The
University of Tasmania’s 2019 Annual Report has finally been released.
The
university reports on a calendar year basis. The Auditor General signed off the
2019 report in February 2020. The Board (known as the Council) adopted the
report in May and sent it to the government as required by its governing Act. It’s
been sitting in someone’s in-tray for the last 3 months. Another Covid victim
no doubt.
Apart
from the financials it’s a pretty skinny report.The overview for the year
occupied only six pages. Even then it was a cut and paste from previous
offerings, from the now outdated Strategic Plan 2019-2024 dated July 2019 for
instance. UTas is “not long-term economically sustainable and being
economically sustainable is no easy task…….At an operating level, we break
even. Still, there is no surplus to see our facilities renewed for the next
generation.” If there were sustainability questions in July 2019, they
would have been more evident when the Council signed the report in February
2020. Even more so today in a pandemic world.
Serious
as it was, sustainability didn’t get another mention. The rest of the overview
degenerated into a public relations pastiche with more proper nouns and
acronyms that you could poke a stick at…… The Ways of Working project, the
People Strategy and College People plans, the Academic Leadership Development Program,
which led to the Lean (sic) and simplification momentum continuing to build
across the University via a new process improvement tool called Go-See-Fix, the
unsuccessful attempt to satisfy the international Athena SWAN charter atho’
UTas did get a Bronze Award accreditation and is committed to continue commitment
to the SAGE initiative. It might as well have been written in Swahili. If a
student served up drivel like that in an assignment, you’d fail them. Irrelevant
twaddle especially when there are pressing matters of sustainability.
The
brief overview concluded with two pages describing UTas’ building program which
is fitting perhaps because more than ever UTas is a property developer with a
side hustle in education.
The
financials confirm this.
UTas
has $1 billion of net assets, revenue for 2019 was $777 million and net profit
$73 million. So far so good. But its core activities of teaching, research,
community engagement and activities incidental thereto produced a loss of $2
million. Non-core activities resulted in
a $75 million profit, most prominent being interest and dividends of $14
million and unrealised gains on investments of $60 million. Markets were in a
bull stage during the 2019 calendar year.
The
cash operating surplus was only $41 million. This is the surplus before
capex spending. Beware of entities with operating cash less than profits, especially
when they’re spending heaps on capex. In this case it’s because of the unrealised
investment gains, included in profits but not cash flow for the obvious reason
they are yet to be realised.
In
2019 UTas spent $206 million on capex. That’s almost as much as the State
government. Without the Royal Hobart Hospital it would be more than the State
government. With operations only generating $41 million, that left it $165
million short….. $100 million came from borrowings, $26 million from
investments, $17 million from capital grants, $9 million worth of plant and
equipment was sold, and cash at bank was reduced by $18 million. UTas chose to
borrow more rather than cash in some of its unrealised investment gains.
UTas’
borrowings jumped from $93 million to $210 million. But there’s another
liability on the balance sheet of $123 million described as a ‘grant of right
to operate’ which for intents and purposes is a borrowing, and further evidence
of UTas’ property development machinations. UTas received a lump sum of $133
million in 2017 for the grant of a right to operate UTas’ purpose built student
accommodation for 30 years. Essentially it was a lump sum in consideration for
selling the rights to future rents over the next 30 years. The grant is
amortised over the term. The amortised portion each year becomes revenue for
that year. Rather than take out a 30 year mortgage and use rents to service the
loan over the period, UTas has received a lump sum up front from the grantee.
In return the grantee will receive guaranteed rents for the next 30 years. It’s
just another way of borrowing money. Six of one half a dozen of the other. The
deal will come at a cost however. The grantee will be earning a guaranteed rate
of return for 30 years. Who is the grantee? What is the rate of return? Whatever
it is, it sure to be less than the rate Tascorp would charge. Tascorp, the
government’s finance GBE, is UTas’ banker.
