EXPLAINER

How are universities being affected by the coronavirus crisis?

Australian National University reported a $225 million hit to its budget due to revenue loss and unforeseen spending during the pandemic. Picture: Elesa Kurtz

Australian National University reported a $225 million hit to its budget due to revenue loss and unforeseen spending during the pandemic. Picture: Elesa Kurtz

Australian universities are suffering big losses this year as the coronavirus crisis shrinks their revenues and blows out spending.

Here is why the sector says the impacts will be much worse than the 2008 global financial crisis and why the effects will be felt for many years to come.

How will Australian universities be affected financially by the pandemic?

Universities are reporting deficits into the hundreds of millions of dollars this year with the pain expected to be felt for years to come. The sector estimates that its revenue will drop by at least $3 billion this year, but it could be up to $4.6 billion.

Universities rely on a range of funding sources, many of which have taken a hit during the pandemic. In 2018, an average of 26% of universities' revenue came from international student fees. Some universities are more exposed to the international student market than others, with this percentage ranging from 2 per cent to 39% for individual universities.

This money contributes to paying wages, funding new facilities and research projects. With travel bans in place, about 80,000 new international students might not be able to begin in the spring semester.

Many universities rely on philanthropic donations, but these bequests are also likely to be smaller this year as businesses and individuals come under financial pressure.

The government provides a large portion of funding through the Commonwealth Grant Scheme which is based on the number of domestic students enrolled at the institution. Funding also comes in the form of the Higher Education Loan Program (HELP), formerly known as HECS. This system allows students in commonwealth supported places to pay their contribution once they are earning an income.

The federal government also budgeted $9.6 billion for research in 2019-20, of which $3.6 billion went to universities. The Australian National University receives a unique source of government funding, the National Institutes Grant.

The federal government announced the Higher Education Relief Package in April which will guarantee Commonwealth Grant Scheme and HELP funding streams for higher education providers at their current levels for the rest of 2020. However, this does not cover the shortfall from international student fees.

The Victorian Government announced a $350 million investment fund for universities and payroll tax deferral worth $110 million. Other states offered support packages for international students.

Will university staff lose their jobs?

Yes. Up to 21,000 full-time equivalent positions are expected to be cut in universities in the next six months according to Universities Australia. This is 16 per cent of the university workforce.

A Deloitte Access Economic report commissioned by Universities Australia found the sector supported 259,100 full-time equivalent jobs in 2018.

The JobKeeper scheme, which aimed to keep Australians connected to employment through the pandemic, was changed several times to exclude universities. The government originally said charities who had experienced a revenue drop of 15 per cent would qualify, but then said universities and schools would not qualify despite being registered charities. It further amended the scheme so that government payments to universities counted as revenue for JobKeeper purposes and that the turnover period to determine if the drop in revenue had been reached was January to June.

Most of the universities' losses will be felt later in the year when new international students will be unable to enter Australia and research contracts are reduced.

Universities Australia chief executive Catriona Jackson said the peak body was disappointed that universities were excluded from the JobKeeper package.

"A worker at a university just like a worker anywhere else," she said.

"In a regional or remote area, the university is likely to be the biggest employer in town and bigger driver of activity."

The pain might not be felt equally. Staff in casual positions will be at a higher risk of not being asked to come back to work in the spring semester.

Charles Sturt University revealed that job cuts were coming after it experienced an $80 million drop in revenue.

Meanwhile, the University of Wollongong is also bracing for job losses as part of a major restructure announced on Thursday. It also announced the Faculty of Law, Humanities and the Arts would cease to exist, with its schools being absorbed into other areas.

Will universities be cutting courses?

Some universities have indicated that they would be cutting courses, while others are not ruling it out.

The University of Tasmania announced in March it would reduce the number of courses from 514 to 120 by next year, citing an over reliance on Chinese international students as a factor in the decision.

The Australian National University said it could defer some small courses and put off some new activities in order to make up for a $225 million shortfall caused by the pandemic.

READ MORE:

How is research being affected by the pandemic?

Research programs have been severely disrupted by physical distancing and travel restrictions imposed because of the pandemic.

Campus closures have led to researchers throwing out samples and suspending plans for clinical trials. Some lab animals have had to be euthanised.

About 9000 international postgraduate students will be unable to return to Australia to continue their research programs.

It's feared that women researchers and academics in the early stages of their careers could be more disadvantaged as caring duties or budget cuts interrupt their research.

Ms Jackson said Australia's efforts to recover from the pandemic would be hampered by a lack of investment in research as universities were forced to cut back.

She said one of the reasons Australia had done comparatively well during the COVID-19 crisis was due to the work of university-trained researchers.

"The reason we have people that smart, that cutting edge is because we have a healthy research and university system."

This story How are universities being affected by the coronavirus crisis? first appeared on The Canberra Times.