Coronavirus: Universities not eligible for $2bn bailout

Major universities were expecting a $2bn coronavirus bailout after a late-night tweet from Treasurer Josh Frydenberg. Then it changed.

Treasurer Josh Frydenberg was forced to clarify his position on a university bailout. Picture: AAP

Major universities were expecting a massive coronavirus bailout worth over $2 billion this morning after a late night tweet from Treasurer Josh Frydenberg on Sunday announced that the government would increase access for registered charities to its $130 billion JobKeeper scheme.

“The JobKeeper legislation we are introducing in Parl on Wed will see charities registered with the ACNC eligible for JobKeeper Payment if they have a turnover decline of 15% or more. This will apply to all registered charities, including those with a turnover of more than $1b,” Mr Frydenberg tweeted at 9.21pm on Sunday.

The JobKeeper legislation we are introducing into Parl on Wed will see charities registered with the ACNC eligible for JobKeeper Payment if they have a turnover decline of 15% or more. This will apply to all registered charities, including those with a turnover of more than $1b.

— Josh Frydenberg (@JoshFrydenberg) April 5, 2020

All universities are registered as charities with the Australian Charities and Not-for-profit Commission so the import of the Treasurer’s words was clear. Universities, hard hit by the fall in Chinese students, would receive over $2 billion from the JobKeeper scheme to subsidise thousands of jobs which otherwise may be lost in coming months.

But the Treasurer misspoke. In an illustration of the perils of governing by tweet, this morning it turned out that Mr Frydenberg hadn’t mentioned a key caveat in his statement which apparently applies. The decision to relax access to JobKeeper for charities does not include universities.

The major universities in the Group of Eight, which have high numbers of Chinese students and are particularly hard hit by the coronavirus travel bans, feel misled.

“On the basis of the announcement of the Treasurer last night we would expect, as registered charities, to be eligible for the JobKeeper package which is a significant commitment for our 50,000 plus staff,” said Group of Eight CEO Vicki Thomson on Monday.

However a senior government source said on Monday that universities will not be given the special access to the JobKeeper package which is being offered to other charities.

But this clarification only came after hours of confusion in which government departments, which had noted the Treasurer’s tweet, took it as read that universities would be given the same increased access to JobKeeper as other charities.

Even Mr Frydenberg’s own office confirmed early on Monday morning that this was the case, only to follow up an hour and put a hold on the confirmation.

It took until mid afternoon for another minister, Assistant Finance and Charities Minister Zed Seselja, to issue a statement saying that both universities and non-government schools (many of which are charities) did not qualify for the more generous 15 per cent revenue loss test for the JobKeeper scheme.

The universities with high exposure to the Chinese student market, eligibility for the JobKeeper scheme as charities would be a lifeline. About a dozen Australian universities (most of not all of the Group of Eight plus some others) have probably seen a 15 per cent of more decline in revenue compared to last year which would make them eligible for JobKeeper under the rule applying to charities.

This would entitle them to support of $1500 a fortnight for six months for each permanent and contract staff member, and most of their casual staff. In total the assistance for eligible universities is estimated at over $2 billion.

However if universities are not considered to be charities for JobKeeper purposes then they face the same threshold for access to the JobKeeper scheme as other organisations: a 30 per cent revenue fall compared to last year for those with under $1bn annual revenue and a 50 per cent revenue fall for those over $1bn. No universities currently meet that criteria.