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Ancora Imparo, October 2006

This month, I will update you on the AUQA audit process and give a progress report on the university's budget process for 2007.

Since last month's visit, the Australian Universities Quality Agency has completed its audit of Monash University. Overall, almost 800 people were interviewed. They included staff, students, Council members, industry advisory groups and other interested individuals. The draft report will not be available for another two months or so, but at the conclusion of the visit we were given a briefing on the unofficial impressions of the team. Overall, this was very positive. The size and complexity of Monash was recognised as was the ambitious nature of the direction we have set for ourselves. Many specific facets were commented on favourably, and some aspects which require more attention were identified. There were no real surprises.

As indicated previously, Stephen Parker, Graham Webb and Robyn Harris did a great job in preparing Monash for the audit. I thank and congratulate everyone who was involved in any way with the process. Implementing recommendations arising from the audit will require further effort. There is no doubt that Monash is a better university as a result of the preparations for the visit and will emerge even stronger when the process is complete.

The university is now in the advanced stage of planning its budget for 2007. This is a complex process where we have to estimate income from all sources for next year and set budgets for each of the faculties, the Gippsland campus and the central services. This is an iterative process where initial targets are set and discussions on how these may be met are undertaken. To cover interest on our borrowings and to provide cash for capital projects, the university must aim for a budget surplus of at least 4% or about $43m on our projected revenue for next year. This operating surplus is not discretionary, and it is not stored away in some secret reserve -- it is required of us by Government and the financial institutions that lend us the money which allows us to undertake our capital program. The capital program will be dominated over the next three years by the modernisation of the Menzies building and the STRIP stages 2 and 3. There are many other pressing needs, including refurbishment of the Matheson Library. The major developments at the western end of the Caulfield campus and at the Victorian College of Pharmacy are externally financed.

We must deliver this budget surplus while increasing the salaries of our staff by 6% in line with the Enterprise Agreement and providing up to $6.55m additional funding to maintain student services in the light of prohibition by government of compulsory amenities fees. Offset against this will be a projected increase in the fee income from domestic and international students, the pipeline effect of the increase in the HECS fees and a further 2.5% increase in the Commonwealth Grant Scheme (CGS) funding -- contingent on us again satisfying governance and Higher Education Workplace Relations Requirements. The increase in CGS is the third and final year of a three-year program instituted from 2005 as part of the Higher Education Support Act of 2003. When added to the derisory base rate of adjustment of the CGS funding which has operated for the last 10 years, this still does not cover true increases in costs and certainly does not make up for the many years without proper indexation.

So this year, as in each of the preceding years, and as is the case at every university in Australia, the budget-setting process is a tense time where difficult judgements must be made. We must keep the momentum in terms of improving our research and teaching performance. Therefore we must be careful to control unnecessary costs. There are substantial savings to be made through better processes of managing purchasing and sharing services between the central services and faculties and campuses. Our workforce is expanding and we must ensure that each new position is fully justified. We can and are increasing philanthropic and corporate support.

Media reports about plans for substantial redundancies at Monash University were inaccurate. The exception to this is the current round of separations already initiated in the IT faculty in response to the marked downturn in the number of students enrolled in that faculty. We believe that with the combination of increased income, savings on non-salary costs and careful scrutiny on whether new positions are truly justified or whether they can be filled internally, it will be possible to meet our budget targets. To place things in perspective, I point out that Monash University has increased its revenue by more than 50% since 2001 from $711m to over $1.1b. Our net assets have increased from $1.03b to over $1.4b, although of course to a large extent these assets are land and buildings and therefore non-realisable.

So Monash is financially sound and managing to meet its budget targets, but it is a very tough and competitive operating environment. To survive and prosper in this environment, we must perform at the highest level with respect to our core functions of education and research. To do this, we also require the highest level of administrative excellence. The AUQA process is a valuable external validation of our progress on all fronts.

Professor Richard Larkins
Vice-Chancellor