Vice Chancellor of the ANU Professor Ian Young said the institution needs to find $40 million in savings.

Vice Chancellor of the ANU Professor Ian Young said the institution needs to find $40 million in savings. Photo: Melissa Adams

W hen union officials were summonsed to Australian National University vice-chancellor Ian Young's office first thing on Monday morning, they had little idea what was in store. But after a two-hour discussion and powerpoint presentation by Professor Young, they left very clear about his intention to embark on a short and sharp $40 million cost-cutting exercise that will result in up to 150 job losses by the end of the year.

Young has given the university community four weeks to decide whether it can help nominate research areas to be strategically axed rather than have him institute across-the-board budget cuts. The whole process needs to be completed within the next four to five months.

National Tertiary Education Union ACT division secretary Steven Darwin said that while there had been general grumbling about belt-tightening at the ANU over the past six months or so, there were few indications things were really this desperate.

And Darwin and his union colleagues wonder if they really are.

According to the discussion paper circulated by Young on Monday, the ANU needs to save $40 million, or 5 per cent of its total revenue, in order to bolster its $14 million surplus ''and protect the health of this great university''.

While $14 million might seem a pretty healthy buffer to some, it is less than 1.5 per cent of total revenue when the sector average is 4 per cent and a Commonwealth measure of financial health.

''Fourteen million dollars is almost nothing in terms of a surplus,'' Young said.

''We could slip into a deficit just like that,'' he said with a dramatic snap of his fingers.

The vice-chancellor blames the global financial crisis for the biggest hit to the bottom line with the ANU's enviable investment portfolio of $1.1 billion down on returns by $30 million on last year and a big spend on campus infrastructure leading to a $10 million increase in depreciation costs on last year.

Added to that a recent 4.5 per cent wage increase and a $26 million rise in services expenses this year and Young and his senior management team are in agreement that ''bold action'' is now required.

''If we do not act to reduce spending, the university will be unable to invest in excellence, and will suffer a gradual decline in international standing and quality,'' he warned.

There is much to unpack in these enormous figures and dramatic statements, and the combined intellectual might of the ANU community of staff and students are sure to come up with many varied interpretations as the four-week countdown begins.

Since Monday, the campus office of the NTEU has been dealing with backed-up inboxes, phones ringing off the hook and nearly 20 new memberships being hurriedly signed.

Not since Deane Terrell attempted to institute major cutbacks in the late 1990s - which targeted arts and the humanities and included an ill-fated and ultimately futile attempt to axe Latin - has the campus atmosphere felt so unsettled.

Terrell's belt-tightening - undertaken against a background of savage Howard government university operating grant cuts - resulted in week-long strikes, walk-outs, sit-ins, pickets, and a police presence on campus.

Many current staff remember it well.

Young admits he is new to the cost-cutting business - not having undertaken anything of this magnitude at his former institution, Swinburne - and that he finds the task difficult.

''I don't go into this lightly at all,'' he said.

But he is certainly not alone in this current crop of university managers who are struggling to balance their books.

Last year, Macquarie University, La Trobe University, Victoria University and the University of Sydney all announced budget shortfalls and job losses.

Just last week, Fair Work Australia intervened at the University of Sydney - where Vice-Chancellor Michael Spence is attempting to slash academic salaries and administrative costs by 7.5 per cent to save $63 million. In February, 160 academics were told their positions were being made redundant or teaching only - although Fair Work Australia has frozen many of those decisions and sent the two parties back in for consultation.

In the national context, it appears the ANU is doing nothing new at all.

But why any university is failing to live within its means is another question.

While the drop-off in the lucrative full-fee paying international student market has sucked billions in planned revenue out of Australia's 39 public universities in the last couple of years, there seems to be a fundamental disconnect between operating requirements and Commonwealth support.

Two successive reviews under the Gillard government have urged the federal government to act - first Denise Bradley's 2009 review of higher education, which called for a 10 per cent increase to base funding, and last December's Lomax-Smith base funding review which called for an unspecified increase to Commonwealth support for student loads.

Earlier this month at the Universities Australia national conference, Tertiary Education Minister Chris Evans questioned rising student/staff ratios and expressed genuine surprise at tutorial sizes while simultaneously warning the sector that a budget surplus would all but scotch any extra funding for universities.

Group of Eight executive director Michael Gallagher said there were some fairly straightforward reasons university finances were under strain.

''The drivers are a rundown on investment income post-GFC, the decline in net revenue from international students, the increased costs associated with capital works expansion and structural problems in underfunding.''

Gallagher noted that research-intensive universities such as the ANU were being hit because they had more expensive infrastructure overheads and had to bear the higher costs of conducting research - their only protection being that international student income had not suffered as dramatically. The irony not lost on anyone in the sector is that all of these job cuts are occurring at a time of unprecedented growth in student numbers.

The union's Steven Darwin began university-wide negotiations this week and will hold the first general meeting next Tuesday. There are more than 3800 academic and general staff on campus, with 1200 paid-up union members.

The tone of discourse taking place across the quiet, calm grounds of the Acton campus this week became considerably more fraught.

Darwin and his members have many questions for the vice-chancellor - the most central of which is whether valuable staff assets and important research functions should be shed in a global financial downturn when there is $14 million in the bank.

There is also incredible unease about how management would ultimately judge staff and research performance before lining anyone up for the chopping block.

The union does, however, commend Young for a strategic approach to cost-cutting rather than going down the University of Sydney path of blunt across-the-board reductions.

There is initial agreement that cauterising a research function which is presumably low in student demand and high in running costs would be preferable to spreading the pain more widely.

According to Darwin, ''Unfortunately we have come to the point where a managerial badge of honour for the modern VC is the size of their surplus. What we can't forget is the unique nature of our national university, and the fact that people's careers and livelihoods are at stake.''

Emma Macdonald is Education Editor.