‘A downward spiral’: coronavirus makes Australian universities experience economic crisis Australian News | Instant News

The Australian university sector said they faced an economic disaster and lost their jobs massively unless he received more help from the government during the coronavirus crisis.

This calls on the federal government to immediately provide loans without interest, because institutions – large and small – are drawing up plans to cut hundreds of millions of dollars from their 2020 budget in anticipation that foreign student income will dry up in the second semester.

Education is Australia’s third largest export industry; At stake is up to 21,000 jobs, $ 23 billion in export earnings and Australia’s reputation which is difficult to obtain as a primary destination for foreign students.

The university has also warned that their economic woes will bounce through other parts of the economy because they delay construction projects in an effort to save money.

University of New South Wales Deputy Chancellor, Ian Jacobs, said the crisis was “soon”.

“There is a risk of a downward spiral, where we are forced to lay off staff because of the financial cash flow crisis and that, of course, means our education offer is suffering more. Then students don’t want to come and international students don’t come back and we have to lay off more staff, “he said.

The Chancellor of the Australian National University Julie Bishop expects a 40% decline in income. Photo: Luke Coch / AAP

“So there is a real direct crisis.”

Cash flow problems

The university has struggled to access job guard program – they have not been included in the more generous limits for charity, even though they are registered charities.

That means large universities – those who make $ 1 billion or more per year – will be asked to show a 50% reduction in income to qualify. Chancellor of the Australian National University, Julie Bishop, has told the Australian Guardian the university expects no more than a 40% decline.

The university said they would benefit from the federal government’s promise to preserve the Commonwealth fund at $ 18 billion even if the number of domestic students fell, and an offer of $ 100 million in regulatory assistance (shared with vocational colleges), both announced on Sunday, but they might not be enough.

Labor has warned that several universities risk financial ruin. Group of Eight Universities, some of which earn 40% of their income from foreign students, must explore cutting eyes in anticipation of a sharp decline in foreign students in the second semester, and possibly beyond.

International students as a percentage of the total

The problem for universities is cash flow, which is why the sector continues to seek further assistance in the form of low or zero interest loans.

Australian universities estimate overall revenue declines of between $ 3 billion and $ 4.6 billion, and warn the government the package won’t be enough to prevent 21,000 layoffs in the next six months.

The University of Sydney says it needs to cut $ 470 million from its budget for this calendar year to meet the shortfall in income from foreign students. The original estimate for 2020 is for income of $ 2.8 billion, of which $ 1.2 billion will come from foreign students, mainly from China.

Students still need to teach

The University of Sydney’s vice chancellor, Michael Spence, will not speculate about what will happen to income in 2021, saying it depends on the direction of the Covid-19 pandemic and the speed of vaccine development.

The university’s monthly bill is $ 120 million, and while it may be able to put some development projects on ice and cut non-academic work, enrolled students still expect their courses to be offered, although it is likely to be online for most if not all 2020

“One of the unusual things about universities, when people stop flying, is that our campus is open, scientific research continues and almost every unit of study is online,” Spence said.

A student walks past buildings at the University of Sydney

The University of Sydney says it needs to cut $ 470 million from its budget for this calendar year to meet the shortfall in income from foreign students. Photo: Brent Lewin / Bloomberg via Getty Images

“Here’s the problem: if you have 100 students and 25 international students, you get a significant financial benefit, but you still have a large number of students who need teaching, and you have more work, not less, to get all of that material online. “

Spence said staff also found students needed more attention because they were grappling with off-campus studies.

The University of NSW, which also relies heavily on international students, has modeled an impact between $ 500 million and $ 700 million, and plans to deduct $ 600 million from its budget.

Jacobs said the government’s response so far was “very disappointing”.

“I hope that when the scale of the crisis becomes clearer, the treasurer will make changes and include us in the provision of charity.”

Banking on foreign students is a risky business

The universities seem to be battling longstanding mistrust of the sector among the US conservative wing Coalition as well as their perception of somehow doing the wrong thing by pursuing foreign student income.

But both the Labor and Liberal governments have pushed or even demanded universities to become more independent.

New South Wales University Campus

“There is a risk of a downward spiral, where we are forced to lay off staff because of the financial cash flow crisis and that, of course, means our education offer is suffering more,” said UNSW deputy chancellor Ian Jacobs. Photo: Ullstein Bild / ullstein bild via Getty Images

In 1990, 86% of university funding came from the Commonwealth and 14% from other sources, including the state government. Now the federal figure is 30%, said Spence.

