BUDGET BOOK 2020 - Edith Cowan UniversityStephen Chapman, Vice-Chancellor and President Scott Henderson, Vice-President (Corporate Services) Bradley Francis, Chief Financial Officer

EDITH COWAN UNIVERSITY

BUDGET BOOK -2020

Stephen Chapman, Vice-Chancellor and President

Scott Henderson, Vice-President (Corporate Services)

Bradley Francis, Chief Financial Officer

23 October 2019

2

1.0 CONTEXT, ISSUES AND HIGHLIGHTS 4

1.1 Introduction 4

1.2 Economic Trends in Policy Environment 4

1.3 2019 Student Load Performance 6

1.4 Factors Impacting Student Load Forecast 6

1.5 Strategic Goals 6

1.6 Budget Highlights 7

1.7 Alignment with the Strategic Plan 7

2.0 BUDGET DEVELOPMENT AND RISKS 8

2.1 Budget Principles and Development 9

2.2 Revenue Allocation Models 9

2.3 Performance-Driven Incentives 10

2.4 Student Load 11

2.5 Research 12

2.6 Risks to Budget 12

3.0 BUDGET SUMMARIES 14

3.1 Sources of Funds 14

3.2 Application of Funds 16

3.3 Capital Budget Summary 17

4.0 FINANCIAL STATEMENTS 18

4.1 Income Statement 19

4.2 Revenue Diversification 21

4.3 Statement of Financial Position 23

4.4 Statement of Cash Flow 25

5.0 ASSET MANAGEMENT PLAN 2020 TO 2024 28

5.1 Introduction 29

5.2 Strategic Asset Management Framework 29

5.3 Major Building Projects – Priorities 29

5.4 Information Technology Infrastructure and Service Projects 29

5.5 Proposed Funding Strategy 30

5.6 Project Cost Information 31

5.7 Asset Management Plan - Detailed 2020 Major Project Information 34

TABLE OF CONTENTS

3

1.1 IntroductionEdith Cowan University’s (ECU) 2020 Budget details its financial operations for 2020, and will assist to meet ECU’s goals and strengthen its financial position by:

• Strategically allocating funds to grow research and research training activities;

• Resourcing academic functions at appropriate levels to deliver quality teaching and learning as well as improve research performance;

• Promoting further flexibility within school budgets to allow for fluctuations in student load and other revenue sources;

• Advancing productivity gains in directorates, together with improving budget agility across all areas;

• Providing strategic funding for opportunities as they emerge;

• Encouraging and enhancing the University’s ability to collaborate with industry and its communities;

• Providing funding to improve ECU’s capability to attract students leading to sustained growth; and

• Funding the Asset Management Plan (AMP) to support the growth in infrastructure and project initiatives required to support the University’s strategic priorities.

The ECU budget for 2020 has been developed following consultation with relevant stakeholders and is submitted by Resources Committee to the University’s governing Council for approval.

1.2 Economic Trends in Policy EnvironmentConditions in some key global economies have shown loss of momentum, including in the European Union, resulting in the International Monetary Fund (IMF) and Organisation for Economic Co-operation and Development (OECD) revising down their economic growth projections. However, global growth is expected to remain solid with strong labour market conditions evident across most advanced economies.

A number of risks and uncertainties remain, despite some more optimistic international forecasts, including: trade tensions, emerging market debt vulnerabilities and geopolitical issues. Chief among these is the possibility of a United States (US)/China trade war and the potential impact on Australian trade. The risks associated with Brexit have become more pronounced in recent months, although Australia’s trade is oriented more towards Asia.

The Australian economy is expected to continue to benefit from growth with major trading partners that has outpaced global growth over the past decade and is projected to continue over the forecast horizon as growth in the Asian region remains relatively strong1.

Real Gross Domestic Product (GDP) is forecast to grow at around 2.75% in 2019-20 and again in 2020-21, sustaining solid employment growth and supporting a pick-up in wage growth with contributions to growth also expected from household consumption, business investment, public final demand and exports.

