Vice Chancellor Alex Zelinksy says Uni faces operating deficit of $18.7M

"The University is at risk of not being financially sustainable if we continue to operate in this way," Professor Alex Zelinsky said in an email to staff on Thursday.

The $5.8 million surplus achieved during 2020 was down nearly $60 million on the previous year's surplus of $65.7 million, he said.

"It is important to remember that surplus does not equal profit," Professor Zelinsky said.

Last year's surplus includes $11.3 million of committed but unspent research grants and philanthropic funding, as well as $13.2 million in unrealised investment gains, he said, creating the $5.8 million operating deficit.

The facts and figures don't necessarily make change easier, he said, but the university needed to be capable of and open to change to "stay relevant and to thrive".

National Tertiary Education Union Newcastle branch vice president Terry Summers said the fact the university made a profit, despite the "extraordinary hits" it took in 2020 due largely to COVID-19, made the changes afoot even harder to swallow.

"The reason why they made that profit was because the staff were so quick to adapt to the crisis and really put in a huge amount of effort to rapidly switch to online teaching, and work from home, above and beyond the call of duty," Associate Professor Summers said.

"It's a shame some of those same staff will lose their jobs."

Changes taking place at the university by way of cost-cutting measures would lead to many senior staff being replaced by junior staff, he said. Up to 360 positions or more would be affected - they would either be forced out, or be forced to re-apply for their jobs.

The restructure also involves cutting faculties from five down to three colleges, and potentially suspending, consolidating or cutting up to 500 courses.

"We don't know how the operating deficit is arrived at and we have asked for more detail. What I do know, and our union's position is that the uni is making a profit, in what [Federal Treasurer] Josh Frydenberg called the deepest recession since the Great Depression, and there's still a need to make more of a profit.

"They have made a $50 million profit over ten or eleven years on average so it's kind of hard to swallow people being shunted out of their positions where they have worked so hard for so long."

A spokeswoman for the university said some of the measures currently taking place have been driven by historical factors. They include adjusting to the end of the demand-driven funding model for Commonwealth Supported Places (CSP) and subsequent caps on CSP funding in 2017.

"These caps meant our sector had to move to a heavier reliance on international student markets, which have since become severely contracted due to COVID-19", she said.

"We have been making changes to improve our long-term financial position and address our operating expenses exceeding our income. COVID-19 did not cause these issues, but certainly exacerbated them and accelerated the need for change. We have made good progress and know it has been a challenging year for staff."

The University Council endorsed the 2020 Annual Report which contains the 2020 Financial Statements on Thursday. University annual reports will be tabled in State Parliament by the end of May when they will be made publicly available. Professor Zelinsky is expected to join discussions about the university's financial position at an all-staff forum on Tuesday.

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