Universities on the brink of ‘ground zero’

Education Minister Dan Tehan will stare down universities pleading for urgent government support­.

Education Minister Dan Tehan has urged universities to fix their business models. Picture: AAP

Education Minister Dan Tehan will stare down universities pleading for urgent government support­, as vice-chancellors warn that Australia’s research capacity will be devastated if they don’t ­secure additional funding.

Ahead of talks between Mr Tehan and Universities Australia on Wednesday, University of Sydney vice-chancellor Michael Spence said the nation’s research system was at “ground zero” becaus­e of the loss of fees from ­foreign students.

While the Morrison government is considering further ­support for the construction, arts and childcare sectors, Mr Tehan has instead urged universities to fix their business models.

New modelling released by Universities Australia shows the sector is facing a $16bn drop in revenue over the next three years.

Dr Spence, who met Mr Tehan on Tuesday, said successive ­federal governments had “avoided investing in the long-term ­future of our research system but we can no longer afford to do so”.

“The impact of COVID-19 threatens the very sustainability of a research workforce that has helped deliver us out of the current­ crisis,” Dr Spence said.

“We know how important research­ is; we know it saves lives.

“Losing our top scientists will have a devastating impact on the future of our economy and our country, especially after we have built up such an incredibly ­impressive history of research.”

Universities have repeatedly clashed with the Morrison govern­ment over pleas for addition­al funding to weather the coronavirus pandemic.

The JobKeeper wage ­subsidy eligibility guidelines rule out access­ for the sector.

The Morrison government, however, has guaranteed that universities can retain the $18bn in funding provided for domestic students regardless of any fall in enrolments.

Australian National University vice-chancellor Brian Schmidt said “we’ve been paying for a lot of the research” with international student fees.

“That money is going to go and the question is: what is Australia going to do about it? All the evidence­ is that when you invest in research in universities, you get large economic spillovers,” Professor Schmidt said.

“This is an impending disaster which needs to be sorted out in the next few months. Universities like my own will have to make ­decisions about what activities we can afford to do and what we can’t. We’re to lose a potential early-­career researcher generation.”

Deakin and CQUniversity have been the first to lay off staff to help meet a budget hole caused by a ban on international student ­arrivals, while Professor Schmidt has also flagged $100m in cost-cutting at the ANU this year.

However, Mr Tehan said university management should be ­repositioning operations to focus on “domestic students and online education” and “greater alignment with industry”.

The minister told The Aust­ralian on Tuesday that the government had already guaranteed half of the sector’s total revenue — and pushed back on calls for additional research funding.

“(This year) around $9.6bn in commonwealth funding is being provided for research and ­development across all portfolios … $12.4bn will be invested over the next four years through the ­education portfolio alone,” Mr Tehan said.

Group of Eight chief executive Vicki Thomson, who represents the country’s largest universities, said research from her members “pumped almost $25bn into the economy each year” before the coronavirus pandemic.

“Life as we know it has changed dramatically and more than ever we need a research-led economic recovery — unashamedly focused on job creation, retraining­, improved productivity processes and new industries supported by AI and hi-tech manufacturing,” Ms Thomson said.

“Our capacity to do that is severel­y compromised — and that will impact on all Australians.

“COVID-19 has shone an uncomfortable light on what we have known all along — our funding system is broken, with an over-reliance on international fee income to prop up our university research — 70 per cent of which is undertaken in Go8 universities.”

Ms Thomson said business ­expenditure on research had been decreasing for the past decade, and was “now at 0.89 per cent (of GDP), which is well below the OECD average of 1.49 per cent and is at its lowest since 2002-03”.

Writing in The Australian, Universities Australia chief exec­utive Catriona Jackson says the sector could lose up to $4.8bn in revenue by the end of the year and “without extra government help” the number of researchers would decline at a faster rate. “Imagine the potential that will be lost. ­Imagine the jobs and industries that will not be created,” she says.

New research released by the Australian Population Research Institute, which noted 80 per cent of students with overseas visas ­remained in Australia, also warned that universities faced a significant hit to their revenues.

“This is because most of the 20 per cent not here were Chinese students. Some 67,919 of the total of 177,442 Chinese citizens holding student visas were not in Aust­ralia at the end of March 2020,” says the report, written by Bob Birrell­ and Katharine Betts.

“Since March 20 they cannot come (or return) to Australia. Thousands are likely to defer or delay their studies in Australia, thus diminishing the fee revenue Australian universities, especially the Go8, had budgeted for.”

They say the “seriousness of the revenue crisis” facing universities would “deepen” over the next 12 months. “This is because normally about half of those taking up higher-education student visas do so in the second half of the calendar year. It is likely that few will do so this year.”

Universities needed to change their business models or commit to major reforms in return for additional compensation, they say.