Universities Australia | Action needed to secure universities’ future
The University Chancellors Council notes the recent reporting on the university sectors financial health. The UCC supports the Universities Australia Media Release from 3 February 2026 which considers the ongoing structural pressures for universities and provides insight to genuine analysis of the state of the university sectors financial position.
Action needed to secure universities’ future
Recent media reporting painting a rosy picture of the university sector’s financial health draws on surface-level financial indicators and masks the deep and ongoing structural pressures impacting Australia’s higher education providers.
This comes as Australia’s universities face further cuts in real terms to funding in 2026, extending the sector’s prolonged strain after a decade of funding erosion, policy instability and rising costs.
“Australia’s universities are critical national assets – educating millions of Australians, driving research and innovation, and supporting economic growth,” Universities Australia Chief Executive Officer Luke Sheehy said.
“But the financial foundations of the system have weakened, and without targeted action, those pressures will only get worse.
“Australia needs a strong university sector. Ignoring the very real pressures our institutions are under will hurt our sector and our country.
“A strong and sustainable university system underpins Australia’s productivity, skills pipeline and research capacity. We need a stable footing to ensure universities can continue to deliver for the nation.”
Analysis of the state of the sector’s finances reveals the extent of the funding challenges confronting Australia’s universities.
Headline surpluses conceal underlying fragility
While universities collectively recorded a 4.7 per cent operating surplus in 2024, this should not be interpreted as a sign of financial strength.
This result was driven largely by temporary and non-recurring factors, including unusually strong investment returns and delayed inflation indexation following the 2022 CPI spike.
Behind the aggregate figures:
13 universities remained in deficit in 2024, after 26 in deficit in 2022 and 25 in 2023
22 universities have weak liquidity, with current liabilities exceeding current assets, and
expenses rose by $3.5 billion in a single year, including $2 billion in salaries and on-costs.
Teaching and research funding remain under pressure
Changes to funding and policy settings and priorities have left universities vulnerable to persistent structural challenges.
Universities rely on domestic and international student enrolments for nearly two-thirds of their revenue, both of which are now subject to significant uncertainty under the government’s Managed Growth Funding system and the crackdown on international students.
Real funding per Commonwealth-supported student has fallen by around six per cent since 2017, despite growth in student numbers.
Universities now receive less funding per student than in 2017, the last year all places were fully funded.
Universities spend more on research than they receive, contributing $1.06 of their own funds for every $1 of research income.
Government investment in R&D has fallen to less than two per cent of total expenditure, while Australia’s overall R&D effort sits at a 20-year low (1.7 per cent of GDP).
International education is no longer a buffer
International education has historically helped universities manage funding shortfalls, but this source of revenue is no longer guaranteed, first due to the impacts of the pandemic and now due to the government’s change of direction on international education.
International student fee revenue only returned to its 2019 real value in 2024.
Growth is expected to slow due to tighter visa settings, higher costs and enrolment caps.
International students account for just over one-quarter of university revenue, leaving institutions exposed to policy and market volatility.
Infrastructure investment is falling behind
Declining operating surpluses are directly constraining universities’ ability to invest in essential infrastructure.
University capital expenditure fell from around $4.5 billion in 2019 to about $3.86 billion in 2024 and remains below pre-pandemic levels.
Capital spending now accounts for less than 10 per cent of total university expenditure.
Seven universities spend less than five per cent of revenue on capital investment, limiting their ability to maintain laboratories, teaching facilities and digital infrastructure.
Since the abolition of the Education Investment Fund, universities have received little direct government support for capital works and must rely on operating surpluses.
A budget opportunity to stabilise the system
In our 2026-27 pre-budget submission, UA sets out a focused, practical package of reforms to restore fairness for students, rebuild sustainable university funding, strengthen the research workforce and ecosystem, and ensure Australia remains globally connected and competitive.
To ensure Australia’s universities are properly supported to deliver the pipeline of skilled graduates and research and innovation that will help our country grow and prosper, UA is calling on the government to use the 2026-27 budget to fund universities properly for the benefit of all Australians.
Fix Job-ready Graduates now: scrap the highest student fee band to restore fairness, cut costs and stop pricing students out of key disciplines
Fund education for better outcomes: grow Commonwealth supported places and restore real per-student funding to meet Australia’s future workforce needs
Protect a $52 billion export: keep international education growing sustainably to support jobs, universities, research and regional economies
Put First Nations first: implement the Australian Universities Accord’s Indigenous reforms to lift participation, completion and economic opportunity for Aboriginal and Torres Strait Islander peoples
Cut red tape: review higher education regulation to slash compliance costs and free universities to focus on building Australia’s future through teaching and research
Rebuild campuses: restore a dedicated infrastructure fund to modernise facilities, expand capacity and support skills, research and jobs
Go global on research: secure access to Horizon Europe and back trusted international collaboration to lift innovation and productivity
Back basic research: lift public R&D investment to the OECD average to protect Australia’s research pipeline and global competitiveness, and
Make PhDs viable: raise stipends, support parental leave and fix tax settings to grow the research workforce Australia needs.
Read on the Universities Australia website.
This piece has been reposted with permission.