Non-mining business investment growth is solid and economic growth is being supported by the roll-out of major public infrastructure projects across the country.

Australian employment growth has been strong; the unemployment rate is at its lowest level (4.9%) in more than seven years and the employment participation rate is at a near-record high. Solid employment growth is expected to continue and the unemployment rate is forecast to be 5% across the forecast period.

The 2019-20 Western Australian (WA) Budget delivered a return to surplus of $553 million for the first time in over a decade. Operating surpluses are forecast across the entire forward estimates period including a $1.5 billion surplus in 2019-20. Net debt was reduced by a projected $4.1 billion and is expected to peak at $37 billion at June 2020. WA is the only state forecasting net debt to peak over the forward estimates period.

The WA economy, as measured by Gross State Product (GSP), grew by 1.9% in 2017-18 following a contraction of 1.8% in 2016-17 (the first on record). Growth is expected to remain at a moderate 2% in 2018-19 as an expansion in export volumes is largely offset by softness in the domestic economy2.

Growth of 3.25% is predicted for the State’s economy in 2019-20 on the back of the first substantial lift in business investment in seven years. This chiefly reflects the construction of new and replacement iron ore projects and new lithium projects. The State Government has committed to invest $4.1 billion in major road and METRONET rail infrastructure projects. Work on these projects is expected to see labour market conditions improve, with employment expected to grow by 1.75% (or 23,500 jobs) in 2019-203.

GSP growth is forecast at 3%-4% per annum in 2020-21 and beyond, with the domestic economy becoming the major driver of growth and export volumes stabilising as iron ore and Liquefied Natural Gas (LNG) projects begin to operate at output capacity. Many of the factors underpinning growth in the domestic economy in 2019-20 are expected to sustain growth over the budget period. Household spending is expected to increase progressively over the forecast period due to an improvement in consumer confidence, a lift in population growth and a strengthening in labour market conditions. This expected increase in household spending, combined with continued growth in business and dwelling investment, will support ongoing growth in the overall economy.

1.0

Context, Issues and Highlights

4

Forecast growth in real gross domestic or state product (%)

Outcomes Forecasts2017-18 2018-19 2019-20 2020-21

World2 4 4 4 4

Australia2 3 2 3 3

Western Australia3 2 2 3 4

Unemployment rate (%)

Outcomes Forecasts2017-18 2018-19 2019-20 2020-21

Australia2 5 5 5 5

Western Australia3 6 6 6 6

1 Commonwealth of Australia. (2019). Budget paper no. 1: Budget strategy and outlook 2019-202 Government of Western Australia (2019). WA State Budget 2019-20 – Budget paper no. 3 Economic and Fiscal Outlook3 Government of Western Australia (2019). WA State Budget 2019-20 – Budget paper no. 3 Economic and Fiscal Outlook

0%

1%

2%

3%

4%

Western AustraliaAustraliaWorld

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

$’000

2024 Forecast2023 Forecast2022 Forecast2021 Forecast2020 Budget2019 Reforecast2018 Actual

0%

1%

2%

3%

4%

5%

6%

Western AustraliaAustralia

0

50,000

100,000

150,000

200,000

250,000

Other IncomeRoyalties, Commercial and Trading Income

ResearchIncome

Student FeesState GrantsCommonwealth Grants(inc Student Contribution)

0

2.0

4.0

6.0

8.0

10.0

12.0

Ratio

2024 Forecast2023 Forecast2022 Forecast2021 Forecast2020 Budget2019 Reforecast 2018 Actual

0

40,000

80,000

120,000

160,000

200,000

240,000

$’000

Trading and Interest

Student Acquisition and Advancement

Corporate Expenses and

Strategic Initiatives

University Central Services

Information Technology

Facilities and Maintenance

Student Learning and

Research Support

Schools, Academic Centres and Partner

Organisations

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

$’000


0

50,000

100,000

150,000

200,000

250,000

$’000


020,00040,00060,00080,000

100,000120,000140,000160,000180,000

200,000220,000

$’000


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

$’000


$’000


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

$’000


0

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60


0%

5%

10%

15%

20%

25%

30%

35%


2020-212019-202018-192017-18

2020-212019-202018-192017-18

2020 Budget2019 Reforecast

$’000

Other Revenue (excl Internal Services Income)Government Financial Assistance (GFA)


