Universities in crisis amid savage cuts to staff and services but, hey, big profits are back

by Michael Sainsbury | Sep 1, 2022 | Government, Latest Posts

As government funding for universities continues to decline, the sector has been savaged by cuts to staff, services and standards, writes Michael Sainsbury. It’s a crisis that should be high on the agenda as politicians, business and union representatives nut out the challenges facing the economy.

A day ahead of today’s Jobs and Skills summit, in an address to the National Press Club, Sydney University Vice Chancellor Mark Scott belled the cat on his own university and the sector:

We need to address the high levels of casualisation in the university workforce, with its potential impact on students, staff and teaching

The crisis is deepening even as universities across the country have banked billions in profits despite the revenue hit from the pandemic. The elite ”Group of Eight” recorded collective profits of $6.2 billion.

After seeing revenues, mainly from international students, collapse as the pandemic took hold in 2020, Australia’s universities have turned this around in short and ruthless order, the latest example of their corporatisation. This is quite the irony as academia was not propped up, as was the corporate sector, by billions in public subsidies via JobKeeper. 

The heady figures, while cheering in terms of the overall financial health of the sector, come care of onerous cuts in staff and conditions, wage theft and a relentless workforce casualisation creating a teaching crisis across the sector.

Alison Barnes, National Tertiary Education Union national president, said it was time such sentiments from university leaders as Scott were backed with action.

“It is those who are most vulnerable to exploitation who are the victims of wage theft,” she said. ”We know at least 21 of Australia’s 40 universities have been implicated in the underpayment of staff.”

In the 12 months to May 2021, 40,000 jobs in tertiary education were lost, with 88% of these losses estimated within public universities.

Research economist Eliza Littleton from the Centre for Future Work at the Australia Institute wrote recently in the At the Crossroads report on universities that:

In the face of Covid shocks, sustained international student fee intake combined with reduced teaching costs through online distance education and job cuts have primed universities for healthy surpluses this financial year. Despite that, universities are continuing with measures that further downsize and casualise their workforce

Australia is crying out for teachers – schools are a key area of skilled worker shortages –  yet the basic humanities degrees that many need to prepare themselves for the classroom have been put out of reach of many and made far less attractive by the ideologically driven Job-Ready legislation passed by the Morrison government during the pandemic.

“The Job-Ready Graduates reforms result in a reduction in government spending on student learning of $1 billion per year, while student contributions increase $414 million per year,” Littleton said.

It is true that the driving force for university corporatisation has been decades of federal government funding cuts. However many observers believe that university management has collectively used the pandemic – some more than others – as cover to ramp up staff cuts and insecure work.

Westacott joins academic gravy train as VC salaries go up and profits soar

“Since 2013, federal government funding for higher education has declined in real terms by 2.6%, despite a 23% increase in student enrolments,” Littleton found. “Federal government funding as a percentage of university revenue has more than halved since the 1980s, declining from 80% in 1989 to only 33% in 2019. In budget 2022-23, the government forecasts a cut to real university funding of 3.4% over the forward estimates.”

In “turning around” their operations, Monash University banked a stupendous $3.2 billion with Sydney University also in the 10 figure club with $1.05 billion. Only Adelaide University had a profit of less than $100 million at $54 million but turned around a loss from the previous year.

In a textbook example of how Australia’s corporatised universities are singularly focused on revenues (and now, it seems, profits) at the expense, critics argue, of learning,  UNSW recorded the highest number of staff cuts of any university in the country, employing 726 fewer full-time jobs in 2021 than in the previous year. Its profit lifted to $305 million. The university has also been accused of underpaying casual staff up to $36 million by an independent auditor. 

Doing more with less

In Barnes’s view it was a “really rotten piece of legislation”, adding that “under the Morrison government federal government funding per student was cut by about 14%. The average course cost was increased by about 7% and it also left universities with 7% less funding overall per student. So it’s expecting people to do more with less and  many students pay more for their degrees. It wasn’t based on clear principles about how funding should be allocated or how things should be.

So for example, journalism, social sciences, social sciences, and humanities fees were increased by over 100% and I think that’s a really damning indictment

It’s worth mentioning, too, that heady profit figures provide justification for handsomely paid vice-chancellors – dozens of Australian university CEOs (as they effectively style themselves these days) are paid over $1 million a year.

Australia’s universities: bosses reel in $1m-plus salaries, $1bn profit on back of staff underpayment

And it’s not just salaries. An investigation by Sydney University’s campus newspaper Honi Soit this week revealed hundreds of thousands of dollars in expenses incurred by former VC Michael Spence, Chancellor Belinda Hutchinson – owner of a $20 million harbourside property –  and others.

Michael Spence “expensed $133,525.46 over two years at the University, and spent thousands on a personal membership to the exclusive Oxford and Cambridge club,“ according to Honi Soit.

Spence’s expense sheets from his last two years as VC were released to Honi Soit under Freedom of Information legislation. 

“From 2019-2021, USyd’s executive spent a total of $10,279 on various subscriptions. Spence himself was responsible for the majority of this, expensing $8633.55 for subscriptions over two years.”

The story also detailed Hutchinsons’ $7000 taxi bill as well as a claim she made of $3.60 for a “refreshment.”

The big question is, as universities have recovered financially, have been reshaped and operating under corporate business models, are now fit for purpose to fulfil their traditional role as our society’s inquisitor and nursery for the next generation of students. This is especially pertinent as the Albanese government launches its Jobs and Skills Summit.

“Universities are still fit for purpose,” Barnes said, ”but whether they will remain so is the big question because if you have  business models that are based on 69% of the workforce, either being employed on fixed term or a casual basis. That fundamentally, at some point, is going to put our institutions at risk. Obviously it already has terrible costs for many of the people who are employed on fixed term or casual arrangements, in that basic capacity to pay rent or go on a modest holiday.”

Staff and students – not university executives  – are coming under increasing strain and their capacity to deliver what society needs them to deliver is increasingly being tested.

The onus to ring in changes to a business model that is being increasingly questioned by staff, students and alumni lies in large part with the federal government

Delivering free undergraduate education for domestic students, an expanded public research program, thousands of secure jobs, and a new national governance body for the sector would cost an estimated $6.9 billion per year in additional higher education funding, Littleton concluded.

Such funding would bring Australia to 1% of GDP on tertiary education funding – about half of what is spent on defence and in line with other OECD countries.

This would generate almost 27,000 additional jobs (FTE) in higher education through easing workload pressures, additional research funding and staffing a new independent higher education agency.

Michael Sainsbury is a former China correspondent who has lived and worked across North, Southeast and South Asia for 11 years. Now based in regional Australia, he has more than 25 years’ experience writing about business, politics and human rights in Australia and the Indo-Pacific. He has worked for News Corp, Fairfax, Nikkei and a range of independent media outlets and has won multiple awards in Australia and Asia for his reporting. He is a fierce believer in the importance of independent media.

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