Last week in The Australian, Australian National University economics professors Bruce Chapman and Rabee Tourky reignited a debate about a levy on international student tuition revenue (“Universities should pay levy on ‘foreign student industry’ ”, 15/11).
Group of Eight productivity during the pandemic
INSIGHTS & RESOURCES
Group of Eight unis outperformed in productivity during the pandemic
by Keith Houghton
6 June 2022
Australia’s universities faced financial challenges due to the pandemic, with limited international student tuition income and no access to JobKeeper funding.
However, productivity analysis using the Research and Education Efficiency Frontier (REEF) technique showed that Australia’s public universities, particularly the Group of Eight (Go8), experienced impressive productivity growth in 2020, driven by research activity.
Despite a decline in student enrolments, universities reduced expenses and made commitments to digital education. The Go8 universities showed stronger research outcomes and improved productivity, demonstrating effective management in the face of COVID-19 challenges.
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Shortly after the pandemic’s onset, there was a view that Australia’s universities were facing a ‘perfect storm’ of negative events. With more limited international student tuition income and no access to JobKeeper funding offered to others, the public universities faced the daunting task of navigating through seemingly inevitable financial challenges.
Earlier this year, official Australian universities data for 2020 was released. This allowed for a comparative analysis of Australian university productivity showing the first effects of Covid.
Productivity analysis goes beyond accounting numbers, cash flows and ‘costings’ developed via questionnaires and empirically assesses the efficiencies achieved in teaching and research outcomes relative to expenditure.
The results for the elite Group of Eight (Go8) universities (Adelaide, ANU, Melbourne, Monash, New South Wales, Queensland, Sydney and Western Australia) are particularly interesting as they are often seen as Australia’s most high-profile institutions. On average, they generally teach a disproportionately larger number of international students – seen as a major casualty of the pandemic.
The Research and Education Efficiency Frontier (REEF) modelling technique, developed by the Higher Education and Research Group (HERG), provides an integrated measure of productivity. It captures outcomes for both major activities of universities – education and research – in a single measure.
Using REEF, the average 2020 productivity of Australia’s 37 public universities rose by an impressive 4.5 per cent. This result will surprise some and has outstripped the productivity performance of many other sectors of the economy. Productivity improvements were grounded in research activity.
Given their research intensity, it is unsurprising that the Go8 achieved an even stronger result – over 6 per cent. Seven of the eight showed positive productivity growth; the average increase of these seven was around 8 per cent. This huge gain involved a herculean effort, and much pain; the outcome is testament to how effective university management, and others in the university community, have been in dealing with the challenges of Covid.
Among Go8 universities, six significantly improved research publication outcomes for the year. The improvements from Adelaide, Sydney, Queensland, Melbourne, New South Wales and Monash varied between 2.5 per cent and 8 per cent growth for the year. For these six, the average number of publications grew by 5.7 per cent compared with the previous year; the strongest average increase for some years.
For a number, there had been an effort to strengthen research quality and quantity in preceding years. This momentum was a key factor; but cannot explain all of the 2020 productivity growth. Total Go8 research publications continued to rise in 2021 albeit at a slower rate than a year earlier. The full effect of the pandemic on research productivity may not yet be observable.
As anticipated, student enrolments were negatively affected. Student numbers, as measured by Equivalent Full-time Student Load (EFTSL), declined for the 37 universities by 1 per cent on average. The Go8 average was larger at over 2 per cent, relating principally to international students. The two outliers were ANU (declining 12 per cent) and Adelaide (growing 4 per cent).
Understandably, cutting expenses was common. For the Go8, expense reduction averaged 2.5 per cent, with only two increasing expenses; Adelaide’s increase reflected their increased enrolment.
In this period, what distinguishes the universities that achieved strong productivity growth from those with lower growth or even decline? The data to comprehensively answer this is incomplete; but some factors are known.
The international student ‘pipelines’ in some universities were larger and longer; including students in three or more years of undergraduate education. Others had shorter ‘pipelines’, including one- and two-year master’s coursework degrees. Students already committed to study programs tended to stick with them; bigger drop-offs were experienced in new enrolments.
Some universities made major commitments to digitally delivered education while others saw online education as transitory, making limited commitments. Students noticed and acted accordingly.
Empirical evidence shows that student attrition is a major drag on productivity. The extent of casualisation of the academic workforce is relevant. This casual workforce was more easily disbanded as the pandemic hit. Lower levels of casualisation made for greater challenges in short-term cost reduction.
All universities attempted cost control but the extent varied widely. Also, some universities were selective about which research programs enjoyed ongoing strong support. The majority of universities reduced expenses, inclusive of large staff redundancy costs.
Other explanations also exist including wage freezes (on some campuses), staff redundancies (common in the sector but the extent varied) and suspended capital works.
The results demonstrate the success of universities in general, and the Go8 in particular, in managing the initial productivity effects of the pandemic. The quality of financial, operational and strategic management has been impressive.
There have, however, been costs and pain endured by many. Important quality issues exist. The average quality of research has not measurably declined, but student teaching evaluations did – markedly in certain instances. The effect of some staffing issues may not yet be observable.
What next? Most universities, including seven of the Go8, have laid a strengthened base to deal with the likely ups and downs of the next several years.
Keith Houghton is chief academic strategist at Higher Education and Research Group
For several weeks, those interested in higher education have been contemplating the interim report of the Universities Accord review. The report makes many insightful and far-reaching observations. Undoubtedly it will be a turning point for important aspects of the educational offerings within our public universities.
It’s now virtually certain that the South Australian Legislative Council, the state’s upper house, will initiate a parliamentary inquiry into the planned merger of the state’s two largest universities.