by FRANK LARKINS 

A detailed analysis of the financial performances of Queensland public universities, in the context of managing the COVID-19 pandemic challenges, is reported in detail HERE

The study reveals six of the seven universities achieving a surplus on net revenue (income less expenditure) for 2021. Five of the six universities had a surplus that was more than 10 per cent of the 2021 total income. For four of the universities the 2021 total income was more than the pre-pandemic 2019 total income. These outcomes represent an impressive recovery from 2020 shortfalls. The Queensland university sector has remained financially healthy throughout the pandemic with combined surpluses achieved in all three years with the largest being $731m (11.5 per cent of total income) for 2021.

Collectively, the universities had total incomes of $6 365m in 2021, some $497m (8.5 per cent) more than 2020 and $250m (4.1 per cent) more than for 2019. This analysis does not however provide the full financial position for 2021 because of inconsistencies in the accounting practices adopted when reporting the winding up of Education Australia Limited (EAL).

The overall 2021 result would have been even more impressive if all Queensland universities had declared more EAL revenue as 2021 income rather than as non-current financial assets. In this regard some Queensland universities adopted practices similar to Victorian universities but different from NSW universities. Accounting practice inconsistencies limit the capacity to accurately assess relative financial performances. An approach assessing changes in annual total equity may be more informative.

The Queensland turnaround from for 2021 was because of an increase in government assistance of $344m, boosted by $163m of one-off special research funding, and $323m in investment and other income. Student fees and charges income declined in both 2020 and 2021, such that over the two-year period from 2019 the fee income reduction was $443m, equivalent to 25 per cent of the 2019 fee income.

The combined total expenditures for 2021 were reduced by $87m (1.5 per cent) compared to 2020. The result which followed a similar decrease of $80m (1.4 per cent) in 2020 was achieved even though the expenditure on employee benefits were $152m more in 2020 than in 2019. NSW and Victorian universities increase total expenditure and employee benefits from 2019 to 2020 before reporting a decrease in both for 2021.

The universities of Queensland, Southern Queensland and Griffith U and QUT appear to have reported the strongest overall financial recoveries.

Some other important financial findings for individual Queensland universities are.

*  University Queensland was an exception among most Queensland and Australian Go8 universities in that its student fees and charges revenue outcomes have been largely unaffected by the COVID-19 pandemic. It also had a significant gain in investment income increasing its total income in 2021 by $255m over the 2020 result. The 2021 surplus of $342m was more than the surplus in either 2020 or 2019.

*  University of Southern Queensland‘s major financial gain was an investment income increase of $83.4m associated with the EAL IDP share ownership. As a result, the university increased its total income from 2020 to 2021 by $79m.

* James Cook U experienced significant reductions in onshore overseas student fee income in 2020 and 2021, so over the two-year period the reduction in fee income was $49m, equivalent to 27 per cent of the 2019 fee income. Because of a gain of $28m in government assistance for 2021 JCU was able to report a surplus of $26m for 2021.

* University of the Sunshine Coast was the only university to report decreased revenue in three areas for 2021 relative to 2020: student fees and changes, investment income and other income. The university did nevertheless report an increase of $13m in total income because of government assistance for 2021 that was $40m more than for 2020. The university also reported an increase of $103.2m in net assets for 2021, including a significant contribution from the EAL closure. None of the EAL revenue appears to be declared as 2021 income, in contrast to some other Queensland universities.

* Central Queensland University is exceptional in being the only Queensland university to report a reduction in 2021 income, of $46m and an overall a deficit of $22m. This was mainly because it incurred very significant reductions in student fees and charges in both 2020 and 2021. Over two years this reduction amounted to $178m, equivalent to 85 per cent of the 2019 fee income. However, the overall financial outcomes are misleading relative to some other universities because none of the EAL windful funding was declared as 2021 income. These financial assets were estimated to have a value of $114.5m at 31 December 2021.

* Griffith University reported a strong financial turnaround in 2021 with a total income increase of $76m over 2020 after reporting a decrease of $37m in 2020 because of reductions in all main revenue streams from 2019 to 2020.  Griffith was one of the best Queensland performers with increases in government assistance, investment and other income. It did incur a further reduction in student fees and charges. The improvement in investment income for 2021 does include some dividend revenue received from EAL. A gain of $61.5m in non-current assets due to the receipt of IDP shares following the winding up of EAL was also reported.

* QUT had the largest financial turnaround from 2020 to 2021 with an income shortfall of $112m in 2020 relative to 2019 being transformed to an income increase of $108m in 2021. This impressive result was boosted by a $98m growth in investment income which included $44.1m from EAL and $69.4m from the QIC investment fund.

The one-off financial windfalls collectively amounting to hundreds of millions of dollars have been accounted for in different ways by Queensland universities making relative performances of income receipts difficult to assess.

The 2021 financial results will provide unreliable baselines to determine financial recoveries in future years. There is a strong case for the Australian Government to mandate a common consistent approach to using Australian Accounting Standards for reporting University financial accounts.

Professor Emeritus Frank Larkins, Honorary Professorial Fellow, University of Melbourne. Melbourne Centre for the Study of Higher Education and School of Chemistry