by JAMES GUTHRIE
In a recently published research article in Social Alternatives (i). it is argued that contemporary Australian public universities are managed like big commercial businesses. As vice chancellors earn millions and students are steered through their degrees like cash cows, casualisation, job insecurity, and wage theft for academic and professional staff are rampant and pervasive. Increasingly expensive degrees leave local and international students with decades of debt.
Consistent with new public management accounting, auditing and accountability practices, neoliberal ideas have seen public universities focus on their accrual financial performance. Property development, investments and commercially oriented research income have become their core business, routinely prioritised over quality teaching and research that have a broader benefit to society. The Academics for Public Universities and others argue that, “all university finances and salaries (including all bonuses) must be fully transparent and made available for public scrutiny. This includes clear and consistent reporting standards for all cash-in and cash-out, (see CMM here ).
Against this background, it will be interesting to see what happens in this year’s annual reports of Australian public sector universities. Several recently released annual reports and vice chancellors’ internal messaging indicate that financial performance was substantially better in 2021 than predicted (also, this was the case in 2020). What is important here is that the predictions are based on the use of budgets to paint a picture of gloom and doom because of COVID. The use of budgets as a calculative tool plays a crucial role in our universities’ construction, mobilisation and preservation of specific strategic and operational choices during periods of volatility. Significantly, the same way calculative-based solutions are created can be used to communicate colourfully blended rhetoric that makes these solutions acceptable. (ii) In other words, the ends justify the means.
Last year I argued that there was a gap between rhetoric and reality regarding the public sector universities’ financial performance (iii). Has anything changed?
The Commonwealth recently released 2020 financial statement data for universities (iv). There are several issues with these official stats. For instance, the financial data is at least 15 months old, and the updated 2021 financial data will only be obtained from the annual reports, which are slowly being released.
Using the 2020 official stats, one can analyse the impact of the COVID-19 pandemic on the financial health of Australian universities. While it was reported that the sector revenue for 37 universities was $1.8 billion less in 2020 than in 2019 with the reductions being in student fees and investment returns, the official public sector university financial data for 2020 suggests otherwise. The highlights are as follows.
* university cash and investments were $24.6bn, increasing by 9.8 per cent since 2019
* overall revenue decreased by 5.1 per cent to $34.7bn in 2020
* in general, 2020 outcomes across the sector were significantly better than anticipated at the beginning of the pandemic in April
* university reports via the media from mid-2020 projected an overall sector-wide revenue decline of $4.8bn for 2020; actual results show a decrease of $1.9bn or 5.1 per cent from 2019
* international student fees were impacted to a lesser extent, with total revenue from international students of $9.2bn, down $755.8m or 7.6 per cent from 2019. This resulted in a decrease in total operating expenses, down $255.1 million or 0.7 per cent to $34.0bn in 2020.
* employee expenses continue to be the biggest cost for universities, with $20.1bn reported in 2020. This represents a substantial increase of $989m or 5.2 per cent over 2019 due to a combination of scheduled salary increases and termination payments made to staff.
Summary of 2019 and 2020 Revenue
| Operating Revenue | 2020 | 2019 | Change | |
| $’000 | $’000 | $’000 | % | |
| Australian Government Grants | 12,122,312 | 11,976,440 | 145,872 | 1.2% |
| HELP Payments | 6,063,971 | 5,806,178 | 257,793 | 4.4% |
| Australian Government Financial Assistance | 18,186,283 | 17,782,618 | 403,665 | 2.3% |
| State and Local Government Financial Assistance | 763,738 | 725,351 | 38,387 | 5.3% |
| Upfront Student Contributions | 455,532 | 459,066 | (3,534) | -0.8% |
| International Student Fees | 9,222,983 | 9,978,794 | (755,811) | -7.6% |
| Other Fees and Charges | 1,454,207 | 1,814,300 | (360,093) | -19.8% |
| Investment Revenue | 927,414 | 2,191,312 | (1,263,898) | -57.7% |
| Consultancy and Contracts | 1,628,787 | 1,567,755 | 61,032 | 3.9% |
| Other Income * | 2,012,149 | 2,000,053 | 12,096 | 0.6% |
| Total Revenues from Continuing Operations | 34,651,093 | 36,519,249 | (1,868,156) | -5.1% |
* Other income includes royalties, trademarks and licences and the share of net result of associates and joint ventures accounted for using the equity method. Source DESE
Hoque et al. (2022) provide empirical evidence on how (and what kinds of) rhetorical devices became a reality (relevant) when universities planned, communicated and marketed their strategic and operational decisions (especially around staff redundancies, casualisation and enterprise bargaining) in 2020. Their overall finding was that universities continued to justify their operational choices using “calculative” rhetoric during the COVID-19 pandemic.
As an academic community, we are kept in the dark. We have to accept the senior executives’ representation of the finances and the proposed strategies and operational actions, not because we agree with them, but because there is not enough information (at our level) to think about alternatives. It seems that the rhetoric does not match reality.
Therefore, I have to ask, what is the limit of transparency and collective decision making in public sector universities? Decisions made by a few elite people behind closed doors significantly impact staff and students’ current and future lives. University strategy and decision-making affect our community and nation.
Let us shine a light, throw open the doors, dismantle the rhetoric and see what is happening in our universities over the past three years.
Emeritus Professor James Guthrie AM, Professor of Accounting, Macquarie Business School
[1] Guthrie, J., Lucas, A., 2022 How we got here: The transformation of Australian public universities into for-profit corporations ‘ Social Alternatives 41(1) (in print) complementary now at https://socialalternatives.com/issue/its-time-the-re-form-of-australian-public-universities/
[ii] Zahirul Hoque Hoque Z.,Kate Mai Mai K.,Esin Ozdil Ozdil E. (2021), Accounting as rhetorical devices during the COVID-19 pandemic: evidence from Australian universities, Journal of Public Budgeting, Accounting and Financial Management, Vol. 34 No. 6, 2022, pp. 168-192, DOI 10.1108/JPBAFM-09-2021-0137
[iv] https://www.dese.gov.au/higher-education-publications/finance-publication