Australian universities made a record $5.3bn surplus during the Covid pandemic at the same time as costs and employee benefits were cut, new data released on Thursday has found.
The finance data, released by the federal Department of Education, revealed $38.9bn in revenue across the tertiary education sector in 2021, with all but three universities reporting a net surplus.
For the past decade, the surplus has hovered at $1bn to $2bn and the sector barely broke even in 2020.
The University of Sydney recorded the highest revenue of $3.5bn in 2021 with a $1bn surplus and an operating margin up by almost 30%. International student fees accounted for the bulk of its total revenue, outpacing government funding.
It was followed by the University of Melbourne ($3.1bn, with a $600m surplus) and Monash University ($2.8bn, with a $300m surplus).
The results were a huge bounce-back from 2020, when 16 universities recorded deficits. But as revenues rose universities continued to slash their budgets.
Expenses across the sector were $33.6bn in 2021, a drop from $33.9bn in 2020 and $34.2bn in 2019 and more than $5bn less than total yearly revenue.
Employees took a significant hit, with expenses down by 5% including 4.6% for academic staff and 6.7% for professional staff.
Payroll tax was also down by 5.3%.
International student fees were down by 5.4% but still contributed $8.7bn to university revenue, the greatest stream of income behind federal government funding ($20.2bn).
Andrew Norton, professor in higher education policy at the Australian National University, said it was “very good year” for the tertiary sector given the “shock to the system” the pandemic wrought.
He said the key drivers were a better-than-expected rebound in international student enrolments, significantly higher government funding, mostly from one-off programs, and high investment income.
“The Group of Eight [universities] have done extremely well, but they did get the lion’s share of [government] dollars based on past research performance,” he said.
“Universities got rid of a lot of staff in 2020 and 2021. I think it was an overreach but when the decision was made, they thought significant revenue declines were extremely likely – 2022 is going to be the most difficult year of the whole crisis because international student numbers were returning, but not that dramatically, and the extra $1.5bn in funding won’t be there.”
The NTEU national president, Dr Alison Barnes, said spending on staff as a proportion of income was at “almost historic lows”.
“A major chunk of the surplus came from investment income,” she said. “Instead of hoarding surpluses in investment funds universities should be investing in secure jobs.”
Barnes said universities used the pandemic to “aggressively cut jobs” and restructure but the findings showed their “doomsday financial predictions” didn’t come true.
Revenue in the tertiary education sector plummeted from a fall in international students in 2020 due to border restrictions.
Data released by the federal government found the number of full-time jobs declined from 130,414 in March 2020 to 121,364 in 2021 (a 7% decrease).
The number is likely to be a conservative estimate as it didn’t count casuals, who account for about 30% of the university teaching workforce in full-time terms, and outnumber full and part-time staff.
“That expensive and callous move is behind the massive workload pressure and under-resourcing we’re seeing across higher education,” Barnes said.
She said the University of Sydney’s surplus was “particularly galling” given ongoing negotiations with the NTEU over its latest enterprise bargaining agreement.
“Investing even a fraction of the surplus into reducing casualisation would make an incredible difference for staff and students,” she said.
In a statement, the University of Sydney said its strong operating result was a “one-off” and the result of saving measures put in place at the start of the pandemic as well as “better than predicted” student enrolments and retention.
“It also included a series of one-time returns such as property sales and strong investment yields, and donor gifts and bequests that can only be spent as instructed,” it said.
“We deeply value our staff and recognise that maintaining our sector-leading salaries and offering the best staff terms and conditions is critical if we are to continue to attract and retain the best people.”
A spokesperson for the University of Melbourne said its surplus wouldn’t have been achieved without an unexpected $111m funding grant and a reduction in spending of $254m.
“Without the grant and the necessary action taken to reduce costs, the university would have faced a considerable operating loss,” they said.
The University of Melbourne surplus comes amid a string of wage controversies, including an upcoming federal court case over the alleged underpayment of 14 casual academics of $154,400 over three years. It has already repaid a total of $45m to staff.
The spokesperson said a “comprehensive program of work” was under way to identify any mis-practice and ensure it made full remediation to staff.
