Universities to lose AU$7.6 billion and 6,000 researchers

The absence of international student revenue due to COVID-19 means Australia’s universities face a loss of up to AU$7.6 billion (US$5.4 billion) in revenue and the jobs of more than 6,000 researchers over the next four years.

A study by University of Melbourne academics Frank Larkins and Ian Marshman found that international student revenue and the discretionary income available to support research will decline to less than 30% of external funding for 2020 and beyond.

They say this is equivalent to a decrease of up to AU$7.6 billion in university revenue.

“The associated reduction in the university research workforce will be in the range 5,100 to 6,100 researchers, including graduate research students, research assistants and academic research leaders,” Larkins and Marshman calculate.

They say this could amount to around 11% of the current research force.

Writing in the online publication, The Conversation, Larkins, a professor emeritus and former deputy vice-chancellor of the University of Melbourne, and Marshman, an honorary fellow at the Melbourne Centre for the Study of Higher Education at the University of Melbourne, note that Australian university research funding is made up of discretionary income that comes from various sources, including international student fees.

This is additional to the funding, including government grants, specifically received for research activities.

“Universities spent AU$12.2 billion on research in 2018,” they note.

“Discretionary income used to fund Australian university research that year amounted to AU$6 billion, of which AU$3.1 billion came from international student fees. This means international student fees made up 51% of all the externally sourced research income.”

Universities most affected

Larkins and Marshman note that all Australian universities will be affected, although their modelling identifies 13 likely to be most at risk because of the size of their research effort and their international student programmes.

These are the research-intensive Group of Eight universities that account for 70% of the total research funding shortfall, while five other universities account for 18%.

The impact of the fee losses on Australia’s other 25 universities is just 12% of the total, they estimate.

But some of the 13 most affected are also facing significantly greater risk to their research programmes. This is because they have committed a proportionately greater amount of discretionary fee income than the sector average of 51% to fund research.

“We have rated the University of Technology Sydney, Deakin and Macquarie universities at extremely high risk,” the researchers say.

“While for Sydney, Melbourne, New South Wales, Queensland University of Technology, Griffith and Queensland universities the risk will be very high, for Monash, Adelaide, ANU [Australian National University] and UWA [University of Western Australia], risks will be moderately high.”

In addition, research rankings and global university reputations will be at risk “unless effective mitigation actions are achieved”.

What needs to be done

“Given their reliance on international student revenue to sustain research, universities must place a high priority on restoring, as quickly as possible, existing international student markets or building new markets in other countries,” Larkins and Marshman conclude.

The federal government could help by promoting stronger international engagement and fast-tracking student visas when borders reopen.

Nevertheless, the universities themselves will need to identify savings in other spending areas such as infrastructure investment, and identify alternative revenue sources such as increased donations, royalties and investment income.

“Broader collaboration between industries, universities and government research agencies is in the national interest, as it pools expertise across sectors,” they write.

“Unfortunately, enhanced collaborations between industry and universities will be limited because Australia’s current level of business research and experimental development is low, compared to the OECD benchmark.”

Establishing an independent “research and innovation council” representing private research institutes, universities, publicly funded government research agencies and industries with a strong research and development focus has considerable merit, they argue.

Such a body could provide governments with independent strategic research advice to underpin internationally competitive programmes. This includes proposing national research priorities important for economic development and social well-being.

This council could also play a valuable advocacy role in promoting the national benefits of investment in research.

“Individual universities should rigorously reappraise their own research strengths and potential capabilities. This could sharpen their focus on priority areas and increase research performance.”

Larkins and Marshman say these actions could be combined with an analysis of other university spending – including on administrative services and corporate overheads – to reduce the need for further savings in high-performing research areas.

But the federal government also needs to acknowledge there is a crisis in university research funding. To date, a coordinated policy response has been muted.

“While the government has established a research sustainability working group – made up of vice-chancellors and others who are to provide advice to the education minister – no other initiatives have been announced,” the two academics argue.

“Undoubtedly, the most vexed issue is the under-funding of the indirect costs of research linked to competitive grants and contracts. This is a critical unresolved policy issue sought by universities for at least two decades.

“Fundamentally, increased collaborative investments across industry, governments, universities and private research institutions are essential to alleviate the research funding shortfall and protect Australia’s international research and innovation standing in a post COVID-19 world,” they conclude.