Coronavirus: NZ universities could face combined $300m loss

Victoria University's vice chancellor Grant Guilford has sent an email to all staff warning about the financial impact of coronavirus. Photo / Sarah Ivey

Universities across the country could lose up to $300 million a year if the Government doesn't move to lift a travel ban in place over coronavirus.

The worst case scenario prediction comes from Victoria University's vice chancellor Grant Guilford after he sent a letter to his staff outlining the financial impact for their institution.

He told the Herald if universities were unable to accept any students from China, it would result in a combined $300m annual loss.

But the "economic damage" would extend well beyond universities because Chinese students also spent money in the community where they studied, Guilford said.

That could result in substantial job losses and course cuts to make up for the loss, he said.

New Zealand is one of a number of countries which has put a ban on travellers from mainland China in an attempt to prevent the spread of coronavirus.

While the ban is being reviewed every 48 hours, it is not clear when it will come to an end.

More than 6500 Chinese students who are enrolled to study in New Zealand this year are still stuck at home.

Guilford said he was confident Victoria University could manage the health risks if the ban was lifted for students.

If the Government didn't move to loosen border restrictions over the next couple of days, the university would face an estimated $12m loss this year, he said.

That's the university's entire surplus.

"While it is essential not to reduce this issue to an economic matter, it is important that I ensure all of you are aware of the gravity of the situation we and other tertiary education organisations face if the travel ban is not lifted in the next day or two," he told staff in a letter.

"Unfortunately the window of opportunity for our Chinese students to continue their studies is rapidly closing. They and their parents are wrestling with enormous uncertainty."

Guilford said the financial impact would flow through into 2021 and 2022 and potentially much longer.

That's because if the students can't do the first year of the course, the university would loose them for the second and third years too, he said.

The loss would need to be addressed, in part, by significant cost reductions proportionate to the loss of revenue, he said.

"It is sobering to recall that the last time New Zealand lost the trust of Chinese parents (as a result of the collapse of two private training establishments in the mid-2000s) it took a decade for our tertiary education sector to regain that trust," Guilford said.

About 70 per cent of Victoria University's costs were "people costs", so there would be substantial job losses, Guilford said.

The university employs about 5000 staff.

"It's very painful, these are fantastic people, they've got families who depend on them and it's the last thing as an organisation we want to be doing," he said.