Budget’s $1bn boost eases universities’ student fee pain

The emergency $1bn boost to research funding announced in October’s budget has nearly cancelled out the revenue loss unis expect this year.

Universities Australia chief executive Catriona Jackson.

The emergency $1bn boost to research funding announced in the federal budget last October has nearly cancelled out the revenue loss universities expect this year from restrictions on international students.

The biggest winners are the prestigious Group of Eight universities, which will pick up $660m of the $1bn extra research money. This will more than cover the further $553m decline in international student revenue (compared to 2020) that the eight universities say they expect this year.

After suffering a 7.2 per cent drop in revenue in 2020 compared to original forecasts, the Group of Eight now expect their 2021 revenue to exceed 2020 revenue by 2.7 per cent.

“Last year’s budget commitment of $1bn certainly gave us a short breathing space to work with the government on the long-term funding of research,” said Group of Eight chief executive Vicki Thomson.

She said her universities, which are still expected to record significant operating losses in 2020 and 2021, wanted to work with the government to translate research results into economic and industry benefits.

Other universities’ losses have also been cushioned by the one-off $1bn injection, which was intended to temporarily replace international student revenue that had previously helped fund university research.

New estimates from Universities Australia, which covers all 39 major institutions including the Group of Eight, show an expected revenue fall of only about $200m in 2021 compared to 2020 — far smaller then the $1.8bn revenue collapse that the university sector suffered last year at the height of the pandemic.

The UA figures also show that the university sector, while enduring the pain of spending cuts and the loss of more than 17,000 jobs last year, avoided the worst-case scenarios.

UA said the sector’s revenue loss in 2020 (compared to original budget forecasts) was just over $3bn. This was at the better end of the range of predictions made by UA in June, when it estimated a 2020 revenue loss from the pandemic of between $3.1bn and $4.8bn.

The losses were stemmed by universities’ success in keeping many international students enrolled online from their home countries. The University of Sydney said on Tuesday it had received positive feedback from international students studying online. “We … believe this has likely contributed to the support from international students willing to study with us from overseas,” a spokeswoman said.

However, although revenue losses are stabilising this year, 2021 revenue is still expected to be 5.5 per cent lower than 2019, forcing universities to adjust to a lower level of expenditure.

“Universities have worked hard to limit job losses by halting infrastructure projects, making tough decisions about courses and finding savings wherever they could, but the effect of COVID-19 on the higher education sector has come at a real cost,” said UA chief executive Catriona Jackson. “Unfortunately, it is probable we will see further (job) reductions this year.”

Ms Jackson also warned that universities would face financial pressure from the cumulative impact of years of lower international student enrolment if no progress was made on returning international students to Australia quickly.

Universities and other education provides are hoping that national cabinet, which meets this Friday, will open the way for more pilot programs to return international students, following the Northern Territory’s successful return of 63 students in November.

Another university grouping, the seven-strong Innovative Research Universities, called on the federal government “to make available safe and workable quarantine solutions for international student entry”.

In a budget submission, the IRU said overseas students who had been stranded overseas by COVID-19 had done their best to stay enrolled online.