Have unis reached peak staffing?

Universities face the prospect of significant job losses as a result of the fiscal uncertainty of international student caps, or steep revenue declines if international enrolments are cut, in the face of policies unveiled last week by both major parties.

Last Friday, NTEU president Alison Barnes stated that, “Labor and the Coalition must guarantee uni funding and jobs will not be cut because of fewer international students,” but on the basis of present trends, this is exactly what will not happen. Labour’s plan to cap enrolments will shape international student pipelines and university budgets for years, while the Coalition’s drastic reduction in student numbers would devastate university finances.

2023 University Annual Reports Queensland, WA and Victoria indicate that with domestic student demand largely flat, it was international numbers that delivered small profits or reduced losses. But in Victoria and Queensland there were also hefty staff cost rises, as pay rises in their new enterprise agreements started to flow the system.

The risk is that while the Commonwealth can cap international student numbers, it cannot do anything about pay rises.

In Victoria, Swinburne U made a small profit and La Trobe U was just in surplus, but just about all others made losses, despite increases in international student fee income.

Universities also reported increased staff costs, up 11 per cent at Uni Melbourne and 13 per cent at Deakin U. Monash U reported a marginal staff headcount increase to just short of 10,500 but costs increased $200m. 

There was a similar pattern in earnings in Queensland. QUT enrolments were up, due to more internationals, reducing the net loss by $110m to just under $20m. However, staff costs grew $52m, because of pay increases in the new enterprise agreement. Uni Queensland had the third flat year for enrolment earnings, both locals and internationals. The university had 16,909 international students last year, 100 fewer the previous peak, in 2021. But while academic numbers were stable, professional staff grew by 500, to 4,500. Overall employee expenses for the consolidated university account were up 6 per cent. Griffith U’s $67.7m loss was mainly due to a $65m increase in employee cost which management attributes largely to staff and enterprise bargaining increases.

WA universities all did ok, with costs controlled and good international numbers, but there is not much of a buffer if offshore arrivals fall. Curtin U made a marginal $12m loss on $1.097bn in revenue, UWA had a $90m net result, due in considerable part to a $44m increase in student fees. And Edith Cowan U’’s $200m increase in revenue was built on $80m more in fees and charges, due in part to a “surge in post-pandemic demand” from internationals.

If the new Commonwealth regime caps (let alone reduces) existing international numbers more student revenue will be hard to find. Overall domestic enrolments over the next five years are hard for managements to presently predict, given the state of the economy and Minister Clare’s commitment to more low SES enrolments.

However, Andrew Norton reports commencing Bachelor degree students in 2022 were down 8.6 per cent on 2021. This maybe just a return to pre-Covid levels, but 2023 university annual reports refer to continuing soft local numbers.

Potential school leaver numbers could grow, if only because there are more of them, as those born in what Treasury calls the “brief baby boom” at the start of the century finish school, but it will take a significant slump in the economy to get mature-age students back, now declining for five years or so.

Locals funded by Commonwealth Supported Places barely cost recover in many disciplines and produce nowhere near the revenue that internationals do.

The budget challenge universities face now is working out how to cover their costs when they have no certainty what their international income stream will be. If they project tough times, a safe solution will be to contain staff costs with no growth in numbers, or even cuts.

The easiest savings for managements come from casuals, but there are not as many as there used to be, at least in EFTS; 24,800 in 2019, 21,000 last year. And when one EFT paypacket is split among multiple people, sacking lots of casuals does not make much of difference (human suffering aside).

If universities lose sufficient international income to require significant savings over time, they will look at continuing staff. So unless policies change, just after pandemic recovery, now may be as good as it gets in terms of HE employment.



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