Number of times (ECU minimum Target)Interest Cover (Number of times)

Professional Salaries and OncostsAcademic Salaries and Oncosts

Domestic Tuition Fee Students (DTF)

Fee Paying Overseas Students, Onshore (FPON)

Total Fee Paying Income



Current RatioMin Target

Max TargetDebt to Equity

Other Balance Sheet MovementsDepreciation

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

$’000


0%

10%

20%

30%

40%

50%

60%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

% of TOR


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

$/EFTSL


0

5,000

10,000

15,000

20,000

25,000

30,000

$/EFTSL


0

100,000

200,000

300,000

400,000

500,000

600,000



Non-Grant Revenue as % of Total RevenueGFA Revenue as % of Total Revenue

Total Fee Paying as a % of Total Operating Revenue (TOR)

DTF as a % of Total Operating Revenue (TOR)

FPON as a % of Total Operating Revenue (TOR)

$/EFTSL FPON

$/EFTSL DTF

Other Financial Assets - Non-Current

Other Financial Assets - CurrentCash

Long Term Debt

Net Cash from Operating ActivitiesOperating Result Before Non Operating Items

2024 Forecast2023 Forecast2022 Forecast2021 Forecast2020 Budget

Net Cash from Operating ActivitiesOperating Result Before Non-Operating Items

0%

1%

2%

3%

4%


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

$’000


0%

1%

2%

3%

4%

5%

6%


0

50,000

100,000

150,000

200,000

250,000


ResearchIncome


0

2.0

4.0

6.0

8.0

10.0

12.0

Ratio


0

40,000

80,000

120,000

160,000

200,000

240,000

$’000









Research Support


Organisations

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

$’000


0

50,000

100,000

150,000

200,000

250,000

$’000


020,00040,00060,00080,000

100,000120,000140,000160,000180,000

200,000220,000

$’000


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

$’000


$’000


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

$’000


0

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60


0%

5%

10%

15%

20%

25%

30%

35%


2020-212019-202018-192017-18

2020-212019-202018-192017-18


$’000













0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

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0%

10%

20%

30%

40%

50%

60%

0%

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10%

15%

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25%

30%

35%

40%

45%

% of TOR


0

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15,000

20,000

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40,000

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25,000

30,000

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0

100,000

200,000

300,000

400,000

500,000

600,000







$/EFTSL FPON

$/EFTSL DTF



Long Term Debt




5

1.3 2019 Student Load PerformanceECU’s student load for 2019 is anticipated to be 2% above 2018. Current projections indicate ECU’s total student load for 2019 will exceed the ECU 2019 reforecast budget target. The 2019 full year total student load as at 9 September 20194 is forecast to be 20,134 EFTSL which is 192 EFTSL (1%) above the 2019 reforecast budget target of 19,942 EFTSL.

The international onshore student load 2019 is forecast to be 4,330 EFTSL which is 156 EFTSL more than budgeted. Fee-paying offshore student load is predicted to be above budget at 499 EFTSL.

