As
published in The Mercury 26th September 2020. It's an abridged
re-write of the previous blog Where to UTAS?)
IF
annual reports were marked like university assignments, the University of
Tasmania’s latest effort would receive one out of 10.
UTAS
reports on a calendar year basis. The Auditor General signed off the 2019
report in February. The Board (known as the Council) adopted the report in May
and sent it to the government as required. The government released the report
in late August, eight months after year’s end. Were it a listed company it
would have been suspended.
Apart
from the financials it’s a pretty skinny report. The overview for the year
occupied only six pages. Even then it contained a cut and paste from a previous
offering, a Strategic Plan dated July 2019. 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.”
The
brief review continued with a pastiche of proper nouns and acronyms which only
an insider could possibly comprehend. Four paragraphs on risk management
described how UTAS had worked collaboratively, reviewed, planned and
implemented recommendations. Exactly what was implemented to address what risks
wasn’t disclosed.
Essentially UTAS’s chosen transition to sustainability requires more students and that requires more student accommodation. Property development is now the tail wagging the education dog.
The
financials confirm this. UTAS’s net profit was $73 million on revenue of $777
million. This occurred pre-COVID. The core activities of teaching, research and
community engagement produced a loss of $2 million. Non-core activities
resulted in a $75 million profit, mainly unrealised gains on investments of $60
million and interest and dividends of $14 million. The investment portfolio was
worth $442 million at year’s end. Calendar year 2019 was kind to share punters.
In
2019 UTAS spent $206 million on capex. That’s more than the state government if
one ignores the Royal Hobart Hospital spend. Borrowings jumped from $93 million
to $210 million.
There’s
another liability on the balance sheet — $123 million described as a “grant of
right to operate” which for all intents and purposes is a borrowing. UTAS
received a lump sum of $133 million in 2017 for the right to operate and
receive the rents from some of UTAS’s student accommodation. Essentially UTAS
has swapped future rents for a lump sum payment. It is safe to assume UTAS has
guaranteed future rents and is locked into a 30-year deal.
Similar
deals appear to be in the pipeline. The 2018 Annual Report referred to a mooted
Melville St building to accommodate 422 students. The Midcity and Fountainside
hotels were also bought by UTAS for student accommodation.
A
pattern is emerging. Develop student accommodation, search the globe for
students, lower the grades necessary for students to pass so they stay, sell
off 30 years’ worth of guaranteed rent, buy more property and so on.
Sustainability
also means being able to adequately fund research. Running a property scheme
hoping to fund a nation’s crucial investment is a sad indication we have lost
our way. More is being spent on student accommodation than the government
spends on social housing. Just as privatised aged care has become a property
play, so too have universities. Wage costs as a percentage of total expenses
have remained relatively stable at about 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 of total wages to 51 per cent. Even with scaling up,
taking in more international students, the shift away from teaching and
research wages has continued unabated.
UTAS
has its own governing Act of Parliament. However it’s not answerable to anyone.
It merely has to tell the government each year what it has received and spent.
Little wonder it was able to serve up such a disgracefully brief report into
its perilous state. 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. 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. Nowhere is this more apparent than in Hobart.
UTAS
retains its anachronistic status as a law unto itself. Its statutory obligation
to act with care diligence and in good faith to further its own interests has
given it carte blanche to become a property developer with a side hustle in
education. It is way beyond time to overhaul the governance of such a crucial
public body.
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