Ventures fail to show profit

November 10, 2000

The commercial arms of many of Australia's universities are in serious financial trouble and, far from turning the intellectual property of their scholars into profits, they are losing millions of dollars.

One of Australia's largest tertiary institutions, the University of New South Wales, lost more than A$5 million (£1.8 million) last year from its entrepreneurial companies, and the Australian National University's commercial arm, Anutech, is A$6 million in debt and faces closure.

Offshoots at Macquarie, Newcastle and Western Sydney universities also made losses last year, according to a report by the state auditor-general.

A senate inquiry into Australia's higher education system is expected to subject to severe scrutiny the commercial operations of the nation's universities.

Labor's opposition spokesman on education in the senate, Kim Carr, said the inquiry provided an opportunity to explore the impact of commercial activities on publicly funded institutions.

Senator Carr said he was concerned at reports that some university companies were losing millions of dollars. He said the "financial deprivation" inflicted on the sector by the federal government may have led universities to engage in questionable ventures.

Certainly, the drive to generate more private income has been forced on universities by a A$1 billion cut in their federal operating grants over the past four years.

Commonwealth grants comprise less than 50 per cent of institutions' operating revenues and vice-chancellors have had to find alternative sources of funding.

The University of Melbourne's budget for next year reveals that just 36 per cent of its A$665 million revenue will come from federal operating grants. Money generated from research activities will contribute A$85 million and student fee income is expected to increase from A$90 million this year to A$106 million.

More than a third of university revenue is derived from student fees. Undergraduates must pay between 30 and 50 per cent of the cost of their courses through the Higher Education Contribution Scheme.

The most significant growth area, however, has been the overseas market. This year, universities are expected to earn more than A$1 billion in fees from overseas students.

In many cases, the recruiting of foreign students is undertaken by university companies. But inquiries into the operations of such companies suggest that a lack of business expertise has led directors into difficulties.

At the University of New South Wales, a A$5.2 million loss resulted from involvement with an interactive English language learning programme, Planet Learning. The NSW Auditor-General said the university had written off A$3.5 million on the venture.

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