Across Australia, universities are grappling with severe financial challenges, threatening their ability to provide essential education and research services. The University of Technology Sydney (UTS) is among those institutions forced to make difficult decisions to remain operational. This situation arises from fluctuating government policies, including the Job Ready Graduates scheme, which have significantly impacted the sector.
Universities lacking substantial reserves or assets are particularly vulnerable. The financial burden of maintaining operations is often underestimated outside academic circles. A significant portion of university funding is derived from per-student revenue, with no additional government support for teaching or crucial capital investments such as IT, infrastructure, and campus facilities. Less than half of a university’s operating revenue comes from government funding, which has not kept pace with rising costs.
Impact of Government Policies
The Job Ready Graduates policy, introduced by the Morrison government, aimed to align university courses with job market needs by lowering student fees for “job ready” courses and increasing them for others. This policy reduced per-student funding for universities, resulting in a financial shortfall for UTS of approximately $2,000 per student, equating to an estimated $60 million annually. Despite calls for policy revisions, federal governments have not prioritized these changes.
This financial strain has led many universities to operate at a deficit, with limited avenues to increase revenue. Consequently, institutions face the tough decision of reducing staff and closing courses. UTS, like many others, has been cross-subsidizing low-enrollment courses, a practice that is increasingly unsustainable.
Strategic Adjustments and Community Involvement
In late 2024, UTS began a transparent dialogue about its financial challenges and potential solutions. The university engaged staff and the community in rethinking its offerings and operations. Some feared this was merely a procedural exercise, but UTS insists the consultation was genuine and impactful.
Feedback from staff has led to adjustments in proposed changes, allowing UTS to achieve nearly 90% of its savings target while reducing the number of academic redundancies from 166 to 121. Unfortunately, most courses initially slated for closure, due to low demand and financial infeasibility, will still be discontinued. However, UTS has managed to retain several redesigned courses in key areas such as teacher education and postgraduate health, aligning with its public mission.
The Role of Universities in the Economy
Critics argue that universities have become corporatized, but this perspective overlooks the complexity and scale of these institutions, many of which manage billion-dollar budgets. As public entities, universities must adopt a businesslike approach to governance, financial management, and performance targets. Revenue generation at UTS focuses on investing in education and research, not on profit-making or building investment portfolios.
Universities contribute more than $185 billion to the national economy, with every $1 invested in higher education research and development returning $5 to the economy.
Australia’s universities are pivotal to the nation’s economy, social fabric, and workforce development. Research by Universities Australia highlights their economic contributions, emphasizing the importance of sustaining these institutions.
Looking Forward: The Need for Systemic Change
The Universities Accord initiative has sparked discussions on the future role of universities in shaping Australia’s trajectory. However, the higher education sector’s growth has lagged behind funding pressures, necessitating urgent systemic redesigns.
The newly established Australian Tertiary Education Commission (ATEC) is expected to provide data-driven advice on funding and help the sector and community rethink university deliverables. This is crucial for continuing to build Australia’s skilled workforce and research capacity.
Professor Andrew Parfitt, Vice Chancellor and President of UTS, emphasizes the need for decisive action to secure the university’s future. As UTS navigates these challenges, it remains committed to serving the public good and investing in its students and research capabilities.
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