A Snapshot of Education and Training in Australia

The Education and Training division is made up of industries providing different levels of education, from preschool through to university and other higher educational institutions. It is made up of both public and privately run institutions.

Demand for education is driven by demographics (particularly the number of people at school or university age), government policy, the employment market and job skill requirements. To a lesser extent, exchange rates and immigration policies play a part, as these affect international student enrolment.

A growing sector

Strong growth over the past five years in this sector has resulted from government reforms and increased funding, population growth, labour trends and increased enrolments by students from overseas. Revenue growth has outpaced population growth, mainly due to increased funding, higher fees being charged and more enrolments from international students who pay full fees. Overall, revenue is expected to have increased at 3.5% over the five years through to 2018-19, to $130.9 billion (with the current year’s growth forecast at 3.6%).

Forecast drivers of growth

Education is compulsory in Australia for children aged from 6–16, and young people are increasingly opting to complete secondary school and go on to attend university. The population of those aged 5–18 is forecast to increase over the next few years and this, along with the trend for reaching higher educational levels to be maintained, will provide expansion for the education division.

Increased government funding for primary and secondary education increases revenue for both government and non-government schools, and education funding is expected to increase over the next few years.

The Higher Education industry currently generates about one-quarter of its revenue from services provided to students from overseas. The Australian dollar is expected to depreciate in the near future, and this makes the prospect of education in Australia more appealing for international students, as it is likely to cost less compared to courses in many other parts of the world and Australian institutions have an excellent reputation.

Industry outlook

The Education and Training division’s performance will be affected over the next five years by increased government funding and demographic and labour trends. Growth is expected to continue, with revenue forecast to rise at 3.6% per year to $156.0 billion. This growth should support increases in employment and total wages over the period. The average cost of wages is likely to rise, as many teaching institutions are likely to want staff with higher qualifications, and this could constrain profit margin growth. However, this will be partially offset by the continued uptake of online courses, which require fewer staff.

Key success factors

Industry success over the next five years is likely to involve:

  • A highly skilled workforce: Well-qualified, experienced and committed staff are essential to the success and reputation of any educational institution
  • Ability to alter goods and services produced in favour of market conditions: Higher education institutions, particularly those offering vocational training, must cater for areas of student demand and skills shortages.
  • Having a good reputation: Being known for high-quality teachers, courses and facilities and high levels of student satisfaction means an institution can set higher course fees and is more likely to win grants and research funding and attract international students.
  • Establishment of export markets: Revenue from full-fee paying international students is particularly important to the revenue growth and profit margins of higher education institutions.

*Source: IBISWorld Industry Report P: Education and Training in Australia (September 2018)

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