It’s
a familiar pattern, seeing Tassie’s public institutions emerging from isolation
and locking themselves into long term finance deals. Hydro with Basslink, RBF
with the Hobart Airport… thus far they’ve all been ill judged arrangements.
When
the forward selling of 30 years’ worth of rent receipts occurred in 2017, the service
concession deal as it is called, the proceeds were invested in shares and
managed funds, taking UTas’ total investments to $420 million by December 2017.
At December 2019 the total stood at $442 million. Markets took a knock in March
2020 but have gradually picked up since.
One
suspects from the financials that there are more service concession deals in
the pipeline, or at least there were before Covid struck. Of the borrowings of
$210 million, $71 million is listed as a current liability, meaning it will be
paid out/rolled over in the 2020 calendar year. Maybe by forward selling the
rents from the Melville Street accommodation. The previous report for 2018 gave
some detail about the expansion of student accommodation planned at that time:
“The
University continued to plan for additional student accommodation, with an
agreement signed with Spark Living for a building to house 422 students on
Melville Street, to be completed by 2021. The purchase and conversion of the
Midcity Hotel was an initiative to meet increasing demand in the interim. In
December, the University announced its intention to purchase the Fountainside
Hotel to meet further demand.”
There
seems little doubt that expansion of student accommodation has underpinned the
UTas model. The damning five year strategic plan issued in July 2019 argued
that increased scale was required for UTas to become sustainable. With population
increases modest at best, and with the perennial excuses of Tassie’s
demographic and health problems coupled with rites of passage which sees many
of out best and brightest leaving our shores, the answer was to try and attract
more students especially from overseas. The only risk mentioned was getting too
many from one country or too many in one course.
From
the sidelines it looks awfully like a Ponzi scheme.
·
Develop student accommodation
·
Search the globe for students
·
Lower the grades necessary for students
to pass
·
Sell off 30 years’ worth of guaranteed
rent.
·
Buy more property.
·
Develop into student accommodation.
·
Enrol more students
·
Sell off 30 years of guaranteed rent
·
And so on
That
the whole show might fall over in one fell swoop wasn’t a risk worth mentioning.
Just like sub-prime loans in the US in 2008, bundling up crappy loans across a multitude
of cities where housing markets were supposedly uncorrelated, was thought to be
a foolproof way of handling risk. It wasn’t. The loans all went down together.
Wage
costs as a percentage of total expenses has remained relatively stable at
around 58 per cent. Most expenses, as one would expect, are wages.
But
there has been a slow and steady shift from academic wages to non-academic wages.
Over the past 10 years academic wages, which includes teaching and research,
has fallen from 56 per cent to 51 percent. Even with scaling up, taking in more
international students, the shift of wages away from teaching and research has
continued unabated.
Opening
the door and peering into the work activities of non academic university staff
is something anthropologist David Graeber from the London School of Economics
did in his 2018 book titled Bullshit Jobs. On page 55 Chloe recounts
what she did:
The
reason that my Dean’s role was a bullshit job is the same reason that all
nonexecutive Deans, PVCs [Pro-Vice Chancellors], and other “strategic roles in
universities are bullshit jobs. The real roles of power and responsibility
within a university trace the flow of money through the organisation. An
executive or Dean (in other words, s/he who holds the budget) can cajole,
encourage, bully and negotiate with departments about what they can, ought, or
might want to do, using the stick (or carrot) of money. Strategic deans and
other such roles have no carrot or sticks. They are nonexecutive. They hold no
money, just (as was once described to me) “the power of persuasion and
influence.”
I
did not sit on university leadership and so was not part of the bunfights about
targets, overall strategy, performance measures, audits, etc. I had no budget.
I had no authority over the buildings, the timetable, or any other operational
matters. All I could do was come up with a new strategy that was in effect a
re-spin of already agreed upon university strategies.
