ANU will today begin a broad, consultative process aimed at reducing our activities to save $40 million (5 per cent of revenue) in order to protect the health of this great University.
We are not alone in having global and national financial circumstances cut into our bottom line.
Investment returns have declined in recent years. The 2012 budget indicates investment returns will be $30 million less than in 2011. This reduction directly impacts on the funds available to operate the University.
In addition, the significant capital investments made in recent years mean that depreciation costs have increased by approximately $10 million compared with 2011.
A number of these issues were discussed in my 13 December 2011 email to staff on the 2012 University recurrent budget.
These external factors, together with substantial wage increases (4.5 per cent in 2012) and services expenses (increase of $26 million in 2012) have meant that the 2012 budget has a projected surplus of only $14 million, or less than 1.5 per cent of total revenue.
The sector average is 4 per cent, a figure which the Commonwealth monitors as a measure of financial health.
We have now reached a point at which there is no option but to take bold action. 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.
That is not a future that any member of the ANU community wants.
As part of the draft discussion paper released to ANU staff today, it is proposed that the $40 million figure be reached by saving up to $25 million in staff expenses, and up to $15 million in improved business practices.
It is proposed that cost reductions be strategic, with clear decisions made as to activities that the University can no longer support. Such decisions will be difficult, but will ultimately result in a stronger institution.
I understand that change of this magnitude causes stress and upset for all, and we do not undertake it lightly. I would ask ANU staff to join with me to identify the best way to make these savings and ensure ANU can continue to live up to the expectations of our staff, students and the national and international communities we live in.
The process we begin today will continue for most of this calendar year, and leave us in better health for 2013 and beyond.
The first step is to read and consider the draft document: http://about.anu.edu.au/strategy-reviews/financial
Comments and responses on the draft are sought from all staff, and can be made at: email@example.com until 5pm on 20 April 2012.
A video of the media conference given on the day of the release of the draft document can be found here: http://youtu.be/Ej7FU-YIUDA