Financial Impact of COVID-19 on Universities
The Australian system of higher education has been hit hard by the coronavirus crisis, perhaps harder than many other university systems. This is so because Australian universities are heavily reliant on the revenue generated from international students. Almost 35% of their students are international, and a large proportion of their income is generated from this source of revenue.
With the financial crisis created by COVID-19, Australian universities are expecting a major decline in the number of their international students, particularly from China. The Mitchell Institute has projected cumulative losses of more than 19 billion Australian dollars over the next three years. The impact is almost immediate as international students are unable to travel to Australia to start their courses in July for the second semester. A number of international students have already paused their studies. The broader economy reliant on international education has also taken a major hit.
To address the severe financial shortfall, most Australian universities have frozen new appointments, enforced some redundancies, cut back on capital projects and shelved new initiatives, even those that were already at an advanced stage of planning. With more than 15% decline in revenue, senior executives at most Australian universities have taken a cut in their pay of around 20%. The staff has been warned to expect financial austerity the like of which Australian universities have not faced before.
Education is Australia’s third biggest export. The revenue generated by international students studying and living in Australia contributed AUD28 billion in 2016/2017, up 16.1% from 2015/2016.
Source: The Department of Education, Skills and Employment, Australian Government.
No Going Back To the “Old Normal”
At the same time, Australian universities are mostly satisfied with the ways in which they have handled the crisis. They moved decisively with the physical closure of their campuses, communicated effectively with students, reassured them of their commitment to quality teaching. In transferring to an online mode of delivery, the universities have supported the teaching staff in developing new skills and adapting to the new conditions. Impressive also has been the speed with which the teaching staff has acquired these skills, and also the ways in which students have embraced the imperatives of working remotely.
As the health crisis begins to show signs of recovery, there are now intense debates about the future throughout the Australian system of higher education. The universities are working very hard to conceptualise how they might solve their financial difficulties in the even harder times that lie ahead. While they recognise the inevitability of a contracted higher education sector, both university managers and unions are working diligently and cooperatively to protect jobs and employment conditions, while ensuring that the quality of instruction and research does not decline.
There is now a widely held belief that there is no going back to the “old normal”, and that creative solutions are needed to solve the emerging challenges. Some within the sector have pointed to the contradictions that had already existed in Australian higher education, which COVID-19 has helped to accentuate. They insist that even if we could go back to the old normal, we should not. Instead, the crisis should be viewed as an opportunity to ask some hard questions about some of the system’s inherent inadequacies, limitations and contradictions.
In Australia, there is remarkably little resistance to the notion that new business models will have to be developed, along with new approaches to research, pedagogy, governance and engagement with the community. Less clear is what these approaches might look like, and how they might be imagined, created, trialled and evaluated. What is widely acknowledged is that there may never be a “new normal”, and that Australian universities will in future need to be constantly vigilant, and develop structures that are flexible and invite and support innovation. The universities will need to become much more responsive to rapid and unexpected changes, remain attentive and prepared, and not afraid to experiment and promote innovation.
They will need to rethink their business model. It is now clear that Australian universities can no longer rely on a single major source of revenue: international students. For a number of years, Australian universities have been warned not to depend so heavily on their ability to recruit students from China almost at will. The current crisis has reinforced the importance of this warning, especially in view of the geopolitical uncertainties and tensions to which COVID-19 appears to have given rise, with Australia caught in the rivalry between the United States and China.
With their success in recruiting international students, Australian universities have, over the past two decades, allowed the Australian government to reduce the level of its public investment in higher education. The government has been able to argue that universities are already rich through the incomes they generate from international students. And now it has hinted that it is not in a position to provide any significant rescue packages. If Australian universities are to remain strong, they need to figure out new ways of pressuring the government into realising its role in the promotion of public goods.
What is widely acknowledged is that there may never be a “new normal”, and that Australian universities will in future need to be constantly vigilant, and develop structures that are flexible and invite and support innovation.
Rethinking Priorities, Practices and Purpose
The coronavirus crisis has also underlined the urgency of rethinking the ways in which universities determine their priorities in the allocation and distribution of their funds. Given their success in moving to online education, they might be tempted to view it as a way of cutting costs. And there is already some evidence to suggest that this is the case. However, this manner of thinking would be fundamentally misguided and hazardous. The temptation to view online instruction as somehow cheaper cannot be assumed and should be resisted, if quality is to be maintained, and if student interest is to be encouraged.
The crisis has clearly shown how useful online tools can be in enhancing the quality of teaching and learning — though not on their own and not for every subject area — as a cheaper version of teacher-centric instruction. Such tools need to be embedded within a broader and a more sophisticated approach to pedagogy, based on multiple ways of helping students to learn. COVID-19 has thus provided universities an opportunity to experiment with new approaches to pedagogy within the context of reflections about the basic purposes of higher education, and how it might be possible to place students at the centre of pedagogic processes.
Universities also need to rethink how the work of academic staff is regarded within the universities whose governance practices have become increasingly corporatised. Even before the coronavirus crisis, many academics believed that their work was not sufficiently valued, and that the commercial imperatives took precedence over educational concerns for which they were responsible. This was evident in the university budgets becoming increasingly directed towards corporate practices of advertising and recruitment, large capital projects and the employment of a growing number of administrators whose functions were often unclear, and who did additional work that academic staff regarded as unnecessary.
As public universities in Australia and elsewhere became corporatised, academic work was increasingly subjected to managerial constraints, within which academic autonomy was compromised, together with a performance regime based on the assumptions of distrust. Education in the times of COVID-19 has shown how such an audit culture is neither necessary nor sufficient for ensuring that the academic staff are dedicated, self-directed and innovative. This realisation should lead universities to reconsider the corporate and managerial practices that they have developed over the past few decades, to allow the professionalism of academic staff to flourish again.
The coronavirus crisis has also underlined the role of universities in working towards the public good. They have shown the contribution that universities make in generating the knowledge needed to provide relevant information, promote pubic debates, manage risks and generate socially useful products and services such as medicine. Indeed, they are located at the centre of the public space where solutions to our common problems are generated. In recent decades, the commercial utility of research has been prioritised, often ahead of research for public good. This crisis may have given universities and funding agencies an opportunity to reconsider the research that is most worthwhile, and how research might not only have commercial and strategic purposes, but moral and cultural ends as well.
The temptation to view online instruction as somehow cheaper cannot be assumed and should be resisted, if quality is to be maintained, and if student interest is to be encouraged.
This logic applies equally to the engagement activities of universities. Most of these activities in recent years have been focused on raising money through various corporations and philanthropic organisations. As a result, the universities have forged closer links with the “top end of the town” ahead of links with the communities within which they are socially embedded. The public nature of public universities is often overlooked, when they begin to regard their status and prestige in corporate terms, discounting the fact that they were created originally for societal good.
The coronavirus crisis has hopefully reminded us all of why public universities exist, and what role they are expected to play in forging caring and thoughtful citizens, and building robust, democratic and socially just communities. It has given us an opportunity to rethink the basic purposes of higher education, and realise the extent to which we have drifted away from them. Ultimately, we need to ask the question of what needs to be done to put the “public” back into the idea of a “public university”.
FAZAL RIZVI
Fazal Rizvi is Chair and Professor of Global Studies in Education, University of Melbourne, Australia.
JUNE 2020 | ISSUE 8
How is COVID-19 Impacting Higher Education?
