big problems this century.

It is when countries start to focus entirely on themselves that we tend to see relations deterioriate, and worse.

Young people growing up today – both New Zealanders and your clients from overseas – have an opportunity to be the first genuine citizens of the world, almost as much as citizens of their own countries.

I believe we should encourage that.

I think it is a great gift we can pass to the next generation.

Your industry’s financial performance is outstanding, and I congratulate you for it.

But I congratulate you even more for your work in helping New Zealand to achieve that even more important goal – helping young New Zealanders to see themselves as part of a wider world.

You can’t put a price on it.

All the very best for the future.


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