As closed borders continue to affect the economy, and the Delta variant of COVID-19 presents a growing threat to New Zealand, education institutions are facing significant disruption. According to IBISWorld modelling, revenue in the Universities industry declined by 4.0% in 2020-21, and is expected to fall by a further 4.2% in 2021-22. Total revenue across the industry is expected to be $4.4 billion this year.
‘Prior to the COVID-19 pandemic, international students accounted for 21.4% of industry revenue. However, due to the closure of New Zealand’s borders, international enrolment has declined at an annualised 12.5% over the two years through 2021-22,’ said IBISWorld Senior Industry Analyst Matthew Barry.
International students are expected to only account for 18.6% of industry revenue in 2021-22. Existing international students who have not completed their tertiary education are expected to continue to study remotely through online channels during the pandemic, enabling universities to derive revenue from foreign students despite travel restrictions.
‘Online channels have enabled universities to continue to offer education to foreign students. However, New Zealand’s institutions face severe competition in this market, as potential students can easily seek alternative online learning programs from other universities,’ said Mr Barry.
Several universities are considered to be highly exposed to international student enrolment numbers. Lincoln University (Te Whare Wanaka o Aoraki) had 1,225 international students in 2020, accounting for 38.6% of all students enrolled at this university. Lincoln University’s industry-specific revenue is projected to fall by 7.7% in 2021, to $115.6 million, due to New Zealand’s borders remaining closed. Similarly, University of Waikato (Te Whare Wananga o Waikato) enrolled 3,180 international students in 2020, representing 23.3% of total student enrolments.
Universities have struggled to maintain domestic student enrolments over the past five years. Overall, domestic student enrolments have fallen at an annualised 0.7% over the five years through 2020. Key drivers of this decline have been a weaker secondary school retention rate and many New Zealanders opting to study at overseas universities. However, this trend is expected to reverse amid the ongoing COVID-19 pandemic.
‘IBISWorld expects the number of domestic students to rise during the COVID-19 pandemic, as travel restrictions prevent New Zealand’s young people from studying overseas. Additionally, the New Zealand Government (Te Kawanatanga o Aotearoa) has committed to extending its fees-free program through to 2022, boosting domestic demand,’ explained Mr Barry.
Vocational institutes feeling the pressure
The COVID-19 pandemic has also left the Technical and Vocational Education and Training industry vulnerable, as international students accounted for 13.4% of industry revenue prior to the pandemic. In 2021-22, revenue from international students is anticipated to only account for 9.1% due to New Zealand’s borders remaining closed. In particular, the COVID-19 pandemic will likely significantly affect Nelson Marlborough Institute of Technology (Te Whare Wananga o Te Tauihu o Te Waka a Maui), Western Institute of Technology at Taranaki (Te Kura Matatini o Taranaki) and Toi Ohomai Institute of Technology, as these institutes have the highest shares of international student enrolments.
Domestic student enrolments have also been in long-term decline for the Technical and Vocational Education and Training industry. Prior to the COVID-19 pandemic, strong economic growth and labour market conditions constrained demand for industry services. However, weaker labour market conditions, particularly during the initial outbreak in March 2020, have encouraged New Zealanders to upskill, limiting the overall decline in domestic student enrolments over the two years through 2021-22.
‘As the decline in international student enrolments continues, we expect the Technical and Vocational Education and Training industry to decline at an annualised 1.3% over the five years through 2021-22, to $1.2 billion,’ said Mr Barry.
Breaking borders
As the vaccination rollout gradually unfolds, New Zealand’s borders remain unlikely to open until early 2022, which will continue to affect both the Universities and Technical and Vocational Education and Training industries. However, the New Zealand Government has taken steps to support these industries by approving the entry of 1,250 international tertiary students. Industry bodies are also expected to work with the New Zealand Government to approve more cohorts of international students over the next six months.
‘The prospect of more international students being granted access into New Zealand is expected to provide short-term relief for universities that are highly exposed to international student enrolments, such as Lincoln University, University of Waikato and University of Auckland,’ said Mr Barry.
International tertiary student enrolments are anticipated to gradually recover once border restrictions ease and vaccination rollouts are completed globally. Improvements in economic activity and labour market conditions over the next five years are expected to create employment opportunities, which may deter some New Zealanders from pursuing further education through technical and vocational programs. Overall, the Technical and Vocational Education and Training industry is forecast to slightly increase at an annualised 0.4% over the five years through 2026-27.
‘The Universities industry is forecast to rise at an annualised 1.5% over the next five years through 2026-27, to $4.7 billion. This growth is anticipated to stem from rising university fees and a recovery in international student enrolments over the next five years,’ concluded Mr Barry.
IBISWorld reports used to develop this release:
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647
Email: mediarelations@ibisworld.com
