Coronavirus: lockdown silver lining for Melbourne uni’s balance sheet

Melbourne’s COVID lockdown has helped boost the University of Melbourne’s fragile financial position by $130m due to greater enrolment numbers.

Students around the South Lawn of Melbourne University.

Melbourne’s COVID lockdown has helped boost the University of Melbourne’s fragile financial position by $130m this year, due to greater then expected numbers of students filling in their time by enrolling to study.

Vice-chancellor Duncan Maskell said the university’s expected budget shortfall of $309m in 2020 had now reduced to $177m, which will translate to an operating loss of $60m for the year after other savings measures are factored in.

Greater than expected numbers of international students continuing their courses online are also playing a role in boosting the university’s financial position, and the university has also managed to increase its research income this year, probably due to COVID-10 related projects.

The lockdown, and lack of job opportunities, has also led to fewer student deferrals this year which has helped keep student enrolments high.

However the University of Melbourne plans to press on with 450 job cuts announced in August. Professor Maskell said the outlook for 2021 remained “very uncertain”.

“This is not sustainable and means that the need to continue to make significant savings over the next two years does not change. We must still reduce our annual operating costs and ultimately resize our operations, to return the institution to a financially sustainable position on an ongoing basis,” he said.

Vice-Chancellor of Melbourne University Duncan Maskell. Picture: Mark Stewart

However the university hopes to use voluntary redundancies and early retirements as much as possible to minimise any forced redundancies.

Professor Maskell said that, as soon as borders reopened, “we need to do everything possible to get international students back to Victoria as safely and quickly as possible”.

Last week the University of Sydney also reported that its financial position was better than had been feared earlier in the year. Mainly due to larger than expected numbers of international students who have remained studying online from overseas, the $470m revenue loss in 2020 which was expected in April has been reduced to $184m.

International students have proved more resilient than expected in maintaining their enrolment than expected. According to federal government figures, 54,000 international students were studying online from other countries in July, of which 44,000 are Chinese students.

On Thursday credit rating agency Moody’s downgraded the outlook on Macquarie University’s debt due to the “sustained negative impact of the coronavirus pandemic”, warning that the university was more highly leveraged than its peers.

“The negative outlook reflects increasing risks related to the university’s elevated debt burden and lower levels of liquidity compared to similarly-rated universities, at a time when the university faces a substantial shortfall in student enrolments that would prompt challenging adjustment measures” said John Manning, a Moody’s vice president and senior credit officer.

Moody’s said it expected Macquarie’s international student numbers to fall well short of what had been expected prior to the COVID crisis.

According to its 2019 annual report Macquarie University had borrowings of $786m at the end of 2019, including $250m issued in November 2019.