UPDATED
THE University of Newcastle (UON) will pause its $200 million STEMM building project and investigate delaying salary increases under measures to save $35 million in the wake of COVID-19.
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Vice Chancellor Alex Zelinsky AO wrote to staff on Thursday to tell them UON was likely to be able to cover a forecast $58 million loss of income.
"Through a range of short-term measures... we've largely been able to cover this loss for 2020 and expect to break even or post a small overall deficit at the end of the year," he wrote, but said "2021 is expected to be much more challenging, for several reasons".
This includes international travel being unlikely to recommence until at least mid 2021 and the federal government's new funding package for the sector meaning "at best we will have marginal to no growth in our funding for domestic students for the next three years".
"We need to take steps now to find $35 million from our activities in order to address the anticipated shortfall in 2021, and help us recover in 2022 while protecting as many jobs as possible," he said.
Professor Zelinsky said the university council had approved him starting discussions with staff and unions about a "range of possible measures".
He said this includes delaying salary increases due September 2020 and September 2021 and annual salary increments in 2020 and 2021, which will require a variation to existing enterprise agreements and therefore a staff vote.
Any outcome would also be applied to management and staff outside agreements.
National Tertiary Education Union Newcastle branch president Dan Conway said the union welcomed Professor Zelinsky's "preference to negotiate in good faith with the NTEU and to attempt to avoid forced redundancies".
NTEU will meet with its members about the matter this week.
"We maintain the university is in a financially secure position with significant investments and virtually no debt," he said.
"It is no secret that in order to reach agreement, we require the university submit financial information to an expert panel to ensure the forecasts are sound and that any cost savings measures are proportionate to our unique financial situation.
"We will also require that any agreement comes with enforceable job protections and that applied cost saving measures are only temporary in nature."
Other proposed measures include reducing leave liability, a course review to "reduce the complexity of our degree structures" and consolidating its five faculties into four.
UON will pause the STEMM building project at Callaghan.
Professor Zelinsky said UON will consult further and host an all-staff forum in the week starting July 20.
Professor Alex Zelinsky declined to speak to media about the measures.
A UON spokesperson said he "will speak on any further details as they arise to university staff as first priority".
EARLIER
THE University of Newcastle will pause its $200 million STEMM building project and investigate delaying salary increases as part of a range of measures to save $35 million in the wake of COVID-19.
Vice Chancellor Alex Zelinsky AO wrote to staff on Thursday to tell them he had met with the university council last Friday to discuss measures to reduce spending this year and beyond.
"Council provided approval for me to begin discussions about the range of possible measures with staff and unions," Professor Zelinsky wrote.
One of the measures that requires variation to the existing enterprise agreement is delaying salary increases due in September 2020 and 2021.
"We will also explore options of delaying annual salary increments in 2020 and 2021," he wrote.
"These pay measures would require variation to existing enterprise agreements and, therefore, a staff vote.
"Any outcome agreed regarding salaries would also be applied to management remuneration and to staff who are outside of the enterprise agreements.
"I would also note that the university would review its position on any pay-related savings measures after 12 months. In the event that there is a substantial improvement in our financial position, we would review any agreed deferrals of pay increases or increments."
The National Tertiary Education Union Newcastle branch president Dan Conway said the union welcomed Professor Zelinsky's "preference to negotiate in good faith with the NTEU and to attempt to avoid forced redundancies".
"NTEU will meet with our members this week to discuss the situation and appropriate ways forward," Mr Conway said.
"We maintain the university is in a financially secure position with significant investments and virtually no debt.
"It is no secret that in order to reach agreement, we require the university submit financial information to an expert panel to ensure the forecasts are sound and that any cost savings measures are proportionate to our unique financial situation.
"We will also require that any agreement comes with enforceable job protections and that applied cost saving measures are only temporary in nature."
UON Professor of Health Economics & Policy, Dr Francesco Paolucci said UON's proposed measures were not surprising and the result of it having to organise a " do-it-yourself response" to the environment in the absence of adequate sector-wide government support.
He said staff in the already-fragmented sector were not eligible for JobKeeper or other government measures.
"What has happened in terms of government policy is it's been fundamental neglect of the strategic importance of the sector, broadly speaking," he said.
