Impact of the pandemic on the 2020 financial health of 37 Australian universities

By Frank Larkins and Ian Marshman

Summary: The revenue streams that contributed to the 2020 total income receipts of 37 Australian universities have been analysed using data published in university annual reports. The major contributors to the $1.8 billion (5%) decrease in sector revenue from 2019 to 2020 have been a 10%  reduction in student fees and charges of $1.15 billion and a very large, 125% decrease in investment returns of $1.28 billion. These shortfalls were marginally offset by increases in funding from grants from governments and student direct and indirect HECS payments of $0.63 billion (3%). As a result in 2020 universities reliance on government support and HECS payments increased from 60% in 2019 to 65% in 2020.

The 2020 financial performance of all 37 universities, in relation to these revenue streams, has been examined to determine the impact of the COVID-19 pandemic. Some 29 universities had less total income in 2020 compared with 2019. From an analysis of the substantial data sets assembled it has been possible to determine that in relative terms the pandemic had a high impact on the financial operations of 10 universities, a medium impact on another 10 universities and a low impact on 17 universities. The overall findings are presented in table 5 in the body of this paper. The universities most impacted are ANU, La Trobe, Federation, CQU, Swinburne, Southern Cross, UWA, Wollongong, Deakin and QUT.

It is concluded that some of the university sector has been remarkably resilient in coping with the challenges of the pandemic in 2020, others have been less so. It is likely that an increased number of universities will experience significant financial challenges in 2021 than in 2020, principally because of a further decrease in international student fee revenues, the need to fund capital and other expenses deferred in 2020 and, for some further expenditure on redundancy payments.

This paper provides a snapshot benchmark as to the financial health of Australian universities at the end of 2020. This will enable greater insight to be gained into the on-going effectiveness of university strategies to deal with the impact of the pandemic when future annual reports are available.

Professor Emeritus Frank Larkins and Associate Professor Ian Marshman are Honorary Fellows from the Melbourne Centre for the Study of Higher Education at the University of Melbourne.

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Professor Emeritus Frank Larkins

f.larkins@unimelb.edu.au