The federal budget papers handed down on Tuesday revealed that Treasury anticipates funding for Australia’s higher education sector decreasing from $11.3 billion in 2020-21 to $10.6 billion next financial year – an 8.3 per cent cut.
This will be followed by a further funding drop of $387 million in 2022-23 and $41 million 2023-24, until funding for the sector is expected to marginally increase to $10.3 billion in 2024-25.
The figures represent a 9.3 per cent cut in real terms to the sector over the next four years, totalling around $1 billion in revenue lost overall.
Treasury said the funding cut to higher education due next financial year “primarily reflects the cessation of additional funding to maintain universities’ research efforts in response to the challenges caused by the COVID-19 pandemic”.
In last October’s budget, the federal government granted Australian universities a $1 billion research funding lifeline to support the sector through COVID and shift its reliance away from international students and closer to commercial research.
Flinders University Deputy Vice-Chancellor of Research Professor Robert Saint said the decision not to extend this emergency funding will have consequences for the industry.
“The federal government’s decision to not respond to calls for an extension of the COVID-related $1 billion in additional funding for university research will have a negative impact on Australian research and development capacity,” Saint said.
He said Flinders would continue to be “highly competitive” in winning research funding, but it will be “in the face of increase competition for shrinking dollars”.
It’s a view shared by UniSA Vice Chancellor David Lloyd, who said the “toughest years for international education are still to come”.
“Overall, it’s very disappointing that the Budget hasn’t recognised universities’ critical contribution to job creation, particularly during the pandemic,” Lloyd said.
“University research underpins Australia’s innovation and productivity and will be critical to the continued pandemic response, so we are looking forward to further announcements about research sustainability and commercialisation.”
The South Australian university sector has spent the last 12 months reeling from a range of pandemic-induced problems, with the absence of international students and the exclusion of higher education providers from JobKeeper putting pressure on the industry’s bottom line.
Adelaide University in April was forced to close down for a week as part of a “purchased leave” agreement with the National Tertiary Education Union (NTEU) designed to avoid 200 job losses.
National Tertiary Education Union SA Division Secretary Ron Slee said university funding was “missing” from the federal budget, with the end of the $1 billion research lifeline to harm job prospects in the sector.
“Last year [the federal government] did recognise … that universities were going to be struggling a bit because of international student revenue falling,” Slee said.
“And so they pumped in a billion dollars research funding to help cover that loss.
“We were thinking surely they’ll keep that going, because the international student revenue in future years, the next two at least, is going to be worse than it was last year.”
Slee said the federal government’s $26.1 million commitment for 5000 extra short course places in 2021-22 was “trivial” in comparison to the research funding cut.
“For all the talk about jobs, one of the sectors that the [Treasurer Josh Frydenberg] is ignoring is the jobs that are being lost and will continue to get lost in universities,” he said.
“I’m not just talking about South Australian unis, but we will be hit on that research cut.”
Adelaide University Vice Chancellor Peter Hoj labelled the budget and its research cut a “missed opportunity” which will have “long term consequences for Australia”.
“We were grateful that the government previously was quick to provide a series of short-term supports to universities in 2020, cushioning the blow of the international student downturn,” Hoj said.
“However, those supports have more or less been withdrawn.
“This ignores the fact that the impacts of the pandemic and other geopolitical issues will affect universities across multiple years, with most indicators pointing to 2023 being the bottom of a cycle that will drag on for years.”
Group of Eight Universities CEO Vicki Thomson, whose organisation has Adelaide University as one of its members, said the budget had left universities with “one hand tied behind our back”.
“Strong financial management has seen some universities withstand the short-term impacts of COVID-19, however others are already in deficit and the next two years will see a further significant decline in revenue,” she said.
Thomson highlighted that the Group of Eight had lost around 4000 jobs and $780 million in revenue in 2020 alone.
“While universities received a much welcomed one off $1 billion injection for research in the October 2020 budget, COVID-19 is not a one-off and there is a need for an ongoing plan to increase productivity in the years ahead.”
Vocational education programs fare even worse in the budget forecasts, with a funding cut of $580 million expected over the next four years – representing a more than 24 per cent decrease in real terms by 2024-25.
Treasury says next year’s decrease in vocational education spending “primarily reflects the impact of the conclusion of one-off increases in 2020-21, which were part of the Government’s response to the COVID-19 pandemic”.
However, the budget papers say these cuts will be “partially offset” by the federal government’s investment in the JobTrainer fund and other skills and apprenticeship training programs.
Among the other higher education measures proposed in the budget are a $30.3 million waiver of regulatory fees for the sector, $9.4 million in funding for grants to support higher education and English language providers deliver online and offshore learning, and a $1.1 million program to incentivising universities to enrol students in “industry PhDs”.
Education Minister Alan Tudge said the package was “measured and targeted” to support the higher education providers who “need it most while borders are closed”.
Treasury says the funding decrease to higher education over the long term reflects “lower costs under the Commonwealth Grant Scheme as a result of the Job-ready Graduates higher education reform package”.
The Job-ready Graduates reform package, introduced by former Education Minister Dan Tehan, is designed to funnel university students into “job-ready” degrees with student fees for science and engineering courses slashed at the expense of law and humanities units which will increase.
Ron Slee said the revelation that the Job-ready Graduates package would result in cuts “flies in the face of what the federal government said its aiming to do”.
Adelaide University Vice Chancellor Peter Hoj said the 9.3 per cent downturn was “largely expected” and is a “direct result” of the Job-Ready reform package which “[shifted] the funding responsibility for Australians from the government to the student”.
“There is also a similar downturn in support from 2020-21 to 2021-22, which represents the government withdrawing short-term supports from last year.
“These changes are short-term and short-sighted and they will be consequential.”
International student return not forecasted until mid-2022
A “gradual” return of international students is not expected until midway through next year, the budgets papers show, prompting anxiety from South Australian universities keen to secure the return of onshore learning.
Treasury forecasts “small phased programs” to bring back international students will commence at the end of 2021, but “the rate of international arrivals will continue to be constrained by state and territory quarantine caps over 2021 and the first half of 2022”.
International education is a $2 billion industry in South Australia.
Flinders University Pro Vice-Chancellor (International) Sebastian Raneskold said the budget’s assumptions are “deeply concerning for universities”.
“[It] will have significant flow on effects for the wider economy and society – the longer we delay their return the slower the state’s economic recovery will be,” Raneskold said.
“Flinders strongly support the urgent activation of an International Student Arrival Plan at the earliest opportunity, paving the way for new students in the future.”
Similarly, Hoj from Adelaide University accused the federal government of failing to “provide a proper road map and appropriate investment in one of Australia’s biggest export markets”, calling the current situation a “major disappointment”.
“If borders remain closed until the middle of next year, it will be too late for universities to have a significant intake of onshore international students until the beginning of 2023,” Hoj said.
“By this point, many pipelines will be empty because students will look to other countries and it will take a long time to refill, so the recovery will be slow.”
SA Health flagged last month that it has identified a “suitable” quarantine facility for international students looking to study in SA next year, but is yet to announce a location.
UniSA Vice Chancellor David Lloyd said the university was encouraged by the prospects for a pilot program.
“We’re pleased to see small pilot programs for international students, with a view to a larger scale return of international students as soon as possible,” Lloyd said.
“We will continue to support efforts to make this a reality – especially given the importance of international education to the wider economy in South Australia.
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