Universities hit by revenue losses claim industry partnerships not the solution

By Melissa Coade

Thursday May 20, 2021

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(Image: Adobe/Monkey Business)

A panel of vice-chancellors representing five universities in Victoria has argued that the cost of research cannot be met by partnerships with industry as a solution to changing university business models in Australia. 

COVID-19 and the drag border closures have had on Australia’s international student cohort was the focus of a panel discussion with five university vice-chancellors (VC) this week. The impact has led to staffing and budget cuts in the sector with Universities Australia predicting an estimated $2 billion loss to higher education because of the pandemic in 2021.

From the perspective of the VCs, the trouble has prompted serious revision of strategic plans to work out how the money that universities once relied on to hold up their research can be generated. But the VCs warn that industry partnerships with universities — which are valuable and will certainly continue — cannot be expected to be some kind of solution to the cash shortfall for funding.

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La Trobe VC Professor John Dewar said that recent events had confronted Australian universities to truly consider where they would get money for research now that the funding model the federal government had encouraged for many years had come unstuck.

Our business model is a response to the government funding model and the government funding model does not properly cover the cost of research,” Dewar said.

“That’s why universities use some of the revenue from international students to cover the gap that that doesn’t cover.”

“With that taken away, I think we do face a more existential question about how the future of research in the university sector is going to be funded,” he added.

Speaking to an audience convened in Melbourne by the Committee for Economic Development of Australia (CEDA) on Wednesday, Dewar rebuffed the notion that the project-focused partnership agreements universities entered into with industry could be some kind of silver bullet to the funding crisis the sector faced.

“We are in a sense mission-driven about our relationship with industry – we believe in its importance because of the way it can contribute to economic growth and stability in the community,” Dewar said. 

“We’re not doing it because we can make money to make up for the loss of international students.”

Deakin University VC Professor Iain Martin added that there was no precedent where the long-term operational costs of a university anywhere in the world had been supported exclusively through commercial partnerships. In part, that is because the model hinges on scoring a deal of the day and does not have the kind of strategic assurance that locked-in government funding, for example, offers.

I’m not aware of one global university that has from commercialisation and intellectual property made a significant difference to their annual operating budget over a 20 year period,” Martin said.

“There have been sugar hits but nothing that really changes. It’s great to have it but you can’t build a future on it because it’s luck.”

The Sydney Morning Herald reported in April that new S&P Global Ratings painted a bleak forecast for Australia’s higher education sector, mostly because of its deep reliance on international student enrolments. The hit would be felt hardest in Australia, according to S&P, compared with sectors in the US, the UK and Canada, because prior to the pandemic over a quarter of enrolled students at Australian universities came from overseas.

Last week the NSW VC’s Committee issued a statement that said ‘close’ and ‘constructive’ work with the state and federal governments over the last 12 months had been undertaken to ‘facilitate the safe return of international students to Australia’.

“This work is continuing to ensure that all safety and regulatory requirements can be met by the proposed strategy,” UNSW Sydney’s Professor Barney Glover said on behalf of the group.

“International students are a much-valued part of our community, and we look forward to welcoming international students back to our campuses soon.”

Despite the strife cutting the flow of new international enrolments to Australian universities has caused, part of the universities’ recovery plan does involve a focus on fostering better conditions to work with the private sector, either by inviting companies to co-locate on campus or work together to find a technology solution. Although, the university bosses also said this came with the caveat that new partnership initiatives could not be cross-subsidised by their institutions. 

Victoria University’s new premises in Melbourne’s legal district, which is not yet operational, will include a high-rise building that houses law firm offices, and Deakin University is focused on ‘building an ecosystem of critical mass’ whose activities and facilities can be self-sufficient in funding terms.

On the changes universities had to make to create more opportunities to work with industry, Swinburne University of Technology VC Professor Pascale Quester said that it was up to higher education institutions to make a compelling case for it.

I think for a long time industry partners believed that because universities received generous funding from the government, it was kind of a free service. You could go and ask a university and […] there was no notion of value being created together. This is not what it’s about – it’s about being able to delineate in what way we deliver value,” Quester said.

“This is not language that is necessarily the language academics have rolling off the tongue. It involves a commercial outlook, which doesn’t mean that the university becomes a commercial entity – it just means that it understands the language that businesses speak.”

The panel, which also featured Federation University VC Duncan Bentley and Victoria University VC Adam Shoemaker, was held a week after the federal government announced its 2021 budget, which did not offer any new support to the higher education sector. Last year’s budget put an extra $1 billion towards research.


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