Universities reject claims they are rolling in cash

Australian universities have angrily rejected the Turnbull government’s assertions they are receiving “rivers of gold” from the taxpayer and can easily absorb the funding cuts announced in the May budget.

As well as increasing student fees, the government wants to reduce university funding by $380 million by applying a 2.5 per cent “efficiency dividend” next year and in 2019.

Education Minister Simon Birmingham last week said: “Australian universities have been enjoying a serious flow of money – rivers of gold, if you like – since the demand-driven system for universities was put in place a number of years ago.

“I think the university sector, whilst maybe wanting to cling to every revenue stream it can, needs to be realistic that they’ve been on an incredibly good wicket.”

Universities would receive funding growth “a little bit slower than it would have otherwise been” under the government’s changes, he said. 

In a submission to a Senate inquiry examining the government’s higher education package, peak body Universities Australia said: “The government has claimed that universities are able to absorb the proposed funding cuts based on their published accounting surpluses.

“This argument misunderstands the true position of universities and how they operate.”

While universities booked a combined surplus of $1.7 billion in 2015, Universities Australia said there has been a “clear negative trend” in the number of universities with healthy surpluses over recent years.

The number of universities with a surplus margin greater than 8 per cent has declined from 23 (or three in five universities) in 2009 to eight in 2015, according to Universities Australia. 

The peak body said the 2.5 per cent efficiency dividend is “bigger than it looks” and will put at risk student support services, small courses such as languages and regional campuses.

Prestigious city universities and cash-strapped regional universities are united in their strong opposition of the efficiency dividend. 

The elite Group of Eight (Go8) universities said: “Australian universities are not rich.”

The Go8 said the “small surpluses” recorded by its universities have been “hard won”, including by laying off staff and by increasing the number of students in each class.

The University of Sydney said it would be $50 million worse off over the next four years if the government’s bill passes.

Victoria University said it was already battling to emerge from deficit and would have to lay off an extra 50 staff over 18 months if the funding cuts go ahead.

“Given the huge restructuring and efficiency agenda already underway, we cannot see a way of doing this without reducing the quality of student services, or cutting research so much that it would significantly jeopardise the university’s reputation and its ability to undertake applied and translational research for industry and our local community,” Victoria University said.

Universities are also alarmed at the government’s plan to link 7.5 per cent of university funding to performance targets that have yet to be defined. 

The University of NSW said the government had used “shallow” reasoning to justify the funding cuts and had overlooked universities’ increased reliance on international student revenue to stay afloat.

Charles Darwin University said the government’s plan would have “serious financial implications” for its long-term viability. 

Grattan Institute higher education program director Andrew Norton said government spending on universities had grown substantially over recent years but student numbers had also risen.

“This isn’t a river of gold, but nor is the stream drying up,” he wrote in a blog post.

“[O]verall the last decade has been exceptionally good for universities, with the strongest increases in total public funding for decades and the strongest growth in private funding ever.”

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