To thrive, universities will need to be student-centric

Before Australia’s general election on 3 May, in which Anthony Albanese’s Labor government increased its majority, the Australian Bureau of Statistics released two critical batches of economic data to universities.

The first release pertains to the Australian Commonwealth’s expenditure on tertiary education, and the second pertains to Australia’s earnings in educational services exports.

After two consecutive years of decline, Australia’s expenditure on tertiary education increased by 9% or AU$1.3 billion (US$837 million) from AU$14.7 billion in 2022 to 2023 to AU$16.1 billion in 2023-24, accounting for 2.3% of total expenditure.

However, the country did not increase funding to universities. Rather, the increase is based on the Consumer Price Index (CPI) component and population growth factors. Universities’ Commonwealth base agreement grants increased in 2024 at a higher rate (about 7.8%) compared to previous years because of higher inflation.

Nevertheless, when viewed over the past decade, Commonwealth expenditure on tertiary education as a proportion of all expenditure is down.

Since 2016 and 2017, expenditure on tertiary education has been below 3% of all expenditure. During the period between 2009 and 2010 and 2015 and 2016, Commonwealth expenditure on tertiary education exceeded 3%, with the highest proportion being in 2009 to 2010 when it was 3.4%.

By contrast, the figure below shows that Commonwealth expenditure on defence has increased from 5.9% in 2009 and 2010 to 7.1% in 2023 and 2024.



In 2023 and 2024, the Commonwealth spent 203% more on defence than on tertiary education compared to 71% in 2009 and 2010. Given the seismic geostrategic changes we are witnessing, it is likely that governments in Australia and liberal economies will further prioritise defence spending or begin to combine civilian focus with defence-related objectives.

These governments are also now prioritising funding in line with national security priorities or areas that enhance national sovereignty.

International student revenue

At the same time, universities are increasing the revenue they get from international students. In 2024, Australia earned AU$51.5 billion for the export of educational services, up by AU$4.6 billion or 9.8% from 2023. China and India continue to be the two main source countries for international students and made up 42.2% of earnings in 2024, down from 47.2% in 2019.

Students paid AU$16.8 billion in fees to higher education institutions in 2024, up by AU$3.2 billion, or 23.6%, from 2023. In fact, higher education institutions’ earnings in 2024 more than doubled from what they earned in 2022 when Australia fully reopened its international borders to travellers vaccinated against the coronavirus.

Annual reports from universities in Queensland and Western Australia were released a few weeks ago and show year-on-year increases in revenue from international students. Those from New South Wales and Victoria are anticipated imminently.

Rising expenses

Although universities’ earnings appear to be up, their expenses continue to rise, with the CPI rising 2.4% over the 12 months to the March 2025 quarter.

The largest slice of universities’ expenditure is on paying employee benefits and on-costs, which accounted for 55.4% of university expenses in 2023.

The latest staff figures published by the Australian Department of Education indicate that there were 122,589 full-time equivalent staff in Australian universities, up by 5,730, or 5.1%, from 2023. This figure also surpasses the previous highest number recorded during the pandemic year of 2020 (116,859).

Over the period between 2018 and 2024, the number of staff in universities increased by 8.8%, and the growth in academic and professional staff was almost the same. In 2024, the proportion of professional staff was the same as in 2019, at 57.1%. Despite the financial difficulties experienced by universities, the number of staff has continued to climb.

Student-centric vision

The re-election of the Albanese government means that the government is committed to Managed Growth Funding, the Australian Tertiary Education Commission and Needs-Based Funding. The government is also committed to making Free Technical and Further Education permanent, raising the repayment threshold and lowering payment rates for student debts.

In practice, that means that universities need to have a student-centric vision if they are to thrive financially and be held in good esteem. Equipping learners to succeed means increasing the levels of support along all stages of the academic journey and beyond.

On the international front, there is also the opportunity to regain the momentum lost due to the politicisation and dehumanisation of international students over the last years.

Additionally, the Albanese government will need to provide clarity on international onshore student caps and decide if it wishes to retain educational services exports as a pivotal sector in Australia’s economy.

The number of international students in the United States is declining, and so far, there have been 100,000 fewer students from Asian countries between March 2024 and March 2025.

In 2023, the United States earned more than US$50.1 billion (AU$77.6 billion) from international students, and this year it is likely to experience a decline in revenue of at least US$4.4 billion (AU$6.8 billion).

Here lies a prime opportunity for Australia to bolster its credentials as a host country for international students.

Improved university processes

The underlying financial position for Australian universities will continue to be challenging due to increasing costs, weak domestic demand for study, uncertainty about the number of international students allowed to enter Australia and geostrategic shifts that are under way.

It is unlikely that the federal government will increase its expenditure on tertiary education to the level of the 1990s or mid-2010s. Universities will need to focus on strengthening the quality of educational delivery they offer instead of building mass.

Collaboration is fundamental to universities, as it can bolster their ability to innovate. Universities have a history of having worked together to find solutions to common issues. Unsurprisingly, this is why in Australia there are four university alliances in addition to the national umbrella of universities.

Through sharing resources, universities can fulfil their vision, bring long-term financial sustainability and progress the spirit of the government’s Universities Accord. Instead of having 43 separate student systems, there is scope for a single unified national system.

At the same time, universities could build a unified human resources system. These two bold ambitions could deliver significant gains to universities, including reducing operational inefficiencies.

Improved university processes can also deliver significant productivity gains to universities. It is likely that the re-elected Labor government will focus on improving productivity across Australia’s service economy.

The pandemic delayed the continued third wave of economic reform which the federal government had embarked on to increase productivity.

Through the accord, the government seeks to achieve higher levels of educational attainment. It is inevitable that universities will need to focus on improving student engagement and the quality of teaching.

To achieve these two objectives, universities’ most important assets are their staff. They must invest in the people who can make it possible.

Angel Calderon is a higher education global expert. This is an edited version of an article which was first published on Future Campus.

This article is a commentary. Commentary articles are the opinion of the author and do not necessarily reflect the views of University World News.