The Australian university sector is reeling under the impact of loss of significant revenue from its international students due to COVID-19. The modelling done by Universities Australia projected 21,000 job losses and loss of $16b in revenue between 2020 and 2023.
University of Melbourne announced 450 job losses, Monash 277 and UNSW 493 recently. Casual staff have just been let go - with some estimating about 70% and on top of that with no assistance from the Commonwealth, the sector is one of the worst hit within our economy along with travel and hospitality due to the impact of COVID.
Universities just do not have the means of keeping them afloat with operating cash shortfall without injection of funds. State Governments are providing much needed guarantee to service new borrowing so the universities can bridge a part of the funding gap. On top of that, universities are forced to defer capital spending and in many cases, cut the capital expenditure budget with concerns of a permanent reduction in international students and provision of university facilities which may no longer be required in the foreseeable future.
Universities are also repositioning their academic offering allowing students to access more online courses and using digital platforms to deliver content with reduced resources. Many fear that the job losses that the sector has seen are going to be permanent and are lost forever.
There is simply no panacea fro universities to get out of this situation without a significant cut in their operating budget and looking for efficiencies in delivering core business. The sector is also flagging shared services and use of other technology to operate a sustainable framework.
University of Melbourne announced 450 job losses, Monash 277 and UNSW 493 recently. Casual staff have just been let go - with some estimating about 70% and on top of that with no assistance from the Commonwealth, the sector is one of the worst hit within our economy along with travel and hospitality due to the impact of COVID.
Universities just do not have the means of keeping them afloat with operating cash shortfall without injection of funds. State Governments are providing much needed guarantee to service new borrowing so the universities can bridge a part of the funding gap. On top of that, universities are forced to defer capital spending and in many cases, cut the capital expenditure budget with concerns of a permanent reduction in international students and provision of university facilities which may no longer be required in the foreseeable future.
Universities are also repositioning their academic offering allowing students to access more online courses and using digital platforms to deliver content with reduced resources. Many fear that the job losses that the sector has seen are going to be permanent and are lost forever.
There is simply no panacea fro universities to get out of this situation without a significant cut in their operating budget and looking for efficiencies in delivering core business. The sector is also flagging shared services and use of other technology to operate a sustainable framework.
FED CHAIR SAYS expansionary policy will remain
If Central Banks were looking to get any guidance from US Fed Chair Powell, has also switched to then their hopes were dashed. Powell stated that US Fed will continue to have expansionary monetary policy despite the rising unemployment numbers. Following the speech, the ten year Treasury yields in the US jumped by 9 basis points and the local ten year yield jumped by 14 basis points to 1.02%. It is interesting to note in this regard that the strongest economy within the Euro Zone Germany has its ten year bond yield for the Bund at -0.41%. The Aussie Dollar jumped following the speech as US dollar weakened and remained at around 73 US cents.
In Australia it is almost certain that the cash rate will remain unaltered in September when the Board meets. The 3 year cash rate continues to find support at 0.25%. As long as the iron ore fuelled economy is supported by Chinese buying and with more gas exports in the horizon, the support for the AUD will grow and with US going into election mode for the 3 November polls, we expect the local dollar to strengthen further into the new year.
In Australia it is almost certain that the cash rate will remain unaltered in September when the Board meets. The 3 year cash rate continues to find support at 0.25%. As long as the iron ore fuelled economy is supported by Chinese buying and with more gas exports in the horizon, the support for the AUD will grow and with US going into election mode for the 3 November polls, we expect the local dollar to strengthen further into the new year.
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