1.4 Factors Impacting Student Load ForecastKey factors influencing the ECU student load forecast for 2020 include:

i. The re-elected Coalition Government

The Coalition Government was returned to power following the Federal Election on 18 May 2019. The Commonwealth Government continued the policy and funding changes first announced in the 2017 Mid-Year Economic and Fiscal Outlook (MYEFO), the most significant of which were:

• Continuation of the “funding freeze”, limiting the amount of Commonwealth Grant Scheme (CGS) funding payable for domestic bachelor degree courses to 2017 levels;

• A limit to the total debt a student can hold as a result of tertiary education assistance for tuition fees, to be introduced on 1 January 2020; and

• A new repayment threshold of $45,881 for Higher Education Loan Program (HELP) from 2019-20.

ii. New Performance Based Funding for universities

In October 2019, the Minister for Education announced the final arrangements for new Performance Based Funding (PBF), effective from 2020. Following the “funding freeze” in 2018 and 2019, PBF provides a modest increase in CGS funding for non-designated (bachelor) places to universities through an annual performance-contingent distribution. The total amount available for Australian universities in 2020 is just over $80 million. The scheme comprises four core measures: graduate employment outcomes;

student experience; student success; and equity group participation by Indigenous, low socio-economic status and regional/remote students. The weighting for the graduate outcomes measure has been set at 40% with the remaining three measures set at 20%.

iii. Uncertainty remains as to the reallocation of Commonwealth supported (designated/capped) places for enabling, sub-bachelor and postgraduate courses. The outcome from the review has not yet been published and approvals for Commonwealth support for new postgraduate course places are currently limited. The implementation of the review outcomes will come into effect in 2020.

iv. Other pending reviews initiated by the Commonwealth Government include the Australian Qualifications Framework and the review of higher education provider category standards.

v. The Australian international education market is becoming increasingly competitive as universities implement strategies to balance their budgets in response to domestic student funding constraints and falling enrolments from China in many large institutions. Universities have responded with innovative incentive schemes and offerings that are impacting the market. In addition, more attractive post-study work rights introduced in Canada and New Zealand continue to threaten Australia’s differential proposition. The United Kingdom recently extended work visa rules post-student to two years for international students matching Australia’s position.

vi. WA has experienced reduced growth in international student commencements in recent years. Between 2017 and 2018, WA was up by 7%, New South Wales (NSW) 8%, Victoria (VIC) 15%, Queensland (QLD) 15% and South Australia (SA) 11%, while Northern Territory (NT) decreased by 1%5. While competition from other states has affected international student numbers in WA, interventions from the new State Government saw the State Migration Occupation List drop from 178 occupations to just 18, before a later upward revision for postgraduates.

vii. StudyPerth was allocated $4.5 million in the last WA State Budget to implement the actions in the StudyPerth International Education Plan, indicating strong support from the State Government for improved international student results for WA. The StudyPerth initiatives are

intended to attract an additional 16,000 students, and to bring the total international student enrolments in Perth to 88,000 by 2022.

viii. Support for other parts of the tertiary education sector may see further declines in demand for higher education. The Commonwealth Government is delivering a $525.3 million new skills package, Delivering Skills for Today and Tomorrow, including 80,000 new apprenticeships and new financial incentives to modernise the vocational education and training sector. A pilot of Skills Organisations will develop training packages for high demand skills, including in information and communications technology, healthcare, cyber security and aged and disability care6.

1.5 Strategic GoalsECU’s Strategic Plan 2017-2021 articulates a set of strategic goals to build on our strengths in teaching and research. The Plan aims to ensure we continue to provide a positive learning experience, while improving the recognition and reputation of the University through increased research capacity and growth in internationalisation. The Strategic Plan includes growth targets for key performance indicators relating to the budget, including: research grant and contract income; international fee income; operating surplus target; and total income.

Strategic Goal Four, Ensuring organisational sustainability, specifically recognises the importance of maintaining a strong financial base that supports the University in advancing its strategic objectives and further strengthens its financial sustainability.

4 ECU Vice-Chancellor’s Report to Council, October 2019, Projected ECU student load 5 Austrade data: 2017 to 2018 growth6 Commonwealth of Australia. (2019). Budget paper no. 1: Budget overview 2019-20

6

1.6 Budget Highlights The University’s 2020 operating budget, associated AMP and financial forecasts for the years 2021 to 2024 comprise the resource plan to advance ECU’s strategic priorities as contained in the ECU Strategic Plan 2017-2021.

