University profits more than halve, new report

A new report from Victoria University’s Mitchell Institute shows that Australian university profits plummeted by $1.6 billion to just $669 million in 2020.

Australian Investment in Higher Education report (PDF, 1.77 MB) shows 15 of the 38 universities included in the analysis reported a loss in 2020. However, most struggled to break even with the majority of the sector profits held by just three institutions.

Report author Dr Peter Hurley from Victoria University’s Mitchell Institute said 2020 was not as bad as expected, but warns the worst is still to come.

“Our analysis suggests there are some very dark clouds on the horizon,” he said. “Special government support for the sector ends in 2021. Continuing border closures mean international student revenue is likely to continue to fall well into 2022 and 2023.”

Dr Hurley said international enrolments were falling by 20-25% per year.

Every missed six-monthly intake of international students is costing universities about $1 billion to $1.25 billion.

Most of the universities that didn’t post a loss barely broke even. Almost all the sector’s profits were concentrated in just three institutions, Monash University (A$267 million), University of Melbourne (A$178 million) and University of Sydney (A$107 million). All three had very high exposure to the international student markets, with more than 50% of student revenue from international students, but they were able to generate a profit due to their investments.

“This shows that it is the smaller, less prestigious universities that have not had a cashed up philanthropic alumni to donate funds over the years, that are most likely to struggle to survive,” Dr Hurley said.

Smaller universities are more likely to cater to the average Australian students.

We know these universities are making huge cuts to teaching and courses and that means a reduced education experience for Australian students.

Previous reports from the Mitchell Institute have highlighted that Australian students’ educational experience is likely subsidised by revenue from international students.