The government is slashing university funding to the lowest levels in decades, as the sector faces $3.8 billion in losses

School’s out. (Uwe Anspach, picture alliance via Getty Images)
  • Australian universities anticipate they’ll be short $3.8 billion as international enrolments plummet.
  • Despite the fallout, federal government funding is on track to fall to its lowest level in more than a decade.
  • It leaves universities facing the prospect of stretching a 2009-sized budget to educate an extra 400,000 students.
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As Australia’s university sector faces one of its greatest tests as closed borders and online learning empty campuses, the federal government is chipping in less and less of its own coin.

The latest government data shows that in the coming years university funding is set to fall to its lowest level in more than a decade, despite enrolments growing tremendously. In real terms, the government plans to put up $9.3 billion in the 2023/24 financial year, almost $2 billion less than it is expected to have spent this year, as students are increasingly forced to pay for the shortfall.

“[The] share of total university revenue from the Australian Government declined from 55.8% in 2009 to 48.7% in 2019. This was largely due to the increased percentage of revenue sourced from fees and charges, most notably overseas student fees,” the new Parliamentary paper notes.

The withdrawal of government support leaves public institutions to do far more with far less. In 2019, there were more than 1.6 million students enrolled across Australian universities, or roughly 400,000 more than there was in 2009 according to official Department of Education statistics.

Even if enrolments defy trend and don’t grow in the coming years, universities are projected to be hundreds of millions of dollars worse off in 2023 without a funding increase.

Compounding this, universities face the fallout from a pandemic which has shut borders and kept away international students, who contribute around one of every three dollars in revenue. When the numbers are finalised later this year, the bottom line “is expected to show substantially reduced overseas student fee revenue which is likely to shift the balance between government and non-government sources again”. In plain language, domestic students will need to foot the multi-billion dollar bill.

Already travel restrictions have led to a 5.1% decline in international enrolments and a 23.2% decline in students starting in 2020. According to Universities Australia the fallout cost $1.8 billion in revenue last year and will cost a further $2 billion in 2021.

“These changes occurred against a backdrop of little real growth in government funding in recent years, during which time universities have increasingly relied on overseas student fees as a source of revenue growth.”

Such an outlook has already seen tens of thousands of university jobs cut. The number includes an unreported quantity of casual and fixed-term employees, which make up around two-thirds of staff. They have been let go at the same time that subjects have been axed, faculties have been amalgamated and buildings sold in a desperate attempt to fill a funding gap. Melbourne University, for example, anticipates a $900 million loss over the next four years, according to The Age.

The equation then becomes pretty stark. Amid a backdrop of funding cuts, universities have redoubled their efforts on attracting international students, a market which has in turn begun shrinking. It leaves universities stretched thin at the same time with no third avenue of funding apparent.

A dawning international reputation presents a third challenge. Australian universities are largely continuing to slip down the global rankings, shown by the latest results out on Monday. Most only scoring highly on research, a field ever reliant on investment. As money becomes tighter, it makes real the possibility that research dollars may not flow as freely in previous year, threatening to push Australian universities lower still and risking future international enrolments.

The relationship between research dollars and international students is fairly self-evident. Melbourne University and the University of Sydney both remain the the country’s top ranked institutions and welcome the most number of international students. While official data is scare, both are estimated to collect more than $500 million from Chinese students alone, despite the nationals only making up around one-third of all international markets.

The billions brought in by international students in turn helps both Melbourne and USYD invest in research for which both institutes are ranked around 36th and 38th in the world respectively. Such standing helps push them higher up the overall rankings which in turn helps them sell themselves to more international students.

That cosy arrangement is now under serious pressure.