The major budget highlights are detailed below:

• ECU continues to grow total budgeted operating revenue by 4.6% ($22 million) to $487 million;

• The Budget delivers an operating surplus of $22 million (4.5% of revenue), fully funds the AMP and achieves all Council financial targets;

• International student revenues, comprising onshore and offshore fees, are planned to grow by 13% ($15 million) to $129 million which exceeds the Strategic Plan target and, in 2020, continues to represent the predominant source of revenue growth;

• The Budget provides strategic funding for the Professorial Research Fellowship program at the $10 million 2021 Strategic Plan target;

• The 2020 budget allows for limited strategic funding to be made available for planned and emerging initiatives; and

• The 2021-2024 forecast shows that all Council financial targets will continue to be met over the coming years, through improved revenue growth.

1.7 Alignment with the Strategic PlanECU’s 2020 budget will continue to support and enable ECU’s Strategic Plan 2017-2021 and the priorities contained within it. Priority funding for investment in research in particular has been made available along with funding to continue support of initiatives aimed at growing student numbers and enhancing student outcomes to enable continued investment in enhancing quality and reputation.

In this context, ECU’s 2020 budget aims to provide resources to progress the University’s Strategic Plan through:

• Resourcing and supporting schools to deliver quality teaching, learning and advancing research and knowledge translation;

• Investment in recruitment of international students both onshore and offshore;

• Support the development and advancement of digital course delivery capabilities;

• Continue to deliver an improved student experience, retention and recruitment capability;

• Investment in redressing gender inequities (including ECU’s Action Plan as part of an Athena SWAN Bronze Accreditation application);

• Advance productivity gains in directorates together with improving budget agility across all areas; and

• Fund the AMP to support infrastructure and strategic funding for project initiatives required to support the University’s strategic priorities.

Provision has also been made within the budget for transnational education support and the upgrading of teaching facilities together with an enhanced capability for industry and community engagement.

Finance and Business Services Centre will continue to work closely with academic and support units to undertake comprehensive forecasts of revenue and expenditure over the course of the year. Regular reporting and analysis are in place to identify potential revenue movements so timely action can be taken to adjust expenditure accordingly or, alternatively, release funding to resource opportunities as they arise.

Stephen Chapman, Vice-Chancellor and President

Scott Henderson, Vice-President (Corporate Services)

Bradley Francis, Chief Financial Officer

23 October 2019

2018 Actual

2019 Reforecast

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Item $’000 $’000 $’000 $’000 $’000 $’000 $’000

Operating Revenue 456,146 465,744 487,252 513,113 539,319 566,591 596,699

Operating Expenses (403,535) (422,652) (441,153) (455,941) (475,305) (495,312) (517,107)

Depreciation (22,758) (22,672) (24,948) (25,980) (27,234) (27,780) (28,312)

Operating Result Before Non-Operating Items 29,853 20,420 21,151 31,192 36,780 43,499 51,279

Operating Result % Before Non-Operating Items 7% 4% 4% 6% 7% 8% 9%

Non-Operating Items (7,817) 6,000 1,000 - - - -

Operating Result After Non-Operating Items 22,036 26,420 22,151 31,192 36,780 43,499 51,279

Note: Totals may not sum due to rounding.

7

2.0

Budget Development and Risks

8

2.1 Budget Principles and Development ECU’s budget process forms an integral part of the comprehensive planning and review cycle to align resources to progress the University’s strategic priorities.

Budget development at ECU involves a two-stage process:

Firstly, consultation with individual academic and support units in estimating income from all sources, followed by the allocation of one-line operating budgets to those units and strategic initiatives; and

Secondly, a devolved decision-making process occurs whereby individual units are required to make decisions on the distribution of these one-line funding allocations across their operations. This process is linked directly with ECU’s strategic priorities and operational plans within each area. The University has a number of controls built in to ensure that units operate within their allocations and that budgets are aligned with ECU’s strategic priorities.

