Effects of Covid-19 travel ban on universities 'not quite bad enough'

The University of Auckland completed a $200m+ upgrade and expansion of its Science Building in 2016. Photo / Supplied

A Weekend Herald investigation into university finances has found widely varying reliance on income from international students, with newer universities with lower asset bases more vulnerable to the effects of Covid-related travel bans.

The spread of the pandemic has triggered cost-cutting in the tertiary sector with target="_blank">fears a thousand jobs could be at risk.

While all universities flagged the new virus in their most recent annual reports - most were published mid-year and Victoria flagged "potential for a significant multi-year material negative financial impact" - some are shown to be better-placed than others to cope with longer-term border closures.

Across the sector, institutions report 16.2 per cent of full-time equivalent students in 2019, or 22,528, were full fee payers from abroad, with the percentage varying from 11.5 per cent in Victoria to 44 per cent at Lincoln. AUT and Waikato also reported around 20 per cent of their student body were from abroad.

But student fee revenue is far from the only source of university income, with revenue breakdowns in annual reports showing a complete cessation of international students would shave between 6.8 per cent (Otago) and 22 per cent (AUT) off universities' operating revenue.

Auckland University's annual report was the only set of university accounts to fail to break out full-fee revenue, and a request for data to enable sector-wide comparison went unanswered by publication time.

Across the sector wealthier universities - particularly Otago and Canterbury - were both more financially secure prior to the pandemic and less reliant on international income compared to their relatively poorer counterparts such as Waikato, Lincoln and AUT.

This analysis shows revenue drops across the whole sector were than the 30 per cent used as a benchmark to assess serious hardship for the wage subsidy scheme.

"It is bad, but not quite bad enough," Chris Whelan, the chief executive of sector umbrella group Universities New Zealand, said of the qualification for the subsidy scheme.

Whelan added universities also gained income from international students through other sources - such as halls of residence charges - and he said around 15 per cent of all revenue, around $500m, across the sector was derived from them.

Total surpluses reported by the country's eight universities amounted to $188m last year.

Whelan noted that pandemic travel restrictions, while dramatic and worldwide, have also not totally wiped out the international education market - yet.

He said presently 5000 students - or 22 per cent of the international intake of university students - were persisting with online enrolments while stuck offshore, but this number was likely to halve next year as the inability to participate in practical study and laboratory work began to bite.

Students presently in-country were also likely to tail off after graduating, and with no prospect of new students arriving to replace them the problem was likely to compound, he said.

"It's a big challenge. And the sector is having to work a whole range of scenarios. If we don't get things restarted next year at any kind of scale, we are looking at two years of first year intake missing."