By Salvatore Babones, Associate Professor at Sydney University and author of the book “Australia’s Universities, Can They Reform”
Universities Australia (UA) has published its pre-budget submission, and it opens with the claim that its members educate “1.5 million Australians every year”. That is incorrect. They educate roughly 1.5 million people every year—of whom only about 1 million are Australian.
The rest (roughly one-third of the total) are international students. Don’t take my word for it. You can check the numbers on Universities Australia’s own website.
“Lie” is such a dirty word, and one prone to prompt lawsuits. So let’s call this an error. It’s only the first of many errors in UA’s log of claims against the public purse.
An old chestnut is UA’s claim that international education generates “$52 billion” in export earnings. That is incorrect. The number comes straight from the Australian Bureau of Statistics, but only $39 billion of that amount is generated by higher education. The rest comes from vocational and other non-university programs.
Of course, $39 billion is a lot of money. But everyone in the industry knows that the ABS figures are inflated, because they assume that all onshore spending by international students results in “export” earnings. That is incorrect. After years of criticism, the ABS has now acknowledged this on its website.
What proportion of the $39 billion in higher education “exports” are actually exports (i.e., paid for from money earned outside Australia)? The ABS estimates that “around a third of the expenditure is funded by international students working in Australia for Australian employers.” So mark that $39 billion down to $26 billion.
Turn to the second page of its submission, and UA urges the government to “back basic research” by lifting “public R&D investment to the OECD average”. Australian government spending on R&D is in fact quite low, at 0.52% of GDP (compared to 0.86% for the OECD as a whole).
But that has more to do low spending on defence than low spending on universities. Across the OECD, government spending on research in universities averages 0.43% of GDP. Australia does not publish a directly comparable figure. But total Australian higher education spending on R&D comes in at a hefty 0.80% of GDP.
The universities could legitimately claim that they generate most of that money from tuition, with only a third of it being budgeted directly from the government. But who pays the tuition that Australian universities rely on to fund their research? Most of it (for Australian students, nearly all of it) comes from … the government.
On the third page, the UA claims that the Coalition’s 2021 Jobs-Ready Graduates package (which reduced Commonwealth support for students in areas like business and the humanities while increasing subsidies for nursing and teaching) “has reduced university funding by around $750-800 million per year.” That is correct.
Yes, correct. Between 2020 and 2024 (the latest year for which data are available), university revenue from Commonwealth Supported Places fell by 6% in real terms, adjusted for inflation.
That was mainly because domestic students enrolments (measured in terms of student load) fell by 4% between 2020 and 2024. Perhaps surprisingly, universities only get paid when they actually educate students.
Over a period when CPI inflation totalled a staggering 19%, Commonwealth funding for student places almost kept pace. The universities aren’t down the $750-800 million they claim. In reality, funding for Commonwealth Supported Places is roughly $200 million below 2020 levels, adjusting for both inflation and student load.
That’s less than 0.5% of their annual revenue.
But the big howler comes on the fourth page. There, UA claims that “the abolition of the Education Improvement Fund in 2019 removed nearly $4 billion in dedicated higher education and TAFE infrastructure investment,” with the result that “real university capital expenditure fell by around 40 per cent between 2019 and 2022.”
That is not only incorrect; it is fantastical. The Education Improvement Fund was established in 2009 but ceased making payments to universities in 2014. They didn’t get a cent from the fund in 2019, and hadn’t received a cent in years. The fund’s closure had absolutely no effect on university capital spending between 2019 and 2022.
If the universities are not investing in their campus infrastructure, it’s because they prefer to invest in their stock and property portfolios. Australia’s 38 publicly-supported universities ran a collective surplus of $2.1 billion in 2024. Luckily for them, the 2025 figures won’t be published until after the budget has passed.
We talk a lot about integrity in the university world. We might get a better reception if we did more than talk.
Australia can and arguably should spend more to provide the best possible education for its future generations. But if universities want to be trusted with billions in government funding, they have to show they can be trusted not to cook the books.
