New Zealand risks losing $1.5b over 6 months if borders aren't reopened to international students - Eric Crampton

New Zealand is missing out on a significant opportunity to boost its post-COVID economic recovery by refusing to reopen the borders to international students in time for the second semester, says a chief economist.

New Zealand Initiative chief economist Eric Crampton says allowing international students into the country is a "pretty obvious move". Over six months, roughly $1.5 billion is set to be made if the Government opens the borders to overseas pupils - a significant earning that will positively contribute to the country's economic recovery following the nationwide lockdown.

In a report released by Crampton earlier in May, 'Open for minds: export education and recovery', the economist noted Statistics New Zealand's recent estimate that international students - studying for less than 12 months - spent $3.9 billion in the year to March 2019. Overall international tourist expenditure in the same period was $17.1 billion. 

In February, local universities pushed for the Government to allow foreign students into the country under the same protocol as New Zealanders returning from overseas, with all new arrivals undertaking a mandatory two-week quarantine period. Although Crampton says refusing students was an understandable move at the time, it's now May - and the Government are risking missing out on a "real opportunity" by being too cautious.

"New Zealand's COVID-free status means international education for the universities, the tertiary sector and even secondary schools - it isn't just a 'get back to where we were' scenario... we've got a real ability to grow here. If you look at America... universities are shifting to really disrupted ways of teaching," Crampton explained to The AM Show on Wednesday. 

"New Zealand could be offering a real university experience for students from places we wouldn't have an easy time drawing students from otherwise. We could be marketing in the US, say 'come to New Zealand, spend two weeks in quarantine, and have a real university experience' instead of sitting at home doing online learning with the equivalent of Zoom."

International students pay roughly $24,000 per year for tertiary tuition, while domestic students pay $7000 on average. There is significant money to be made, and Crampton believes universities would have no problem funding the two-week quarantine period if it meant overseas pupils were able to resume their studies.

"I think the universities would be very happy to pay for it themselves out of the fees that are charged... so long as quarantine can be set up on a 'user pays' basis, why limit it? So long as facilities can be proven safe and they're monitored, with a penalty of deportation for breaches of quarantine to keep everyone safe... of course it should be 'user pays'," he said.

"I don't think anyone in the tertiary sector would be complaining about that."

Despite some enthusiasm for the idea at first, Crampton says the Minister of Education has scaled back the optimism after being presented with research by the NZ Initiative a few weeks ago.

The ministry instead seems to be entertaining the prospect of allowing international students across the border come November - or potentially even January, Crampton says. 

"I think some of that is missing the importance of the timing here. In North America, semesters start in August. If we're trying to hit that market and encourage students going to top American schools to come to New Zealand instead, we need to be open from around July," he explained.

Roughly 22,000 international students study in New Zealand's secondary schools each year, the majority paying a host family about $250 per week for amenities and meals. For many families, this extra income is essential to their livelihoods.  

"That's real money in the pockets of a lot of families that helps them through and provides an interesting experience for their own kids," Crampton said.

"Timing really matters though - if we don't start hitting those semester deadlines, we'll miss [out]."

In Crampton's report for NZ Initiative, he argued that reopening the country to foreign students in time for semester two would not only help with the recovery of the hospitality industry and the tourism sector, but would reduce the need for stronger central Government support of the universities or potential bailouts.