The federal government provided its lowest ever share of Australian universities¡¯ funding last year, despite its efforts to suppress their main source of private revenue.

Canberra¡¯s contribution to university income fell to 45.6 per cent in 2024, down from almost 48 per cent the previous year and 55 per cent in 2022, according to a Times Higher Education analysis of institutional annual reports.

Earnings from overseas students¡¯ tuition fees soared to almost A$13 billion (?6.3 billion) ¨C over A$2 billion more than the previous record ¨C and constituted more than 28 per cent of overall university income, up two percentage points from 2023. International education revenue rose at all but one of the 38 publicly funded universities, despite multiple policy changes to constrain foreign enrolments.

Federal government funding also rose, reaching more than A$21 billion ¨C A$1 billion more than the previous record in 2021 ¨C thanks to increases of more than A$640 million in Higher Education Loan Program (Help) allocations and A$220 million from the Commonwealth Grant Scheme. Nevertheless, the federal component slumped to its lowest ever proportion of university revenue, which hit an all-time record of over A$46 billion.

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While Australia¡¯s richest universities have long drawn the bulk of their income from private sources, the federal government has normally been the major funder of the overall sector. Its contribution has fallen below 50 per cent only in 2019, 2023 and 2024.

Monash University policy expert Andrew Norton said it was unhelpful to compare government funding with other more volatile forms of income, because surges in international education or investment revenue ¡°distorted¡± the picture.

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Norton said the commonwealth contribution should be judged against expectations of what government funding should cover. has established that government allocations ¨C both overall teaching grants and funding per student ¨C have consistently risen over the past two decades, despite occasional short-term dips because of policy changes or lagging indexation.

But he said universities¡¯ costs were increasing more quickly than government funding, which meant administrators needed to find other sources of income to maintain their research efforts and breadth of teaching.

International education had proven the only realistic source of alternative funds, and the government¡¯s crackdown would stifle these earnings for many universities, forcing them to jettison courses ¡°that are not at least breaking even¡± ¨C an outcome already evident in course cuts across the sector.

¡°I suspect what¡¯s happening is that more and more subjects and courses are falling below the numbers of students they need to be viable, and as a result, they are being cut,¡± Norton told 91ÇÑ×Ó.

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Annual report figures show that universities¡¯ federal funding rose at a marginally higher rate than their costs last year, after the government belatedly indexed teaching grants to compensate for an earlier inflationary surge.

But over the five years to 2024, the growth rate of universities¡¯ expenses was five percentage points higher than the increase in commonwealth allocations.

Federal funding more than covered the sector¡¯s major expense ¨C employee costs ¨C every year until 2017. Since then, employee costs have exceeded commonwealth funding every year except 2021, when the government gave universities a Covid bailout. Last year, Canberra¡¯s contribution was about A$3.5 billion less than employee costs.

The international education restrictions risk exacerbating this trend. Norton said major rule changes had occurred in the middle of last year ¨C too late to ¡°radically affect¡± earnings in 2024, but likely to have a more pronounced effect in subsequent years.

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History suggests that constraints on international enrolments can influence course offerings down the track. The Australian National University, which voluntarily capped its overseas admissions in 2018, is now embroiled in arguably the biggest round of course and job cuts of any Australian institution.

91ÇÑ×Ó¡¯s figures are drawn from the accounts of universities¡¯ consolidated businesses rather than their parent entities. They arguably exaggerate the federal government¡¯s contribution by including revenue from Help, most of which is ultimately repaid to the government through graduate taxes.

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john.ross@timeshighereducation.com