‘Simply poor management’: The truth about our universities’ finances

Amid job losses, chronic wage theft, course cutting and fee hikes, the post-COVID financial picture for universities appears grim.

And yet, a report quietly released by the federal government late last year paints a rosy picture of the sector, which in 2024 enjoyed a $2.1 billion surplus across the nation’s 43 universities.

“Universities are … pursuing revenue growth and most institutions remain in a sound financial position, supported by strong asset bases, healthy liquidity, and adequate reserves,” the report, Finance 2024: Financial Reports of Higher Education Providers, said.

Matthew Pinnuck, a professor of financial accounting at the University of Melbourne, said universities were “incredibly well funded”.

“The fact of the matter is that the true costs of delivering education have gone down dramatically over time due to both technology and economies of scale due to large student numbers,” he said.

“When unis are saying they are underfunded, it’s simply poor management.

“Post-internet and post-AI, combined with the economies of scale due to the large student numbers, the costs of delivering education should be very low.”

The previous year’s surplus had been a comparatively low $122 million across the sector.

The federal government gave $21.2 billion in funding to universities in 2024 – an increase of 8.7 per cent compared to 2023. Universities’ coffers were further topped up by an $186 million increase in domestic student fees and $12.3 billion in fees from international students, a 21.5 per cent increase since 2023.

A Herald analysis of international student fees last month showed international students pay up to eight times the fees of a domestic student, with more than 583 degrees costing north of $250,000.

“The mark-up students are paying over the likely true direct cost of education is huge. Remember the [allegations of price gouging by] Coles and Woolworths? The mark-up that the university sector is charging is way in excess of what the supermarkets were,” said Pinnuck.

Australia’s universities have a collective $34 billion worth of cash and investments – enough to cover nine months of operating costs.

The University of Sydney owns $5 billion of those assets and also posted a surplus of $545 million in 2024.

Its operations vice-president, Nicole Gower, attributed the “successful year” to “generous philanthropy, a solid return on our managed investments and continued demand from students”.

The University of NSW is also faring well financially – from a debt of $84 million in 2023, the university posted a surplus of $131 million a year later.

“UNSW will need to generate annual operational surpluses of approximately $300+ million to fund essential campus reinvestment, including refurbishment or replacement of ageing infrastructure,” the uni said in a strategic update in December.

Elsewhere in the prestigious Group of Eight universities, the University of Melbourne enjoyed a surplus of $272 million and reported $5 billion of assets. Monash University also turned $9 million of debt in 2023 into an $180 million surplus in 2024, while boasting $2 billion in assets.

The University of Melbourne said in a statement that it had a $99 million operating deficit and the surplus was due to investment gains, philanthropy and the sale of a campus.

Monash University was contacted for comment.

Pinnuck said the quick reversal of fortunes at some universities proved they could improve operations when faced with external pressure.

“[Things] such as the COVID-19 pandemic or federal government cap [on international students, achieved by slower processing of student visas after an institution has reached 80 per cent of its allocation]. These external shocks force us to improve operations. Turnaround is evidence that we are unproductive. If there’s enough external pressure, we could become efficient,” he said.

Not all universities fared so well in 2024. Macquarie University reported being $8 million in debt (compared to $88 million in 2023); the University of Wollongong owes $26 million (compared to $39 million the year before); and UTS is $80 million in debt (after owing $107 million in 2023).

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