Dr Paolucci said it was concerning the government had not engaged with the sector about how it would cope with another year without new international students.
He said the government could partner with universities and share the cost and risk of bringing current international students to Australia to spend time in quarantine and then resume their studies.
He said it also needed to investigate the feasibility of offering international students who are willing to study courses solely online support visas to travel here after completing their studies. He said if this was introduced, students would have to be offered reduced fees.
UON's other measures available under existing enterprise agreement provisions include reducing leave liability.
UON will encourage people to reduce their annual leave balances and ask eligible people to use some of their long-service leave.
It will also look at extending the Christmas shutdown period and have also decided to not give any new approvals for sabbaticals in 2021.
It is undertaking a course review to "reduce the complexity of our degree structures and see us offer fewer courses that are better resourced, more flexible and externally focused".
It is also looking at its divisional and faculty structures.
"Consolidating our organisational structure from five to four faculties could deliver savings and strengthen our teaching and research collaboration," he wrote.
"This wouldn't be a simple merge of two faculties but instead a look at all faculties and schools to see where change makes sense in terms of the priorities in our strategic plan."
UON will pause the STEMM building project "as the university needs to maintain its reserves during these uncertain times".
"We will proceed with the demolition of the McMullin Building as part of the project and ensure the site is 'shovel ready' for construction should we secure stimulus funding from the state or federal Government," he wrote.
A UON spokesperson said enabling works have been underway since late-2019. The program for decommissioning and demolishing McMullin will start in the last quarter of 2020.
"The progress we have made through the STEMM Alliance to improve collaboration across STEMM disciplines will continue - this is a fundamental part of how we need to work."
Professor Zelinsky started his email by telling staff UON was a "financially robust institution".
"We started the year with no debt and strong student enrolment numbers from both domestic and international students," he wrote.
"Our research income was continuing to grow and we were receiving excellent philanthropic contributions. However...
"At our all-staff forum in May, I explained that as a result of the impact of the COVID-19 pandemic, we were forecasting a loss of income (international student fees, commercial income, interest and dividends) in the order of $58 million for 2020.
"Through a range of short-term measures, including the recruitment freeze, suspending more than $20 million in capital works expenditure and asking staff to take annual leave over an extended Easter break, we've largely been able to cover this loss for 2020 and expect to break even or post a small overall deficit at the end of the year.
"You have all helped us to achieve this position and I am sincerely grateful for the cooperation and resilience you have shown.
"Unfortunately, 2021 is expected to be much more challenging, for several reasons."
He said this included international travel being unlikely to recommence until at least mid 2021.
"This year we were lucky to have around 85 per cent of our international students in Australia when the borders closed," he wrote.
"That is unlikely to be the case in 2021.
"While this is devastating for those students who planned to study with us, it also has a significant financial impact on our university.
"Last month the federal government released its Job-ready Graduates Package outlining its new funding approach for universities.
"Our analysis indicates that at best we will have marginal to no growth in our funding for domestic students for the next three years.
"Also, we can't continue some of the current measures - such as the recruitment freeze - longer term if we're to operate effectively.
"It is also important to note that our operating expenses have been growing faster than our revenue for several years - and our investments have historically helped buffer that gap.
"So, while COVID-19 has exacerbated the need for savings measures, we have had an underlying challenge which we must address.
"The short-term measures we have undertaken in response to COVID-19 won't deliver all of the savings we require to achieve a balanced budget in 2021 and beyond.
"We need to take steps now to find $35 million from our activities in order to address the anticipated shortfall in 2021, and help us recover in 2022 while protecting as many jobs as possible."
Professor Zelinsky said UON will use the next fortnight to consult further with staff and unions.
"I will hold an all-staff forum in the week commencing July 20 to advise you of the progress of our discussions, share more details about next steps and provide an opportunity to ask questions," he said.
"We all know that these are challenging times.
"However, I am confident we can reduce the financial impact of the pandemic on our University and achieve the vision in our Looking Ahead strategic plan by working together.
"We must come out of this period as a stronger university, better positioned to provide the education that changes people's lives and conduct the research that our regions need to prosper."
More to come