Australia’s university sector could lose another $6 billion in revenue over the next decade, according to a new report

• A report released by consultancy EY predicts Australian university revenue will decline by a further $6 billion in the years leading to 2030.
• It suggests that to survive, the higher education sector will need to abandon international revenue altogether and focus on offering specialised courses to Australian students.
• The pandemic had “exposed the over-reliance on on-campus learning and international students in Australia’s higher education system,” head of education at EY Catherine Friday said.

Australia’s university sector may never return to its peak pre-2019 levels, a new study has found.

New research by consultancy EY predicts the Australian university sector will have to abandon its current funding model based on Commonwealth subsidies and international student revenue, as it faces revenue losses that could decline by a further $5 billion to hit $6 billion by 2030.

It also found this could force universities to shed around 50% of non-research staff, along with threatening some institutions with closure or merger.

The report, The Peak of Higher Education, is based on interviews with 32 senior figures in Australian and New Zealand institutions and suggests that international student enrolments will never return to 2019 levels.

It also predicts that on-campus learning will play a diminishing role in most student’s education, even after the current restrictions on in-person lectures and tutorials are lifted.

Catherine Friday, EY’s global head of education, said the pandemic had “exposed the over-reliance on on-campus learning and international students in Australia’s higher education system”.

“There is so much financial strain in the sector right now and such uncertainty about ongoing income and revenue streams that it’s reasonable to suspect that there might be university closures or some sort of merger activity in the market,” Friday said.

The EY researcher said the report’s models for a sustainable future for the sector urged universities to become more “homogenous” and offer similar courses while competing for students.

This was because reduced revenue caused by the loss of international students would force institutions to cut back on courses and specialise in specific fields of learning.

“For some universities it might mean they will reduce the number of broad generalist degrees that they currently offer,” Friday said.

“Everyone trying to do everything is simply unaffordable.”

Since the pandemic gutted higher education last year, the country’s university sector has held out hope that at least some students would return in 2021.

Since December 2019, there has been a more than 5% decline in enrolments and a 23.2% decline in new students, according to government figures.

But with the majority of Australia now under lockdown, including all of NSW until what could be the end of October, it is now highly unlikely international students will be able to reenter the country to study at Australian institutions.

Universities Australia has estimated the sector has lost 17,000 jobs since the start of the pandemic, and Victoria University think tank Mitchell Institute has released modelling suggesting the university sector faces cumulative losses of up to $19 billion over three years due to international border closures.

Mitchell Institute education policy fellow Peter Hurley told the Sydney Morning Herald that the Morrison government’s recent changes to the funding formula for university places would force universities to reconsider the range of courses they offer.

“There is going to be a real plateau in the amount of money that universities are receiving from government for students, so there is just less room to grow in that respect,” Hurley said.

However he said it was unlikely any universities would close or merge in the forseeable future.

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