Adelaide faces bankruptcy

November 23, 2001

One of Australia's oldest universities is facing bankruptcy and is seeking a A$10 million (£3.7 million) advance from the federal government to overcome its financial crisis.

Dozens of academic and other staff jobs at the University of Adelaide may have to go. The federal education department has warned that an administrator will be brought in unless the university improves its financial situation dramatically.

This is the first potential bankruptcy case involving one of the nation's 39 public universities. It follows the abrupt resignation last month of Mary O'Kane as Adelaide vice-chancellor. Professor O'Kane was forced to quit after losing the support of her senior management team for a reorganisation.

The university chancellor, Robert Champion de Crespigny, said at the time that Adelaide's financial position and its future outlook were sound. Yet soon after his assurances, the education department is believed to have issued the warning about having to bring an administrator into the university.

Cliff Blake, Adelaide's temporary vice-chancellor, told an academic board meeting that the university faced a bleak financial future. Professor Blake, who assumed the temporary position after retiring from Charles Sturt University, said Adelaide was in the worst financial position of any Australian university.

It is believed that the university faces a A$3.2 million deficit by the end of the year. The situation is likely to get worse because more staff salary increases are due under an enterprise agreement with the National Tertiary Education Union. This week, union members adopted a motion of no confidence in the university council and called on the state auditor-general to investigate the university's finances.

Professor Blake has written to more than 350 staff who are over the age of 55 and called for voluntary retirements. He is understood to want up to 70 staff to leave, but he will begin selecting individuals for compulsory redundancies if there are not enough volunteers.

In a statement last week, Professor Blake said he had completed a budget that set out a clear recovery strategy.

"I am confident that this strategy will quickly restore the university to a sound and stable financial position," he said.

The university council will consider the new budget strategy at its meeting next Monday.

Subject to a legal complaint

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