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Sydney Uni turns hit on investments into cuts

THE University of Sydney will cut planned spending after taking a $100 million hit on its investments, highlighting the ripple effect of the credit crisis reports Jacob Saulwick in the Sydney Morning Herald of 18th October 2008.

But the tertiary sector union has questioned the disclosure, suggesting the university is using the loss as a gambit in enterprise bargaining negotiations.

"We are currently facing an annual loss of investment income in the order of $100 million and this will require some prudence on the part of the university," the vice-chancellor, Michael Spence, wrote in an email to staff this week.

Faculties will have to cut planned budgets by 6 per cent, and also cut 9 per cent from planned administrative expenses.

Until recently, funds investing surplus income have been a growing source of revenue for universities and charities.

The University of Sydney's funds were worth about $1.3 billion in December, spread between local and international shares, bonds, and listed and unlisted property and infrastructure.

The investments have delivered an annual return of about $150 million in the past few years, but that is expected to drop to $50 million this year.

"All universities have different policies," said the vice-chancellor of the University of Technology, Sydney, Ross Milbourne.

"We have a policy that is basically we are holding in trust both government money and money donated to us by various people, and we have taken the view that we are not going to play a lottery with other people's money," Professor Milbourne said.

He said universities that speculated on the sharemarket enjoyed big gains when prices were rising, which should offset their present weakness. "If they are taking a short-term view of slashing and burning I think that is a very short-term focus."

The vice-chancellor of the University of New South Wales, Fred Hilmer, said his university would not need to pare back planned spending, and that it did not rely on its funds for regular programs.

Representatives from the National Tertiary Education Union will meet with the University of Sydney's deputy vice-chancellor and chief operating officer, Bob Kotic, on Monday to discuss the university's financial position.

"The NTEU is concerned that the university management is using the 'current economic climate' to avoid dealing with the issues raised in our log of claims for a new enterprise agreement," said a union spokesman, Michael Thomson, in an email to members. "This just seems to be just another excuse."

The university's acting vice-chancellor, Don Nutbeam, said the university was just tightening its budget for next year. "It is not like we are in trouble and we are making cuts," he said.