Bluescope is expected to announce closures at Port Kembla and Hastings today. These closures are a flow on from the mining boom and the associated high Australian dollar exchange rate making it harder for non-mining exporters to compete. As usual there are calls for the government to ‘do something‘. But what should it do?
One obvious way for the federal government to ‘do something’ is to avoid artificially preventing exports. The best example I know of this is in the education sector. Education has been one of Australia’s biggest export earners, but the high Australian dollar has made it less competitive. In contrast, a devalued US dollar has increased their exports of education services and their international education sales are booming.
However, the high Australian dollar is clearly not the only factor. Canada, another country with a ‘commodity currency’, has not found the relatively high value of their dollar to be a barrier to increasing education exports. As reported here, Canadian education exports are booming. While the Australian dollar has appreciated against the Canadian dollar over the past year, the Canadian dollar has itself appreciated against other currencies like the US dollar. So there seems to be more at work than just the exchange rate. (You can find the exchange rate history here.)
A major reason for the drop in Australian education exports is the federal government’s visa policies. The government changed these rules to prevent exploitation of immigration rules – which of course are also set by the federal government. So to solve one problem (that it created) the federal government has so restricted student visas that it is undermining a major Australian non-mining export industry. The irony of course is that a major beneficiary of education exports is the Australian government who owns/funds almost all our Universities.
What should be done? Well here is a simple example from across the Tasman. The solution makes it easier for students going to ‘high quality’ education providers to get visas. It is a long way from a perfect solution but at least it helps avoid strangling a major export industry in bureaucratic redtape.