I
was given a 75% full-time equivalent Personal Assistant, a 75% full-time equivalent
“Special Project and Policy Support Officer,” and a full-time postdoctoral Research
Fellow, plus an “expenses” allowance of twenty thousand pounds. In other words,
a shed-load of (public) money went into supporting a bullshit job. The Project
and Policy Support Officer was there to help me with projects and policies. The
PA was brilliant but ended up just being a glorified travel agent and diary
secretary. The Research Fellow was a waste of time and money because I am a
lone scholar and don’t actually need an assistant.
So
I spent two years of my life making up work for myself and for other people.
My
very brief stint as Head of Department reminded me that at the very minimum, ninety
percent of the role is bullshit: Filling out the forms the Faculty Dean sends
so that she can write her strategy documents that get sent up the chain of
command. Producing a confetti of paperwork as part of the auditing and
monitoring of research activities and teaching activities. Producing plan after
plan after five-year plan justifying why departments need to have the money and
staff they already have. Doing bloody annual appraisals that go into a drawer
never to be looked at again. And in order to get these tasks done, as HoD, you
ask your staff to help out. Bullshit proliferation.
So,
what do I think? It is not capitalism per se that produces the bullshit. It is
managerialist ideologies put into practice in complex organizations. As
managerialism embeds itself, you get entire cadres of academic staff whose job
it is just to keep the managerialist plates spinning – strategies, performance
targets, audits, reviews, appraisals, revised strategies, etc., etc. – which happen
in an almost entirely disconnected fashion from the real lifeblood of
universities: teaching and education.
It
was revealing to glance at the University of Tasmania Act 1992 to check to whom
UTas is responsible? The answer is no-one. UTas is literally a law unto itself.
Section 12 requires it to give the government an annual report each year which “contains a full account
of the income and expenditure of the University for the financial year to which
it relates”.
That’s all. It’s not answerable to anyone. It
merely has to tell the government each year what it has received and spent. The
local BMX Club has more onerous responsibilities to its members.
Little wonder Utas was able to serve up such a
disgracefully brief report into its perilous state. The Council ought to
ashamed at such a travesty. Perhaps not? After all they can please themselves.
It mustn’t be forgotten that the Federal
government is largely responsible for setting the parameters that have pushed
universities in the direction all have taken. But it is time to examine the
mess that has been created. The height of absurdity was reached when a plea
came from one university to open the borders to international students as they
are needed to subsidise university research.
The influx of international students has crush
loaded city infrastructure, pushed up the price of inner city housing, reduced housing
availability for local workers and aided and abetted wage theft in the service
economy leading to flatlining/declining wages
for locals as well. Nowhere is this more apparent than in Hobart. Despite being
a public institution UTas retains its anachronistic status as a law unto itself,
only obliged to act with care diligence and in good faith to further the interests
of the university.
With the actions of UTas the property developer, having
such wide ramifications in the city of Hobart, it is way beyond time to update
the governance of such a crucial public body.
As a property with an educational purpose, the university is entitled to an exemption from paying general rates. ...
ReplyDeleteOne relatively easy solution to the "UTAS-as-Property-Developer" problem is simply to change the rules so that UTAS has to pay council rates on all it's buildings. Suddenly they have a huge incentive to focus on research and education i.e being a university again.
Reduce inner city prices, more housing availability, less wage-theft, better wages for locals and, most important of all, a river of gold flowing into Hobart, Launceston and Burnie councils.
Hi John. I'd like to write to you via email: ahandpj@bigpond.com. Cheers, Andrew
ReplyDeleteHi John
ReplyDeleteI am part of a small group of UTAS Engineering graduates who have been investigating any justification for relocating the STEM faculties into the city.
Would like to chat with you on this topic and share our findings to date.
Contact details are howards_aust@bigpond.com or 0418 513829
Is any body doing anything about casual staff wage theft at UTAS? It's been going on from at least 2018 until Covid Shutdown. UTAS is a sacred cow and even the NTEU is loath to have a crack at them.
ReplyDeleteThanks for your sharing, it helps me a lot and I think I'll watch your post more.
ReplyDeleteSA GAMING