Universities can say goodbye to the years of plenty

Many universities recorded surpluses in 2020, the year of the pandemic

We now have information about the 2020 financial outcomes for 12 of Australia’s universities — nearly one-third — and the pattern is becoming clear. Many of them have passed through the shadow of COVID and come out in the black, either in surplus or with only a minor deficit.

The latest data comes from Queensland where the 2020 annual reports of the seven public universities are published, with five reporting surpluses and one with a tiny $5m deficit.

Many will read this with cynicism, concluding that universities were crying wolf last year when they saw their international student market evaporating and pleaded for government support.

So what’s the real story? Have universities come through their travails in reasonable shape? Or is the pandemic an inflection point which marks the end of the years of plenty and the beginning of the years of penury? There’s much we don’t yet know — including the 2020 operating results of over two-thirds of universities — but I think two things are clear.

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One is that universities are currently operating in a mode which is not sustainable. Last year they made emergency spending cuts and postponed necessary investment in buildings and other infrastructure.

They also rapidly cut staff numbers and now have to rebuild around a new normal in which there are fewer human resources. . I’ll bet many cases will emerge in which cuts have gone too far, compromising the quality of education and other services which students expect from a university. In other words, spending levels will need to pick up.

The second thing is that universities will need to get used to a permanently lower level of international student fee income. The impact of this will vary. The privileged big five — Sydney, Melbourne, Monash, UNSW and Queensland — might succeed in keeping reasonably high numbers of international students. But it’s doubtful that others will.

For both of these reasons the operating surpluses we are seeing now are not a fair indication of universities’ financial health.

Queensland University of Technology vice-chancellor Margaret Sheil believes that the paradigm in which a plentiful supply of international students essentially funded university research is ending. In future, universities will have to work harder to attract international students, who will be fewer in number.

“We will have to provide a more sustainable educational experience (for international students). We have to invest in that rather than in rising up the research rankings,” she says.

That’s a big, fundamental change, and it’s imminent.