Foreign Student “Tax” Will Generate Huge Dollars

2 May 2002

The proposed Government levy on the foreign student industry will likely generate upward of $6 million annually and put at risk major export earnings.

Michael Barnett, Chief Executive, Auckland Chamber of Commerce, was strongly disputing claims by Associate Education Minister Steve Maharey (Business Herald 2 May) that “only a small amount of revenue will be generated.”

Mr Barnett also disputed the need for a levy to set up a regulatory organisation. This will re-create a producer board-like control and diminish the industry’s ability to be innovative and progressive.

A snapshot of the industry strongly reinforced the notion that the levy is nothing more than a tax. Not only has there been no consultation, the proposal of a 1% levy appears to be an arbitrary number without reference to a confirmed plan to regulate the industry.

Based on a 1% levy, the 80 larger schools can expect to generate $1.6 million – or $20,000 each, and universities and polytechnics upward of $4 million across the sector. Other smaller schools would be up for between $10,000 and $20,000 each.

From a wider perspective, Mr Barnett said Government needs to carefully consider strategic implications of this proposal. Industry sources advise that their response to this levy will be to increase student fees, and tag invoices with a “Government charge”.

Regulating the industry because of alleged concerns at the way some businesses were marketing their services in China, lacks credibility against the wider damage that will be done to NZ’s image as a progressive export marketer.

Mr Barnett strongly advised Government to scrap the proposal and instead encourage a strengthened self-regulatory approach.

The juice industry is one example where self-regulation has recently been established. Similarly the wine and marine industries self-regulate based on a flat fee structure. “This is the way to go,” said Mr Barnett “and the Chamber would be prepared to assist the industry to establish a self-regulatory code as we have done with other member organisations”.

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