by JAMES GUTHRIE
On his appointment in October 2019, Macquarie University Chancellor, Dr Martin Parkinson AC, wrote that: “Australian universities face challenging times, and we will be no exception. But together, acting with openness, honesty and integrity, I am sure we can build an even better student experience and staff workplace, something of which both current and former students and staff will be justifiably proud.”
Little did Dr Parkinson know of the turmoil that lay ahead. Fast forward to December 2020, when the university indicated it would need to find annual savings of $170m to achieve financial sustainability.
However, what is financial sustainability? Let us look at the numbers in Macquarie U’s most recent 2020 annual report, when the pandemic had only just begun, published on March 31 this year. According to the report, income from continuing operations was $1.1bn (consolidated). The 2020 income was down $53m from 2019, and income from international students dropped $21m. There was a drop in investment income of about $12m from 2019.
The financial statements are an accrual-based document, so it includes depreciation and other accruals expenses that then led to a reported $54m deficit.
At the same time, Macquarie University is cash positive; it has a surplus of cash received compared to cash paid. The statement of cash flows shows a surplus of $122m and, more importantly, a tremendous amount of money, $272m, spent on the property. There are also proceeds from the sale of financial assets $350m and paying off financial assets $110m.
Macquarie University reported $2.8bn in campus assets (cost $622m) at the end of 2020 and disclosed that it would continue to deliver more than $500m in building and infrastructure upgrades in bonds borrowing, now totalling $730m. Also, it has $103m service concession assets (student accommodation?). Depreciation and amortisation increased by about $11m to a total building depreciation; this comes from the income statement. Table 1 (below) is a summary of the Income and Expenses Statement.
What is not in the accounts is the significant cross-subsidy of the Macquarie University Hospital from student fees. It is concerning MQM Health is the operator of the Macquarie University Hospital. It is noted that the leases for hospital building, medical equipment and other equipment from its parent for what is called peppercorn arrangements with a nominal consideration. A current valuation of the hospital and equipment cannot be found in the MU books. However, a review of the accounts since 2012 indicates that the hospital building and equipment cost about $300m up to 2019. Therefore, applying a commercial rate of 10 per cent of the annual cash forgiven to the parent for the hospital is about $30m a year. In 2020 Macquarie University Hospital celebrates ten years as the country’s only university-led private hospital.
All these numbers have a human face. In 2020, the annual report only reported the full-time equivalent number (FTE) of staff, a drop of 529 FTE. There is much more happening here than the numbers tell us. For example, my Accounting and Corporate Governance department at Macquarie University saw a decrease in FTE permanent staff members from over 50 staff in 2019 to a headcount of approximately 37 now. This is not just a loss in numbers, but a loss in experience and quality, of highly skilled researchers and supervisors, two deputy deans and several professors. These departures have been a mix of voluntary redundancies and retrenchments. Recent replacements are Level B and teaching-only positions.
Figure 1 (below) shows staff productivity compared to the total student load over 50 years since Macquarie University was founded. The top line is the total student enrolments, and the second bottom line is staffing numbers. The number of casual staff stopped being disclosed in about 2010.
Here again, we see the human cost. An internationally accepted optimum teacher-student ratio is 1:20, calculated on continuing lecturers. A lower student-to-staff ratio can help students cultivate closer relationships with their lecturers, have more rapid access to assignment feedback, and engage in more interactive seminars and discussions. It is vital for tutorial, seminar and other workshop sizes, which should be small and manageable so that students get the best from them, and lecturers must have enough time to devote to each student outside of the lecture theatre.
In 2020 Macquarie University ranked 195 in the Times Higher Education rankings (just released) which publish a teacher-student ratio. Its teacher-student ratio is 1:65. This ratio is the worst of any university in Australia. Many universities were in the 20-30 range—for instance, Sydney university 1:19.
The staff-student ratio can be calculated in various ways. It can be a straight headcount and classification into local and international onshore students, or students can be counted as equivalent full-time students (EFTSL). The same applies to counting university staff, either a straight headcount and classification into academic and non-academic by full-time, part-time or casual or calculating staff as a so-called Full-Time Equivalent. Nevertheless, these calculations tell us little. This is because teaching cannot be condensed into a statistical calculation. Instead, teaching involves actual staff and actual students working together.
When the teacher-student ratio is high, as Macquarie University, tutorials are overcrowded and of little pedagogical value. There are not sufficient full-time academics with time to devote to individual supervision, mentoring of students, and continuity with students over the entire course of their studies, factors that are essential to delivering quality education and an excellent student experience.
The pandemic has not made this problem. It was created by the enforced redundancy of full-time academics and the historical casualisation of more than 50 per cent of all academics nationally, while domestic and international enrolments grew. This situation is complicated by the preference of university managements for diverting funding away from academic and professional salaries and into buildings and other unnecessary expenditures.
The quality of education provided by our public sector universities cannot be maintained or improved under these circumstances. That ultimately affects every Australian who depends upon the quality and standards of tertiary education – which means all of us.
Nor is it consistent with the charitable purpose of Macquarie University, as stated on the Australian Charities and Not-for-Profit Commission Charity Register. Here Macquarie University states its mission is “to advance education. The university does this by engaging in activities including research and teaching courses of study for the purpose of advancing education”.
How does this charitable mission sit with the remuneration provided to vice-chancellors and senior executives? In 2020, Macquarie U VC, Professor S Bruce Dowton, appointed in 2012, earned over $1 million and five executive officers earned over $500,000. The NSW premier’s salary is about $300,000.
Revisiting Dr Parkinson’s commitment, how is Macquarie University building an “even better student experience and staff workplace, something of which both current and former students and staff will be justifiably proud”? In the face of a global pandemic, the university has suffered a slight decline in its financial situation in 2020. It is healthy, for the most part, even with gloomier forecasts about international students. It boasts that it will continue to deliver more than $500m in building and infrastructure with its bonds borrowing, suggesting an ongoing confident outlook. However, at the same time, it constantly erodes its academic and professional workforce which can provide a suboptimal student experience.
Distinguished Professor James Guthrie AM, Macquarie U Business School
Figure 1 Productivity and staff/student ratios first 50 years.
Table 1 Income and Expenses Comprehensive Income Statement summary
|Donations and bequests: $12,821,000|
|Revenue from providing goods or services: $347,887,000|
|Revenue from government including grants: $545,584,000|
|Revenue from investments: $16,049,000|
|All other revenue: $45,943,000|
|Total revenue: $968,284,000|
|Other income (for example, gains): $5,805,000|
|Total gross income: $974,089,000|
|Employee expenses: $606,493,000|
|Interest expenses: $23,990,000|
|Grants and donations made for use in Australia: $0.00|
|Grants and donations made for use outside Australia:$0.00|
|All other expenses: $396,328,000|
|Total expenses: $1,026,811,000|
|Net surplus/(deficit): $-52,722,000.|
|Other comprehensive income: $-1,935,000|
|Total comprehensive income: $-54,657,000|
MACQUARIE UNIVERSITY Briefing and Consultation Paper, Proposed Framework for Academic Workplace Change in 2021 8 December 2020
Macquarie university charities commission report 2019, 2020
Macquarie university annual report 2019, 2020
Macquarie university annual report 2010