by Garry Carnegie and James Guthrie
UWA’s new VC Amit Chakma says the university must address a $70m structural deficit (CMM September 28 and October 19).
UWA joins the growing list of public universities in Australia, which are simultaneously responding to the impacts of COVID-19 by seeking to reduce expenditures. Most Australian universities have perceived the need to cut costs without any undue delay, including the costs of full-time, part-time and casual employees, given declining income from fee-paying onshore overseas students.
The concern of this commentary is to examine the basis of this foreshadowed claim for essential savings of $70m drawing upon the audited published financial statements of the university for the year ending 31 December 2019.
Several highlights of the UWA consolidated financial results for the 2019 year are outlined below:
* total income from continuing operations of $1.09bn (2018: $938m)
* net result (surplus) from continuing operations of $121m (2018: $29m)
* total assets of $2.46bn (2018: $2.35bn)
* investments, including commercial properties of $882m (2018: $851m)
* proportion of income from fee-paying on-shore overseas students to total income from continuing operations is 13.8 per cent (2018: 16 per cent)
* proportion of total income from fee-paying on–shore overseas students and fee-paying off-shore overseas students to total income from continuing operations is 13.9 per cent (2018: 16.3 per cent).
UWA is not as exposed to international student fees as most other public universities, with less than 14 per cent of total income from continuing operations, down from 16 per cent in 2018, derived from fee-paying on-shore overseas students.
UWA, therefore, became less reliant on sources of income involving fee-paying international students in the period immediately before the impact of COVID-19. Indeed, UWA was among the bottom four, of 37 public universities in Australia, that are the least reliant public universities on income derived from on-shore international students for the year ending 31 December 2019.
UWA had increased its borrowings by $56 million to a total of $190 million as of June (UWA, Friday, 5 June 2020). However, for an institution with unrestricted assets approaching $900 million, this means the university is still holding substantial investments, including commercial properties.
Overall, UWA seems to be in relatively sound financial shape. Contrary to any public perception, it is not heavily reliant on income from international student sources.
As outlined in CMM (October 21), the University’s VC is endeavouring to drive operational changes. Professor Chakma is quoted as stating:
“The observation has been made that the university does not have a strong history of delivering change well or sustainably at the scale of what is now required. Having heeded the lessons learned from previous large scale organisational changes, we will ensure that leadership has full transparency, are aligned to a common set of collective goals and that focus on a sustainable university remains our target, whilst we make necessary adjustments to our operating model”.
VCs and governing councils of Australian public universities have opportunities to interrogate financials prepared for organisational management. but a wide range of stakeholders do not have this opportunity. As we have argued (CMM October 18), stakeholders remain “in the dark” as to whether strategies to adopt cost-cutting measures are fully justified and aptly timed to fit the circumstances.
We note UWA was the first Australian public university to publish its 2019 annual report on 17 March 2020. It may choose to continue this record by being among the first universities, if not the first in Australia, to voluntarily produce interim financial statements to help in reducing opaqueness which, in our view, is apparent in recent announcements about the so-called UWA “structural deficit” and moves to drive organisational change during a global pandemic.
Emeritus Professor Garry Carnegie, RMIT and Distinguished Professor James Guthrie, Macquarie University