Solid investment returns, generous philanthropy and surging income from international students have produced an A$880 million (?419 million) turnaround in the financial standing of the public universities in Australia¡¯s most populous state.

But the good fortune has been monopolised by the two richest institutions, with six of the remaining eight recording deficits and a seventh managing only a razor-thin surplus.

The 2024 financial accounts of the 10 New South Wales (NSW) universities, published on 30 May, provide more evidence that policy developments, demographic change, economic cycles and the after-effects of Covid-19 have all deepened the chasm between the large sandstone institutions and the rest.

The University of Sydney and UNSW Sydney recorded surpluses of A$550 million and A$203 million respectively, after boosting their combined earnings by more than A$1.3 billion ¨C largely because of a A$680 million improvement in their income from foreign students.

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Sydney reaped A$1.6 billion from international students, a record for the sector and 10 per cent higher than in 2023, while the UNSW¡¯s A$1.4 billion windfall from foreign enrolments was the third highest in the sector¡¯s history and an extraordinary 61 per cent more than the previous year.

UNSW said ¡°unprecedented demand over the past couple of years¡± had been driven by its improved position in some rankings, a ¡°concerted post-pandemic international recruitment rebuild strategy¡± and?¡°recent policy shifts¡± in the UK and Canada.

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¡°Students have responded to the rise in ranking even as the federal government¡¯s proposed caps on international student enrolments posed a challenge to us and to the broader Australian higher education sector,¡± a spokeswoman said.

Sydney¡¯s overall revenue of almost A$3.9 billion was also a sector record, with a A$594 million spike in its earnings easily offsetting a A$273 million increase in its expenses. Vice-chancellor Mark Scott credited his surplus ¨C easily the biggest at any university this year ¨C to ¡°unprecedented¡± philanthropy and an ¡°exceptional 15 per cent return on our investments¡±, along with the university¡¯s ¡°responsible and prudent¡± financial management.

He said Sydney had lost A$69 million on its core teaching and research activities. ¡°Universities continue to operate in a challenging financial environment with considerable ongoing scrutiny, expanding regulation ¨C including the potential cap on international student enrolments ¨C and constrained government funding for education and research,¡± Scott told staff.

It is a lesson not lost on the leaders of the other universities. Charles Sturt, Macquarie, New England, University of Technology Sydney, Western Sydney and Wollongong universities all finished the year in the red, with a combined deficit of A$233 million ¨C although this was well down on their A$568 million shortfall the year before.

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Southern Cross University¡¯s A$961,000 surplus represented less than 0.3 per cent of its revenue. The University of Newcastle produced a A$61 million surplus thanks to increases of A$48 million in federal government funding, A$22 million in international students¡¯ fees and A$34 million in investment earnings.

¡°Our core operational costs still exceed the university¡¯s operational income,¡± chancellor Patricia Forsythe and vice-chancellor Alex Zelinsky warned in a foreword to Newcastle¡¯s annual report. ¡°Challenges will continue to impact the sector for years to come and we, like many universities, will be forced to make difficult decisions to ensure our long-term financial sustainability.¡±

The decisions may be more difficult in some universities than others. While all 10 NSW universities increased their earnings from international students last year, Sydney and UNSW captured 66 per cent of that income.

Meanwhile, earnings from domestic students were flat. Teaching subsidies through the Commonwealth Grant Scheme fell by about a million dollars. Loan income increased by about A$35 million from undergraduate students, but declined by A$27 million from other students.

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john.ross@timeshighereducation.com