Posted 20/04/2021 by: Professor David Lloyd

You hear it often said that 90% of an iceberg lies beneath the surface. Unseen. But present. That’s a fact of physics and the relative densities of ice and salt water. It’s hard to imagine the unseen – but so much of life, and work, is unseen to so many of us. From the microscopic menace that mercilessly disrupted our lives this past year to the wonder of wi-fi that allowed us to cope and not just by streaming Netflix – so much we don’t see that can have a massive bearing on our lives. Our work lives are similarly partitioned between the visible and invisible. We each have a unique set of skills – not all the Liam Neeson type – which we apply to the delivery of our roles – but our roles all subtly differ and while we have an appreciation for what our colleagues do, unless we are actually doing it, we never really know the full extent of what, or how, our peers are doing.

Where’s he going with that opening, I hear you muse. He’s going to awareness, hopefully. Awareness of the interlayered and interdependent complexity that makes a university function – the seen and the unseen working in tandem. The African proverb tells us that ‘it takes a village to raise a child’.  As I’ve sat in graduations this past week, I’ve reflected that it takes a community to make anything truly successful. The community of the University of South Australia makes UniSA successful as much in the way that they pull together when times are tough, to just get stuff done, as they do in how they come together to celebrate the achievements of our graduates crossing the stage in Pridham hall, clapping them out to the unexpected strains of Pharrell Williams. If you haven’t yet attended or volunteered at a graduation ceremony, that’ll probably be lost on you and more’s the pity. It’s great. As an aside our Chief Operating Officer has never been seen in the same location as our dancing Koala graduation mascot. Ever. Coincidence? You be the judge.

The other thing about icebergs is that they loom – despite what you can’t see, you can tell they’re going to do some damage. (I think ‘A night to remember’ outplays Cameron’s ‘Titanic’ in the looming stakes). The continued closure of Australia’s international borders, for all the right reasons driving that reality, is something of a looming iceberg for the armada that is the Australian higher education sector.

‘Iceberg, dead ahead!’

Suddenly you’re trying to turn the ship and wondering if the factory install includes floor to ceiling watertight compartments below decks.  Some vessels – including the USS Enterprise, sorry, UniSA – are undoubtedly more resilient than others, but I find it unusual that no-one is remarking on the quantum of institutions who’ve gone into deficit in 2020. It’s about a third of the sector at current count. For purely comparative purposes, we have 38 public universities in Australia and we have 53 banks. Fourteen of the banks are owned by the government – so 39 aren’t. If one third of those banks were in deficit in 2020, despite the insights we gained to their management and behaviours from various Royal Commissions, we would probably see some very different media treatment to that which has been afforded to the higher education sector. It’s a reasonable comparison though, behaviours aside, as both sectors are essential to national economic prosperity and critical to the functioning of civil society. Higher education, it seems, is not valued as highly as retail banking. It’s also surprising how testy some people get when you point this out in a public forum.

It’s also interesting to see how this plays out in the media. A university reports a loss for 2020 and they’ve been over-reliant on international student revenue. They return a surplus and they’ve been crying wolf about the impact of Covid19. ‘It was ok when it left here’ is the mythical Belfast refrain regarding RMS Titanic, reflecting on her encounter with an iceberg some 109 years and four days ago. The inference is that the ship was fine as she left dock and circumstances other than Irish engineering led to her untimely demise. There’s a similar refrain emanating from political circles – the sector is positioned as having been engineered properly – if some universities are in strife, well, that’s not because of us, they were ok when they left here. Or were they? I’d argue that they were at risk from the get-go. The engineering flaw that might yet sink some universities is not their over-reliance on international student revenue – it’s the structural gap into which that funding was flowing. A gap that was built-in through the short-funding of core teaching and research for over a decade.

There’s no doubt that the iceberg to which I’m referring has already struck the higher education sector (or vice versa). It’s more akin to  Cameron’s Titanic collision though. It appears to have scraped along the bow. The unseen damage has been done below the water line. Depending on their resilience, universities’ momentum has seen some of them take to the pumps to stay on course, while others have taken on water more quickly and are at risk of floundering. Those who are listing most heavily are valiantly attempting to right themselves through the roll out of enterprise agreement variations hastily put in place in 2020 – but shutdowns and deferred pay increases are not cost reduction approaches, they merely move the issue around (dare I make reference to deck chair rearrangement?). For many, recovery was predicated on the return of international students at volume in 2021. That’s unlikely to happen given 1) the speed of our vaccination roll-out, 2) escalating geopolitical tensions relating to our largest market 3) the impact of Covid19 on other feeder markets and most importantly 4) the continued closure of our international borders. The damage done in 2020 grows more acute in 2021 and compounds into 2022. That’s the unseen element – the element unique to university business models. About 25% of the entire 2019 international student cohort completed their studies in 2020. 2020 saw a physical intake of commencing international students at the start of the year, but no mid-year intake (and that’s not factoring in the impact of ‘stranded’ internationals who were enrolled but found themselves off-shore). 2021 has seen no physical intake of commencing students, but some students are commencing online with the view to completing on campus in the future. In 2021 another 25% of the 2019 cohort will complete and leave. There hasn’t been a meaningful replenishment of that cohort in 2020 or 2021 – so project forward to 2022…. You get the picture. Sealing the hole torn is a non-trivial undertaking as the ship continues to sail. That is why we are seeing sectoral job losses and why we will see more deficit results in 2021.

Ironically 2020 was the tip of that particular iceberg.

When we first evaluated the challenges facing us back in the Summer of 2020 we quickly determined that our best course of action would be a multiannual one. Not a short term response. Rather a longer term one, where we prioritised preservation of employment levels to best position us for recovery. We took a very deliberate and structured approach to cost management (prudence) to preserve employment levels. Our strong 2020 financial result is undoubtedly the result of all the work, seen and unseen, that was done by all of our community. Despite the issues outlined above, we intend to break even in 2021 – and, again, to preserve employment levels as we do so. We are on course to achieve that goal. However, with sustained and continued uncertainty comes increasing strain on the system, (and I guess with VC’s blogging about sinking ships that strain might get further amplified – apologies – if you take home one message from this, know that ours is not a sinking ship). We will once again endeavour to plan out and ahead as far as we can – to reduce that strain and uncertainty for us all. As we do, it’s worth remembering that there’s no value in us watching the fate of others with self-congratulatory glee – rather, our best course is to pay attention to where we are and where we are headed, paying heed to our challenges, repairing as we go, and showing what can be achieved with a spirit of Enterprise and the work of a village contributing to our success. 

Professor David Lloyd

Through The Big Picture, I hope that our whole community gains a greater and current appreciation of what is going on, how it fits together and how our activities connect and reinforce each other at a whole of enterprise level.

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