Universities Down Under had begun reducing their outlays, and their staffing numbers, even before the full effect of the financial turmoil on the global stock markets had been felt. Falling investments, shrinking government grants and growing concern about the overseas student market are increasing pressure on institutions to slash their costs and, in the past month, more than 500 academics and general staff have been laid off or are facing redundancy.

The University of Sydney, Australia's oldest and richest, announced last week it was cutting spending next year because its income from investments had fallen by a staggering $100 million. The university's acting vice-chancellor, Professor Don Nutbeam, told ABC radio that share market investments had once provided about 10% of Sydney's annual budget.

"Sydney University has been affected simply because a significant amount of money invested produced about $150 million [US$97.5 million] a year over the past few years and this year we are anticipating it will only produce about $50 million," Nutbeam said. "So next year, we are probably expecting to be down about $100 million."

He said the university's building programme could be slowed and enterprise bargaining negotiations with the National Tertiary Education Union over pay increases might also be put on hold.

"We're quite keen to better understand how the impact of the current financial turmoil will play out in the university before we enter into a long-term agreement with staff," Nutbeam said.

Sydney is not alone. Returns from endowments in universities across Australia are expected to plummet as Australia's investment markets dive. The Group of Eight research intensive universities are among the oldest and wealthiest with the biggest endowments and, as a result, they are likely to suffer the biggest falls.

The Australian newspaper reported last month that, based on a survey of expectations among seven of the Go8 universities, investment revenue would drop by a startling 71% or $388 million to just $162 million.

"The losses will be twice as bad as during the tech-wreck, when the dotcom boom came to an end and Go8 investment revenue dropped by 35 per cent from $233 million in 2001 to $151 million in 2002," the paper reported.

At the University of Western Australia in Perth, the financial collapse in the Australian stock market is expected to halve the university's income from investments. UWA vice-chancellor Alan Robson said investment income normally comprised 6% of the university's annual earnings but that this would fall to around 3% in 2009. Robson said this would mean cutbacks in the capital works programme but left open the possibility of more severe action.

Although the federal government has promised more money, including a multi-million dollar allocation for capital works, this will not appear on university books until next year. Meantime, several have begun to cut jobs and reduce the number of courses.

At Victoria University in Melbourne, vice-chancellor Professor Elizabeth Harman last month announced that up to 270 staff positions would have to go and the number of courses attracting small numbers of students would be slashed. At least two of the university's outer suburban campuses also face closure.

Another Melbourne university, La Trobe, had earlier confirmed it was seeking about 180 job cuts from mainly general staff while the University of Melbourne continues to make cuts within its arts faculty following an overhaul of the entire university curriculum.

Academics and general staff at Victoria University are holding a ballot this week to decide on an industrial campaign to restart negotiations over salary rises proposed by the National Tertiary Education Union which also wants to limit employment of staff on contracts. Deakin University staff will be asked next week to approve a similar campaign.

geoff.maslen@uw-news.com