UTAS: The Rufus years

 

Summary:

The first five years of Prof Black’s tenure has delivered $117 million in losses from the core activities of teaching and research including the relentless pattern of restructuring costs as UTAS struggles with declining real revenues and increasing costs. Capital grants of $227 million included as revenue help hide the losses.

Declining cash flows have accompanied the reduced profits to such an extent that 2023 saw UTAS with negative cash earnings for the first time in 2023, with no discernible plan to rectify the mess.

This means operations are unable to service the current level of borrowings.  Servicing existing borrowings as well as all new capex requires running down existing cash and investments until there’s no option but to start selling the family jewels, parts of the Sandy Bay campus.

At the rate of capex spending undertaken in 2023, UTAS only has another two years before the cash tin runs dry, which will not be enough time to make core activities sustainable once again.

The primary focus should be on arresting the decline in earnings from core operations. Moving to Hobart will only defer and exacerbate the problem. Building STEM facilities with a sale and leaseback arrangement won’t fix negative earnings from the core activities of teaching and research.It’ll make it worse as any investor/lessor will want a rate of return well in excess of the rate at which UTAS could borrow, if only Treasurer Ferguson will approve an increase in UTAS’ borrowing limit. UTAS knows this but sheer bloody mindedness has led it to deliberately pursue the reckless course of taking UTAS to the brink of insolvency, by trying to force the hand of the Parliament and the government to allow it to sell parts of Sandy Bay so that it can continue with its vanity project whilst ignoring the wishes of most other stakeholders.

Prof Black has recently railed against the inadequacies of Tasmanian schools’ performances notably the numbers who make it to Year 12. It may be a heart felt concern, but in part is likely to have been a reflection on the lack of students moving on to UTAS. Prof Black called for an inquiry into Tasmania's education system. Any inquiry should require a closer look at UTAS.

However less than expected numbers of Tasmanians wishing to study at UTAS must be in part due to mainland universities being able to attract the best and brightest, those who can afford it and those wishing more face-to-face learning and/or a more communal/collegiate setting than lesser quality offerings in a traffic congested city.

If the edu-migration international student Ponzi scheme was virtually over even before it started, no doubt ably assisted by the Covid virus, how long will the current plan last?

Even the mildly sceptic would question if UTAS racks up $117 million in losses from core activities over five years what are the odds of it pulling off a much riskier project like the Hobart move? If it doesn’t who’ll be left holding the can?

Isn’t it time to take a deep breath.

The government and the Parliament need to show who’s boss. Prof Black or the people of Tasmania?

What the 2023 Annual report revealed:

The 2023 year was by far the worst of the five years since Professor Black assumed the role of Vice Chancellor of UTAS.

STT's desecration continues

 

The desecration continues. Another 20 hectares, this time in the iconic Dial Range on Tasmania’s Central Coast has been earmarked for clear-felling by Sustainable Timber Tasmania STT later this year.

Tasmania's debt: Should we worry?

 

Viewing problems facing State governments through the same lens used to look at Federal budgets run the very real risk of erroneous conclusions.

The Australia Institute wrote an opinion piece titled Tasmania's fear of Government debt is hurting the State published in The Mercury on 22^nd March reassuring Tasmanians that deficit spending was fine because our assets are growing. “That does not sound like a government about to go broke“, it was said, ignoring the fact  insolvency isn’t triggered by a lack of assets, rather an inability to service liabilities.

There followed an assertion because our per capita net debt was lower than other States, despite other financial liabilities such as the much larger unfunded defined benefit scheme for government employees, Tasmania was sitting pretty. Our biggest challenge is to unshackle ourselves from a restrictive self-imposed borrowing constraint.

The pro-forma response to the Tony Abbott-Joe Hockey debt and deficit doomsday scenario was trotted out. Most economists agree with this knowing the Australian government is not revenue constrained and more significantly, controls its own currency, neither of which are true in the case of state governments.

The weeties choking moment came when it was stated: “Tasmania currently is able to meet its spending commitment to pay teachers, nurses and other public sector workers. The “cash flow” of the government is actually in surplus “.

That statement shows a complete misunderstanding of Tasmanian government financials. The suggestion that operating revenue is enough to cover operating spending is simply wrong.

This blog will pinpoint the errors whilst also having a look at the way State governments report their budget outcomes compared to the way the Federal government does.

Election 2024: Tas vs Vic - the battle for the Basket

 

Our less than honest politicians continue to rely on an endemic misunderstanding of State government debt when spruiking their credentials as economic managers.

Rebecca White harks back to 2014 when general government net debt was absent. But there was plenty of unfunded superannuation liabilities and borrowings by government businesses, some of which were needed to pay returns to government, that she conveniently sidestepped.

Jeremy Rockliff’s advertisements have a fleeting glimpse of a chart showing net debt across states with Tasmania having a small amount compared to other States. A disingenuous comparison given we’re the smallest State.

Treasurer Ferguson when defending the level of debt in his 2023/24 Budget the day after the budget was handed down in May 2023 told us our net debt is quite low:

 “…our borrowings are very, very small in comparison to other jurisdictions per capita, just have a look across the waters that Victoria what they are doing……..I wouldn’t want to be in their shoes.”

There’s plenty of metrics to suggest our predicament is not much different to Victoria, perhaps even worse given we are still deluding ourselves about our true position, and about to be lumbered with another round of unfunded election promises no matter who wins.

Election 2024: The Labor Fiscal strategy

 

Just when one thinks things can’t get any worse the Tasmanian Labor Party put out its Fiscal Strategy Statement with an accompanying media release declaring Treasurer Ferguson “simply has no idea what he’s doing.”

It’s a classic case of a kettle being called black by a particularly sooty pot.

The Fiscal Strategy is a statutory requirement of the Charter of Budget Responsibility Act 2007. Opposition parties need to lodge a Strategy with the Treasury Secretary ten days after an election is called.

The Tasmanian Labor Party outsourced the preparation of its fiscal strategy to its media minders. As a consequence, the strategy is a flawed document replete with dubious and at times incorrect assertions.

Election 2024: End of the UTAS dream?

 

Reading between the lines of the Liberals’ statement vowing to block the sale of UTAS’ Sandy Bay properties, one gets the feeling it’s a PR masterstroke from UTAS. They’ll now be able to say they were forced to change course rather than having to admit it was a crock of an idea in the first place.

Election 2024: UTAS issues

 

The Clark electorate in Hobart is particularly crucial. If major parties only manage to get two seats each at the State election on March 23rd they will need four seats in the other four electorate to achieve a majority in the new parliament. That’ll be a tough ask.

Given the poll 18 months ago revealing three quarters of Hobart City electors are opposed to UTAS’ move into the City it is a little surprising there hasn’t been a greater willingness by third parties and potentially key independents vying for the three remaining seats to discuss their views with voters.