“I have not heard the same criticism from our airlines, that they are taking risks in expanding into international markets,” Jacobs said.

The government has offered support for airlines by recognizing that they provide an important and very important service for another important export industry: tourism.

“I think that is partly due to the lack of recognition of the role that universities play in the economy,” Jacobs said.

A report commissioned by Group of Eight in 2018 put the contribution of this sector at $ 70 billion after broader economic impacts on sectors such as real estate, construction, retail and tourism are taken into account.

UNSW is a major partner on the Randwick health campus worth $ 2 billion, which is being developed with the NSW government. Most of the expenditure is 18 months away, but Jacobs warned the crisis could jeopardize the university’s future contribution.

The university sector has recorded stellar growth over the past decade, and with additional funding for research flowing from foreign student income, five Group of Eight universities have entered the 100 best universities in the world.

But some warn it is risky.

“Australian universities are taking millions of dollars with taxpayers’ money to pursue a high-risk international growth strategy, which ultimately has proven to be incompatible with their public service mission,” wrote University of Sydney professor Salvatore Babones last July.

Considered a maverick among the university elite, Babones warned that the high dependency on Chinese students in particular made the sector exposed to risks such as trade wars, political shifts, or international decline.

But he did not even expect it to become a virus that would pose an existential threat.

“As long as their bets on the international student market pay off, university betting will look like a success. If their bets fail, taxpayers can be called in to help pick up the tab, “he concluded.

So how critical is the financial situation?

“We are a large organization,” Spence said. “We do have cash reserves but the amount is not large and we don’t think we should use it to get through this, because we think we should keep some salary payments in cash reserves, if there is a real disaster.

“We have limited reserves,” Jacobs said. “We have built future funds and increased our reserves. But we still have limited gaps and abilities to deal with the cash situation. “

For smaller universities, packages announced by the government could actually mean more competition for short courses.

Central Queensland University vice chancellor, Nick Klomp, acknowledged “the desire to support the university sector” but warned the package “might not significantly help” the university because it had fulfilled the cap funded by the Commonwealth Commonwealth Commonwealth Funding scheme for domestic. the student. The proposed shift to a short course will not help.

“The university is waiting for details [the] “Announcement of short-term funding, but in the long term this initiative can introduce more online competition – a market on which many regional universities depend to be able to provide for people and in thin markets,” Klomp said.

Laboratory at the Charles Perkins Center. University of Sydney.

Campus Our campus is open, scientific research continues and almost every unit of study is online, “said Michael Spence of the University of Sydney. Photo: Carly Earl / The Guardian

“In 2020, a decline in starting international students at CQU equals the loss of income of more than $ 100 million.

“Current modeling shows significantly fewer international students in 2021 and 2022, even if the Covid-19 pandemic is immediately controlled.”

The government has two bodies that oversee the financial health of the sector.

That Tertiary Education Quality and Standards Agency The 2018 report found 83.8% of universities were considered low risk. But TEQSA is not possible to be modeled for seismic events like that.

The Ministry of Education also publishes financial information about universities. Its 2018 report revealed that 10 universities operate either in deficits or with operating margins of less than 1%.

It also implies how slim a portion of the university reserves are.

The report said the University of Technology, Sydney, had less than 11 weeks’ cash and an investment in expenditure. The same report said UTS obtained 19% of its income, or $ 362 million, from foreign students.

An uncertain future

The deputy chancellor tried to imagine what their institution would be like when they emerged from this crisis.

Politicians from both persuasions have talked about a more different university sector. This means making choices as to whether to focus research funds in several institutions rather than disseminating them more broadly.

“If the international education market is seriously affected by Australia, we will have two choices: either not to own what is considered a world-class university, or to significantly put more funds into the higher education sector,” Spence said.

“If it really decides to add more public funds, then it needs to decide where it will get more money, and that might mean the sector has to become more different.

“It will be a challenging conversation. Every government says it wants it; no government has stated that. “

Jacobs said the silver line from the crisis was that universities quickly put their programs online and quickly learned what worked well.

“We will have a very different way of educating the world, after this,” he said.

ANU’s deputy chancellor, Brian Schmidt, believes that higher education will be changed by coronavirus, tells the Sydney Morning Herald: “What do we want our domestic course offerings like? What research do we need to do for the short and long term? And how do we ensure that this system – which has created a substantial dependence on international student income, which will decrease in the future – what should the system look like? “


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