The 2020 Annual Reports are publicly available for all Australian universities, with the exception of the three South Australian universities. The 2020 financial accounts provide an insight into how Australian universities, both collectively and individually, have adjusted financially to the challenges of the first year of the COVID-19 pandemic.

While acknowledging the limitations associated with headline income and expenditure statements, they nevertheless provide a useful basis for year-on-year comparison.

Leaving aside Adelaide, Flinders and USA’s financial results, Australian universities have reported a 5.2 per cent reduction in consolidated revenue, earning $33.46bn in 2020, compared to $35.29bn in 2019.  $1.15b of the total $1.83b decline is attributable to a reduction in fees and charges, which has declined by 9.5 per cent from the previous year. International student fee revenue represents the largest portion of fees and charges.

On the expenditure side, total university expenditure declined by a negligible $106m (0.3 per cent) from $32.82bn in 2019 to $32.92b in 2020. Employee Entitlements represent the largest share of university expenditure. For 2020 Employee Entitlements increased by 5.3 per cent from $18.5bn to $19.5bn an increase of $984m. As a result, Employee Entitlements, expressed as a proportion of total university expenditure increased from 56.2% to what may well be a generation high of 59.4%.

At the individual institution level, there were some some notable results

notwithstanding the impact of the pandemic, four universities reported an increase in revenue for 2020: These were Uni New England, Uni Sunshine Coast, Uni Southern Queensland and Charles Darwin University. The latter recorded a sector high revenue increase of 7.5 per cent.

while the majority of universities reported relatively modest reductions in Fees and Charges, universities with reductions greater than $50 million were:

* UNSW – $182m

* Uni Melbourne – $108m

* ANU – $103m

* RMIT $81m

* La Trobe U – $62m

* CQU – $52m

On the other hand Monash U, was one of only three universities reporting an increase in Fees and Charges for 2020, with an increase of $38m. Charles Darwin reported an increase of $6m and ACU $1m.

On the expenditure side, results were more mixed:

19 universities reported increases in total expenditure on a year-on-year basis. Universities with the largest increases were:

* ANU – $100m

* RMIT – $56m

* Swinburne – $46m

16 universities were successful in reducing expenditure, with the most significant reductions occurring at:

* UNSW – $120m

* Uni Melbourne – $61m

* Charles Sturt U – $57m

* QUT – $47m

in terms of Employee Entitlements, only four universities have reported year-on-year declines in expenditure:

* Charles Darwin U – $6m

* UWA – $3m

* Western Sydney U – $3m

* La Trobe U – $2m

universities which have reported the highest proportionate increases in Employee Entitlements for 2020 are:

* ANU – 15.6 per cent ($105m) increase

* RMIT – 11.6 per cent ($100m) increase

* Uni New England – 11.2 per cent ($24m) increase

* Uni Sunshine Coast – 9.8 per cent ($17m) increase

* Murdoch U  – 9.2 per cent ($21m) increase

based on the above summary analysis some preliminary conclusions may be drawn as to the impact the COVID-19 pandemic is having on Australian universities:

* at the sector level, the overall impact on revenues has been significantly less at $1.8b than the $3b-$4b initially predicted by several commentators including ourselves. Having experienced only a 5.2 per cent decline in total revenues, universities appear to have been extraordinarily resilient, particularly when university sector ineligibility for Australian Government JobKeeper and other pandemic business support is taken into account.

* the sector has been less nimble in being able to adjust expenditure to the decline in revenue. Despite the decrease in revenue, 2020 expenditure remained at the same level as for 2019. The most significant contributor to this was the 5.3 per cent increase in Employee Entitlements. This increase of nearly $1bn appears to have been offset by significant savings in Other Expenditure items, a remarkable achievement.

* a significant portion of the increase in Employee Entitlements is likely to be attributable to redundancy costs associated with staff departure programmes. Assuming annual indexation in employee costs of around 2.5 per cent, an additional $500m is likely to have been expended on redundancy programmes in 2020.

* thirty universities reported increased employee benefit outlays in 2020 compared with 2019. Four universities – La Trobe U, UWA, Western Sydney U and Charles Darwin U, reported modest decreases in staffing costs. The first three of these signed up to the union-initiated Job Protection Framework in 2020.

* location seems to have had little impact on Fees and Charges outcomes. Despite being part of the sector most impacted by the lockdowns that occurred in 2020, Victorian universities reported an aggregate 8.1 per cent reduction in Fees and Charges revenue. In aggregate NSW and Queensland universities reported a 10 per cent reduction.

* financial results reflect the differing impact of the pandemic on individual universities and seemingly their choice and timing of response. Nevertheless, several smaller regional universities with limited exposure to the international student market appear to have got through 2020 relatively unscathed in terms of finances. Other universities have either retained existing student enrolments or identified alternative revenue sources. Some universities have incurred significant revenue loss and acted quickly to reduce expenditure. Others appear to have been still developing their COVID response strategy at the end of 2020.

* there is no discernible trend by university group as to the impact of the pandemic or the university response. Within the Group of Eight, for example, Monash U appears to have been most resilient and has now displaced Uni Melbourne as top-ranked university in terms of consolidated revenue. UNSW, ANU and Uni Melbourne have incurred significant reductions in Fees and Charges. UNSW appears to have responded more quickly in addressing the revenue loss. Uni Sydney and Uni Queensland appear to have been less impacted and have not responded in as emphatic a manner.

With no prospect in the short or medium term of borders being re-opened to international students, an extended lockdown in NSW and repeated lockdowns in Victoria, the financial challenges occurring in 2021 are likely to be greater than in 2020. Preliminary reports indicate 2021 international student enrolments will be lower than in 2020. 2021 is now likely to be the proving ground for the strategies and pandemic responses each university adopted – whether explicitly or implicitly – in the first year of the pandemic.

A more detailed article will be published when the South Australian universities 2020 annual reports are available.

Ian Marshman and Frank Larkins

Melbourne Centre for the Study of Higher Education

University of Melbourne


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