Australia spent years riding a tidal wave of tuition fees and related economic benefits from full fee-paying overseas students, but universities now face an uncertain future as COVID-19 measures ban international travellers, revenue shortfalls drive savage job cuts, and social-distancing laws redefine what it means to ‘go to university’.

The sudden loss of billions in revenues has rocked Australia’s higher-education sector, with the University of Melbourne, for example, conceding that 450 jobs would go in a “last-resort measure” as the institution prepared to lose $1 billion over the next three years.

Highlighting the extent of the change were revelations that the university had previously laid out a $4.2 billion capital works plan over the coming decade – and that $330 million of this had been deferred, with other future spending being reviewed.

“With fewer students, the university must be smaller and we will need fewer staff,” vice-chancellor Professor Duncan Maskell said in announcing the reductions this month.

“Based on all of the information we have available and our current modelling, we know the financial challenge facing the University is significant and we must take action now, in order to ensure the University’s survival into the future.”

Similar refrains have been heard across Australia’s top-ranked tertiary institutions, with ANU flagging job cuts to close a $225 million funding gap, the University of NSW retrenching nearly 500 people, Monash University cutting 277 positions, and the University of Queensland culling staff.

Regional education bellwether CQUniversity will fire 180 staff as it tries to claw back a $116 million revenue loss, while some 200 University of Adelaide staff also face the axe after accepting temporary austerity measures to avoid losing twice as many positions in a $60 million budget black hole.

Staring down an existential crisis

Cutting hundreds of lecturers, researchers, and casual support staff is a body blow for an industry whose value is based entirely on its human capital – leading the National Tertiary Education Union (NTEU) to blame “greed and fear of scrutiny among university vice-chancellors” for cutting jobs so early in the pandemic.

Yet as the world careens towards an uncertain future – promises of a vaccine within months notwithstanding – more than 21,000 jobs are ultimately expected to go, forcing the sector to reinvent education in a time of diminishing resources and surging demand.

Many are rebuilding their short-term plans around ubiquitous online learning, but face further disruption from recent federal government initiatives, such as the push to adjust course fees to steer students towards “job-relevant courses” in-demand industries – and cut $900 million from the sector in the process.

Budget challenges will drive the marginalisation or elimination of courses perceived as offering less job-ready skills, with the University of Sydney already flagging potential elimination of more than 20 government and international relations courses as it moves to cut eight per cent of its staff.

An open letter from University of Sydney staff warned of a “long-term decline in the quality of education” and Monash Faculty of Arts dean Professor Sharon Pickering warned about reflexively cutting industry-valued ‘soft skills’ amidst the “juggling act” that balances breadth of instruction with industry relevance.

Recent scenario planning by Deloitte laid out a worrying future for the higher-education sector, with four potential scenarios based on differing degrees of pandemic response.

All four of those scenarios predict the closure or merger of hundreds, even thousands, of universities facing an existential crisis of unprecedented scale.

Traditional on-campus learning will increasingly become the domain of the monied elite, Deloitte predicts, as tuition-dependent universities struggle and ‘mega universities’ lean heavily on online learning.

In one scenario, an unbalanced regional recovery favouring Asia-Pacific countries could, Deloitte warns, push Western-styled higher education “into structural decline” and “dampen intellectual debate on campuses” due to a growing emphasis on post-COVID public order and shared sacrifice.

Other predictions include the failure of public university systems; growth in smaller, local and two-year institutions as students try to reduce their education expenses; and a student exodus from universities altogether as they move straight into a jobs market that values skills more highly than degrees.

Such possibilities hang like a sword of Damocles over universities trying try to claw back from the “incredibly complex set of changes” imposed on them by the government’s jobs-ready strategy, says Mark Warburton, director of educational consultancy PhillipsKPA.

“In the past, governments have attempted to second-guess labour market needs,” he told Information Age, “but they have a very bad record of doing that.”

While there is value in ensuring funding aligns with “what might be required to efficiently deliver quality students”, Warburton continued, “you can’t instantly jump from ‘this is what they were spending, which was primarily funded by international students and government’, to removing the government funding and concluding that’s what you need for quality students.”

Time for industry to step up

Fundamental structural overhaul and reductions in government funding will, Deloitte predicts, likely increase engagement with industry – which has long leaned on the university sector to produce graduates with relevant skills.

This arm’s-length approach has been particularly challenging in ICT, where rapid change has seen skills demand outpacing universities’ ability to design and deliver relevant training.

Current government policy has flagged ICT as a priority area, which is encouraging news for a sector that has long struggled with a yawning skills gap.

Deloitte anticipates a surge in corporate training programs and believes employers will “become more directive in defining the skills they expect higher education to provide” – often tying their funding to specific outcomes such as increased workplace productivity.

“As there are fewer employers hiring,” the report projects, “the employer has a greater stake in the value of education and thus is heavily involved in curriculum design and even school creation.”

This shift is already being seen in recent partnerships such as those announced by RMIT University, whose RMIT Online arm this month debuted partnerships with online retail giant The Iconic and the Singapore Institute of Management to develop new “skills-based, industry-designed online education opportunities”.

As the pandemic continues to evolve, the effect of the government’s recent funding changes will become clearer – as will the balance between private interests and learning institutions that have become shadows of their former selves.

Melbourne University’s Maskell, for one, is cautiously optimistic that jobs-focused support like the National Priorities and Industry Liaison Fund will help it “[focus] our efforts in striving for excellence and prioritising areas where we can make a real difference”.

Yet it’s still early days in the pandemic and “it’s a brave person who predicts the future,” says Warburton, who warns that the full impact of today’s cuts won’t be felt for three years.

“Industry is always going to have to bear some responsibility for training its workforce, and all of this is going to have an impact on the way that universities teach,” he explained. “Universities are having a very difficult time working out precisely where they are going to land.”