What UniMelb’s 2024 Annual Report Really Tells Us
By David Gonzalez, NTEU UniMelb Branch President
The University of Melbourne recently tabled its 2024 Annual Report in the Victorian Parliament. But just before it became public, Vice-Chancellor Professor Emma Johnston issued her own interpretation to staff.
The VC’s message: despite recording a net surplus of $273 million, the University also reported an “operating deficit” of $99 million—and therefore must take a “prudent approach” to spending for the rest of 2025 and beyond.
So Which Is It: Surplus or Deficit?
To make sense of this, we consulted Emeritus Professor James Guthrie, a renowned accounting expert from Macquarie University, who has analysed university financial reporting for decades.
A Tale of Two Numbers
Professor Guthrie explains that the University of Melbourne manages its financial performance using an internal metric called the “underlying net operating result”—or simply the “operating result.” This figure, reported as a $99 million deficit for 2024, is not the same as the University’s actual audited surplus.
According to the annual report, the operating result is calculated by subtracting “discretionary investment income and expenditure” and “income of a capital nature” from the $273 million surplus.
This method wasn’t always used. In fact, prior to 2014, the University’s operating result reflected its audited income statement—essentially, revenue minus expenditure. But in 2014, management changed tack, citing “unprecedented funding uncertainty” and introduced a non-audited financial statement to represent a different version of its financial position.
Since then, all Group of Eight universities have followed suit.
Why This Matters
Professor Guthrie outlines the flaws in this approach. The so-called operating result typically paints a far bleaker picture than the full financial story. For example:
2024: Net result +$273m | Operating result: -$99m
2023: Net result +$156m | Operating result: -$71m
2022: Net result -$203m | Operating result -$104m
2021: Net result +$584m | Operating result: +$147m
2020: Net result $178m | Operating result +$9m
The audited financial statements—the ones that truly matter—show a very different reality:
A net result of $273 million
A $304 million increase in total assets
A $51 million increase in cash and cash equivalents
Despite this, the University emphasizes the operating result when communicating with staff and the public.
So… Where’s All the Money Going?
The University’s financial assets total $3.7 billion (up from $3.2b in 2023 and $2.9b in 2022). Only a fraction—around $139 million—is from endowments, meaning most of this wealth comes from previous surpluses and investment income.
But here’s the catch: the income from those investments is excluded from the operating result. Instead, it appears to be reinvested, further growing the University’s financial portfolio.
Professor Guthrie notes that while the University was founded in 1853 to serve the public good through education and research, today’s financials suggest something else.
A Finance and Property Empire?
According to the annual report, UniMelb is heavily engaged in market investments—derivatives, currency swaps, and shareholdings. It also owns $6.7 billion in property, plant, and equipment, much of it funded by government capital grants. This is up from $2.8 billion in 2010.
Key figures:
Depreciation: $172 million, which reduces reported net results
Service concession assets (e.g., student housing): revalued in 2024 at a $55 million loss
Borrowings: $684 million (down from 2019), linked to campus expansion
Land revaluations: Added $156m (2020), $124m (2021), $29m (2022), $2m (2023); but fell by $55m in 2024
Building revaluations: Added over $390 million since 2020
Service concession revaluations: Minor increases yearly since 2020
In short, UniMelb increasingly resembles a finance and property business, profiting from asset revaluations and student housing rents—not just education.
The ‘Operating Result’ Is a Choice—Not an Accounting Rule
Professor Johnston’s preferred financial measure—the “operating result”—isn’t required by accounting standards. It’s a strategic choice. By excluding certain revenues, management creates a narrative of scarcity, even as the University’s overall financial health remains robust.
UniMelb isn’t alone. Across Australia, public universities have adopted similar tactics—relying on obfuscating language to present themselves as financially constrained, particularly when justifying job cuts or restructures.
Crucially, accrual accounting methods—like depreciation—don’t reflect the reality of institutions that receive land and buildings as public gifts. A more transparent measure would be to focus on cash flows and the accumulation of liquid assets, which reveal a far healthier position.
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This article draws heavily on the work of Emeritus Professor James Guthrie, with his permission. We thank him for his invaluable expertise.
References:
Financial outlook – adapting to a changing landscape, Vice Chancellor Emma Johnston, message to all staff, 12 May 2025
Profile of Professor James Guthrie, Emeritus Professor, Department of Accounting and Corporate Governance, Macquarie University
Uni Melbourne finances: stronger than they look, by Prof. James Guthrie, Campus Morning Mail, 31 August 2021
Victorian Auditor-General’s Report – Results of 2023 Audits: Universities