The year 2020, which marks the onset of the worldwide public health crisis brought about by the COVID-19 pandemic, has been a critical factor in the significant collapse of Australian university profits by $1.6 billion to just $669 million, based on a new report by Victoria University’s Mitchell Institute.
According to lead author Peter Hurley, while 2020 was not as bad as every institution had anticipated, the findings serve as an advance notice for institutions that the worst is still underway.
Key Takeaways:
- A new report by Victoria University’s Mitchell Institute has shown the drastic drop in Australian university profits.
- Australian university profits dropped from $1.6 billion to just $669 million in 2020.
- The report indicated that most universities struggle to break even with the majority of the sector surpluses held by just three institutions.
The report, Australian Investment in Higher Education, analyzes and looks closely at the decade-long data to discover the changes in the university policy and the impacts of the pandemic.
Out of the 38 universities included in the analysis, 15 have reported a deficit in 2020, with international enrolments falling by 20-25 percent per year. In a nutshell, university revenue dropped by AU$2.2 billion in 2020, down 6 percent from the previous year.
However, the report also indicates that most of the institutions struggle to recover expenses with the majority of the sector surpluses held by only three institutions – Monash University (AU$267 million), University of Melbourne (AU$178 million), and University of Sydney (AU$107 million).
The VU Mitchell Institute’s previous reports showed that Australian students’ educational experience is likely subsidized by revenue from international students.
Hurley also noted that the support from the government would end in 2021, while the border closures and travel restrictions will continue to be the cause of a progressive downfall of the sector in 2022 and 2023.
Consequently, for every missed opportunity for six-monthly intake of international students, about $1 billion to $1.25 billion cost institutions. This also means that smaller and less prestigious universities encounter the most challenging conditions.
Hurley added that as the government support is nearing its end, parts of the university are likely to face various challenges that could lead to cuts to staffing, research, and courses.
In 2022 and 2023, educational institutions will need to navigate some of the most challenging conditions they have yet to face. Meanwhile, Australian governments and educational institutions are crafting plans to recover rooted in the alarming fall in international student demand for universities compared to the pre-pandemic state of international education.
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