Australia’s biggest state has promised to help universities plug the gap between the cost of the coronavirus and the modest assistance from Canberra.
The New South Wales (NSW) government says it will guarantee up to A$750 million (?413) in commercial loans to help the state’s 10 public universities recover from the impacts of Covid-19.
The offer could prove very beneficial, with many universities outlining plans to borrow money as well as cutting costs to weather the pandemic’s assault on their budgets.
Ratings agencies and economists have warned that the cost of debt has increased for universities compared to banks and governments, according to The Australian newspaper.
NSW tertiary education minister Geoff Lee said universities were vital to the state’s economic strength and productivity, and needed to be in a healthy state to help drive recovery from the pandemic.
Similar arguments have failed to influence federal government policy. Canberra agreed to maintain universities’ domestic funding at last year’s level and to waive some regulatory fees, but these measures are only expected to compensate universities for around one-seventh of the billions of dollars they expect to lose.
The government repeatedly changed the rules of the massive JobKeeper employment scheme to deny universities eligibility for subsidy payments that could have prevented thousands of academic job losses. Education minister Dan Tehan has refused to offer more, insisting that universities must refocus on domestic students and wean themselves off their reliance on fee-paying overseas students.
NSW universities have collectively forecast losses of more than A$1.5 billion this year alone. The two biggest institutions, the University of Sydney and UNSW Sydney – which last year obtained more than 37 per cent of their combined revenue from overseas students, mainly Chinese – expect downturns of A$1.07 billion between them in 2020, with the losses accumulating in coming years.
NSW treasurer Dominic Perrottet said universities applying for loan guarantees would be asked to show how they intended to restructure their operations to make themselves more sustainable.
He said the state’s public universities directly employed the equivalent of almost 34,000 full-time staff and supported thousands of indirect jobs. “It is critical we position our universities for a dynamic recovery from the impacts of Covid-19,” he said.
“This is about…helping future proof these vital institutions, making them more resilient and enabling them to come out the other side of this pandemic stronger than ever.”
The commitment is the latest NSW government measure to assist universities and their students. On 3 June it earmarked A$6 million to help charities provide essentials like food and medicines for migrants and temporary visa holders, including international students, supplementing the A$20 million announced in May to bankroll temporary crisis accommodation for stranded international students.
The NSW government also says it has deferred A$100 million of university payroll tax.
