NSW universities plunge into the red as finance markets turn

All but one of the public universities in Australia’s most populous and richest state finished 2022 in the red, as rising costs and investment reversals erased the wall-to-wall surpluses posted the previous year.

Accounts presented on 31 May suggest that New South Wales’ (NSW) universities are still weathering the financial impacts of the Covid-19 pandemic and other global disruptions. Nine of the 10 institutions registered deficits last year, with earnings down and expenses up.

Collectively, the 10 universities traded a A$2.1 billion (£1.1 billion) surplus in 2021 for a A$134 million shortfall in 2022. As in other states, investment losses were the major factor, accounting for A$1.3 billion of the turnaround.

But inflation also had a significant influence, with “other expenses” – an umbrella category covering areas such as security, travel, cleaning, consumables, marketing, student scholarships and contracted services – rising by about 14 per cent to increase the cost base by some A$360 million.

Employee-related costs rose by about 5 per cent, adding another A$320 million to expenses. Overall, operating costs surged above 2019 levels after two years of Covid-induced belt-tightening.

The biggest reversal occurred at the only institution that managed to avoid falling into deficit. The University of Sydney’s A$302 million surplus was well down from its A$1.05 billion result the previous year.

Sydney’s investment earnings were down by some A$440 million, while its federal government funding declined by about A$90 million. Meanwhile, staff costs rose by some A$80 million and other expenses by about A$50 million.

But the university’s losses were softened by a A$50 million boost in international education earnings, raising revenue from this source to about A$1.4 billion – well over the total earnings of most of the state’s other universities.

“Despite ongoing headwinds, the university again finished the year in a remarkably good position,” chancellor Belinda Hutchinson and vice-chancellor Mark Scott remarked in a foreword to their annual report.

Sydney’s finances have proven immune to Covid-19 border disruptions, with its income from overseas students rising to more than 30 per cent above pre-pandemic levels. Three other NSW universities increased their international education takings in 2022.

A A$6 million boost in earnings from foreign students at the University of Wollongong’s Australian campuses took some of the sting off the institution’s A$28 million deficit.

“While the financial impacts of the pandemic linger, the university remains on a sound and sustainable financial footing and the gradual return of international students to our Australian campuses is a positive sign for the future,” Wollongong noted. But it added that its domestic teaching revenue had declined, partly because of government funding changes.

The NSW Auditor-General’s office, which released a combined report on the state’s universities, said domestic enrolments had decreased by 5 per cent while international student numbers were down by just 1 per cent.

Vice-chancellors’ pay declined at five institutions and remained unchanged at two others, reducing the average package by 4 per cent to about A$924,000. Nevertheless, half of the state’s university leaders pocketed seven-figure earnings.

john.ross@timeshighereducation.com