This report shows that Australian university profits plummeted by $1.6 billion to just $669 million in 2020.

The report shows 15 of the 38 universities included in the analysis reported a deficit in 2020. However, most struggled to break even with the majority of the sector surpluses held by just three institutions.

The research in this report shows that 2020 was not as bad as was first envisaged. Overall revenue fell by 6% - the first fall in at least a decade. International student revenue is down about 9% compared to 2019, which is smaller than originally forecast. While fifteen universities reported a loss in 2020, overall the sector reported a small surplus.

Key points:

• Annual net operating results for universities were $669 million in 2020, the lowest since at least 2009. In terms of surpluses as a proportion of total revenue, this represents a margin of 1.9% where a 6% margin is considered financially prudent.
• The overall surplus reported across the sector obscures large differences in individual universities. Fifteen of the thirty-eight universities included in this analysis reported a deficit in 2020. Most of the surplus was located in three universities, Monash University ($267 million), The University of Melbourne ($178 million) and The University of Sydney ($107 million).
• The real financial assistance universities received from the Australian Government rose from 2009 to 2016 in line with the introduction of demand-driven funding, before plateauing from 2017 when the demand-driving system was effectively ended. This plateau continued with a small increase in real terms of $230 million, or 1.3%, in Australian Government financial assistance in 2020 compared to 2019.
• In 2020, international student revenue fell in real terms by $868 million, or 8.6%, to $9.2 billion. The falls in international student revenue were less than expected. This may be a combination of timing of border closures and also ‘churn’ in enrolments as the uncertainty caused international students to defer, delay or change their studies.
• Universities continue to be exposed to problems caused by the coronavirus pandemic. The Job-ready Graduates package, the major reform of domestic student funding passed in 2020, is unlikely to make up for any revenue shortfall. Universities will receive an extra $1 billion in research funding for 2021 but there have been no other substantial extra funding announcements for 2022 or beyond. Without further support, the outlook for universities in 2022 and 2023 is very difficult.