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New analysis estimates universities will lose $16 billion by 2023 because of the coronavirus. Experts reveal how this could affect Australia.

·5-min read
  • Universities Australia estimates that Australian universities could lose $16 billion by 2023 because of the coronavirus pandemic.

  • Experts highlighted the consequences of reduced funding to universities such as a weaker higher education sector and a generational loss of researchers.

  • However, University of Melbourne's Ian Marshman believes it could lead to a "much leaner and potentially more differentiated sector."

  • Visit Business Insider Australia’s homepage for more stories.

The coronavirus is expected to have a long term impact on Australia's higher education sector.

Modelling from Universities Australia found Aussie unis could lose $16 billion in revenue by 2023 as a result of the pandemic.

Universities Australia CEO Catriona Jackson said in a statement the revenue is used to support employees and facilities as well as fund research and innovation.

Universities Australia called on the federal government to invest directly into Australian research. The organisation highlighted how universities account for a growing amount of Australia's research, rising from 24% of Australia’s R&D 10 years ago, to 34% in 2017-18.

Jackson added that if universities are not able to fund this research, it could affect Australia's ability to "innovate its way out of the COVID-19 recession".

"If there’s less research on campus we will be less equipped to deal with crises like COVID-19 and bushfires in future," she said.

"Great Australian researchers have been responsible for so many job-creating, life saving innovations including vaccine for cervical cancer, IVF, soft contact lenses, the bionic ear and spray on skin for burns victims. All the result of Australian university know-how."

Ian Marshman, Honorary Principal Fellow at the Melbourne Centre for the Study of Higher Education told Business Insider Australia via email that if universities don't receive funding, it will lead to a weaker higher education sector and a generational loss of researchers. On the other hand, he said, it could mean a "much leaner and potentially more differentiated sector."

He said some restructuring could lead to fewer universities overall as well as a rise in online delivery. It could also mean the development of new international markets – with lesser reliance on one or two source countries – and more focus put on domestic markets and reciprocal partnerships between business and industry.

Why university finances are in decline and who will be impacted

Andrew Norton, Professor in the Practice of Higher Education Policy at Australian National University, said the major reason universities are in financial trouble is because of the drop in international student numbers. Marshman also pointed to the same issue, saying international student income accounted for an average of 26% of Australian university revenue in 2018.

Norton told Business Insider Australia via email around 20% of students who were meant to start in semester one this year didn't arrive before the borders closed due to the coronavirus pandemic.

"It is going to get much worse, because large numbers of international students start their courses in semester 2," Norton said. "It is very unlikely that the border will be open to large-scale movements by late July."

Norton added that those impacted are the staff teaching the students but also "the research financed with international student profits."

"My estimate is that more than $3 billion of the $12 billion Australian universities spent on research in 2018 came from profits on international students," he said.

Universities are also affected by having to move on-campus courses to online and support students, mainly international students, who have lost their jobs.

"In even the best case scenario, there are going to be substantial job losses in Australian higher education," Norton said. "In the worst-case scenario, many research projects will be abandoned, courses cut, and campuses closed."

Marshman said online courses, often posited as a solution, are more suited to particular programs like short courses, skills upgrading or postgraduate education.

"Quality online delivery is not inherently less costly to deliver than campus-based education," he said. "What is likely to emerge from COVID-19 is the acceleration of a ‘click and brick’ mode of delivery in which the best of both experiences can be offered to students, particularly undergraduate students experiencing higher education for the first time."

What can be done to support universities

Norton said governments have been generally reluctant to help out universities outside of giving public funding to some that have struggled with domestic student numbers. He also doesn't believe there should be a general bailout for universities.

"That would set a bad precedent by encouraging risky behaviour in the belief that governments would ultimately cover the losses," he said. "However, I believe a more strategic investment in current research projects could be valuable, to ensure that they are not abandoned with consequent loss of the time and money already invested."

However, Norton believes the government should make more funding available to support an expected rise in demand from domestic students.

Marshman said there is a lot that universities can do, and are doing, to help themselves during this situation. He suggested actions universities can take, like reviewing the number of campuses they operate from, consolidating courses and subjects, reviewing management overhead costs and staff costs.

But even with all these measures, universities will have a long way to go.

"Even with the most severe of these measures some universities will struggle in their current form if the decline in fee revenue is deep and long," Marshman said.

In the short term, Marshman suggests increasing government support for international students by allowing them to access JobKeeper/JobSeeker payments, and allowing eligible universities to receive JobKeeper payments for their staff as well.

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