COVID-19 pandemic research funding shortfalls and workforce reductions modelled for individual Australian universities

By Frank Larkins and Ian Marshman

Summary: The revenue margins available to Australian universities to cross-subsidise research activities from overseas student fee revenues have been modelled using 2018 data sets and the average domestic cost of teaching for Go8 universities as the reference point.

It is predicted that as a result of a decline in international student fee revenue Australian universities collectively will have a shortfall in discretionary income available to support research over the next five year to 2024 of between $6.4 billion to $7.6 billion. The shortfall will result in a reduction in the research force of between 5,100 to 6,100 research student and staff researcher positions, approximating some 11% of the current research workforce.

The precarious situation currently faced by the sector, because of the loss of overseas student revenues due to the COVID-19 pandemic, is underscored by the fact that for 2018 university dependency on discretionary fee revenue to support research was equal to 51% of all externally sourced research income and government research block grant funding. Some universities were committing more of their own discretionary funds to research than externally sourced research income. The impact of the pandemic means that the discretionary funds available system-wide will be reduced from the current 51% to less than 30% of external funding for 2020 and beyond.

While all Australian universities will be impacted, thirteen universities are identified as the most vulnerable regarding their future capacity to support research at current levels. This is due to the size of their research effort and international student programs. These 13 universities include the Go8 universities, which account for 70% of the research funding and staffing shortfalls, and five other universities which account for 18% of the shortfalls. The remaining 25 universities share just 12% of the impact of the shortfall.

The scale of the research challenge, when universities are committing more discretionary fee income to fund research than externally sourced research funds and are now facing significant fee loss, means that the risk of losing research momentum will be extremely high. The University of Technology Sydney, Deakin and Macquarie universities are in this risk category, especially if effective mitigation actions are not achieved. For Sydney, Melbourne, New South Wales, QUT, Griffith and Queensland the risk is less, but still will be very high, while for Monash, Adelaide, ANU and UWA risks will be moderately high. The other 25 universities will face research challenges, but generally at a lower level of risk.

The research investments made by these thirteen universities have resulted in each improving their international rankings in recent years. Consequently, university international research reputations are significantly at risk because of the research revenue shortfalls. Reputational damage will be to the national detriment.

To protect research programs and standing universities will need to identify savings in other expenditure areas and find additional revenue sources. Enhanced university-industry collaborations opportunities, while important, will be limited because of the low level of business research and experimental development.

Governments, federal and state, can also play a role in strengthening the national research framework to ensure Australia maintains an internationally competitive higher education research sector to underpin national economic prosperity and community wellbeing. Possible research-related policy actions by all sectors for a post COVID-19 world are discussed.

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.

The views and comments expressed in this paper belong to the authors and do not necessarily reflect those of the LH Martin Institute, Melbourne Centre for the Study of Higher Education and The University of Melbourne.

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Professor Emeritus Frank Larkins