BY FRED FUENTES
MELBOURNE — Just two and a half years after the launch of Melbourne's first private university, Melbourne University Private (MUP), confidential university documents have revealed it is in financial crisis and could lose its legal status as a university.
According to one leaked document, MUP faces losses of $7.9 million in 2001 and $8.1 million in 2002.
MUP was initially envisaged to be a state-of-the-art facility which would eventually attract 2800 fee-paying students and corporate support, generating up to $2.5 billion in economic activity and up to 3600 jobs. So far this year, student enrolments in degree courses have totalled only 101, and no private company has invested in the venture. The only investor in MUP is the publicly-owned University of Melbourne, which has so far put $10 million into MUP.
Confidential documents revealed that board members of MUP expressed concern about a risk of insolvency and the board "was unable to approve the 2001 budget unless extra funds were provided".
University reports are now saying that if MUP continues on its present path, by 2005 it will be so small the university would rightly "regard it as a failure".
MUP was launched in August 1998 by the then premier, Jeff Kennett, and Melbourne University vice-chancellor Alan Gilbert. The 1998 submission on MUP admitted that the plan was incomplete. However, it was backed by a report from a committee chaired by senior academic Kit Carson and international financial consultants including Boston Consulting. At that time, while backing the project, Boston Consulting warned that a private university solely dependent on fees was not commercially viable and that MUP's student projections were "optimistic".
The university and the government pressed on anyway. By late 2000 the private university was in financial trouble.
The final condition for government approval of MUP was that a review of its performance be completed by December 2001. This review is likely to deal with MUP's eligibility to be accredited as a university. To remain an accredited university MUP will need to show that it has achieved "a level of research output acceptable to the [education] minister" and at least 3% of its students enrolled in postgraduate research programs. This target has yet to be achieved.