The Department of Education commissioned Deloitte Access Economics to prepare a report on Transparency in Higher Education Expenditure. The report was submitted to government in November 2019 and was recently released. It is the second of three annual reports, analysing teaching and scholarship costs of 32 universities in 2018.

The average cost for bachelor level programs was $17,600 in 2018, with sub-bachelor programs some 2 per cent lower; graduate level programmes were 22 per cent higher at $21,500.

The average disguises a wide divergence of costs across bachelor disciplines, represented by Fields of Study. The most costly per EFTSL were Veterinary Study at $50,200, Dental Studies at $37,000, Medical Studies at $29,800, Other Agriculture and Environmental  Sciences at $29,900.  The least expensive at $14,300 was Other Societies and Culture.

At the postgraduate level the average study cost was $22,000 with the most costly Fields of Study per EFTSL being Veterinary Study at $61,900, Dental Studies at $47,100 and Other Agricultural and Environmental Studies at $42,200.  Communication and Media at $17,200, Education at $17,200 and Management and Commerce at $18,400 were the least expensive.

Deloitte finds that for the common sample of university participants the compound annual growth rate (CAGR) in operating costs over the period 2015-8 has been 2.9 per cent. Given a CAGR in base funding for domestic students – i.e. a total of Commonwealth Grant Scheme funding and HECS payments – of 1.7 per cent over the same period, bachelor teaching operating costs are estimated to have increased from 85 per cent to 89  per cent of the funding provided by the Australian Government. When “below the line” costs (depreciation on teaching facilities and in-kind contributions, third party and partnership costs) are taken into account university costs per EFTSL as a proportion of government funding increased by between 1.69 per cent – 4.65 per cent so as to comprise between 91.6 per cent- 94.6 per cent of government funding for bachelor study. However, several professional degrees had costs considerably more than government funding.  Most notable were Food, Hospitality and Personal services at 208 per cen and Veterinary Studies at 148 per cent.

For the sector in 2018 some 52 per cent of all university costs were attributed to teaching and scholarship with a wide variation between universities from 24% to 87% (with the Go8 group at 39%) reflecting the diversity of activities within universities.

Three key messages may be drawn from the data presented:

  • university costs are growing at a faster rate than the rate of indexation in government funding. In fact, the actual position in 2020 for several universities will be worse as the Deloitte study acknowledges that it takes no account of the 2017-18 government announcement that the total amount of Commonwealth Grants Scheme funding for 2018-19 would be frozen at 2017 levels. The rate of funding per place being received for universities will therefore be lower than reported if they have met or exceeded 2017 enrolment levels.
  • the actual level of funding provided debunks the long-held assertion that the quantum of government funding for teaching and scholarship includes a component for research. Even with the highly optimistic margin of between 5.4 per cent- 8.4 per cent of uncommitted teaching funds there is little available for university research. Moreover, the universities with the greatest ‘below the line’ teaching costs and hence the smallest teaching grant margins are the research-intensive institutions with additional medical and dental clinical training costs.
  • the teaching and scholarship costs for 2020 will be very different to 2018 or 2019 for many universities because of the impact of the COVID-19 pandemic. There are likely to be increased costs because of on-line course development and delivery costs and, in the absence of Australian Government funding, the need to offer financial support for the current cohort of international students impacted by COVID-19. All universities will be detrimentally challenged if there is no supplementation beyond current Commonwealth Grant allocations.

Marshman and Larkins are Honorary Fellows, Centre for the Study of Higher Education, University of Melbourne 


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