The budget development process involves comprehensive communication with executives and staff within operating units and meetings of the University Executive.

ECU’s budget and forecast framework incorporates a set of core principles to ensure that the University’s budget:

• Links to the University’s strategic priorities;

• Reflects the integrated nature of the institution;

• Provides incentives for:

- Achievement of declared targets/results;

- An enterprise culture;

- Advancing research and knowledge translation; and

- Quality teaching and learning;

• Is transparent;

• Improves the University’s sustainability;

• Presents comprehensive, all-inclusive operating and capital budgets;

• Provides adequate funding for support services, overheads and infrastructure, appropriate to agreed service level expectations, while seeking to maximise funding for academic activities;

• Is underpinned by timely, secure and user-friendly information systems;

• Involves appropriate consultation;

• Encourages efficiency in the application of resources; and

• Improves understanding throughout the University of the overall financial position and capabilities of the University.

The budget provides a comprehensive statement identifying all sources of income (including income from controlled entities) and the application of funds to operating units and the AMP. The allocations incorporate both operating and capital expenditure with detailed estimates being provided with respect to the 2020 budget year. Financial forecasts for the years 2021 to 2024 are also incorporated, including an AMP for that period.

At the aggregate level, the University will continue to operate within the funds available to it, although cash reserves and debt may be used from time to time to meet cash flow requirements arising from the AMP. Similarly, operating units are required to manage activities within the funds available to them. Organisational sustainability is a key objective.

The following financial management and accountability principles are also applicable:

• All budgets, forecasts and quarterly report updates are reviewed by the Executive Dean or Director and relevant Executive member;

• Operating units must undertake all budget and forecast activities using the most recent market and business intelligence available to ensure accuracy and reliability of the numbers;

• No deficit budgets at school or directorate level are permitted without approval from the Vice-Chancellor;

• Accountability for budget outcomes are located with managers of operating units; and

• The following financial performance targets are to be maintained for the budget and forecast period:

- Overall University operating margin of at least 4%;

- Interest cover on borrowings of three times operating result, excluding interest costs;

- Current Ratio target not less than 1.0; and

- Debt to Equity Ratio (measure of the level of borrowings) not to exceed 30%.

2.2 Revenue Allocation Models The University receives income from a variety of sources that can be classified as either general income or tied to specific purposes.

General income includes:

• Teaching and Research Block Grants from State and Federal Governments;

• Commonwealth Grants Scheme funding based on Commonwealth supported student load;

• Performance Based Funding based on performance criteria;

• Fee income (e.g. from international students); and

• Investment income from entities and other income.

Tied income is received for a specific purpose (e.g. competitive research grants) or in exchange for contracted business and commercial services. Such specific purpose income is allocated directly to the respective areas for delivery of services.

The revenue allocation model distributes general income funding to deliver core and strategic academic activities (including individual schools, performance pools and ECU research), strategic initiatives, AMP, overheads and support services. The revenue allocation model adopts the following principles:

• A high level of transparency and efficiency in processes;

• Simplicity;

• Integration across all operating levels of the University;

• Income allocations based predominantly on where earned; this means using the weights implicitly built into the Commonwealth funding discipline clusters together with an allocation to recognise and reward generation of student load; and

• Flexibility to account for different revenue streams and different allocation rates (as applicable, e.g. from partnership agreements).

These principles and associated allocations are presented to University Executive each year for endorsement and/or updating based on prevailing circumstances. Academic activities receive priority in funding allocation decisions. Funding of support services has been set at a level to ensure efficient delivery of services through an enterprise resource allocation approach.

9

2.3 Performance-Driven IncentivesThe 2020 budget allocations are performance driven and there are real incentives for schools to achieve or exceed targets. Key performance elements include the following:

• Income from Commonwealth-supported undergraduate and postgraduate student load is distributed on the basis of enrolment projections; this incorporates previous history, designated course load provided by the Commonwealth and market intelligence of likely demand;

• Commonwealth and ECU-funded Higher Degree Research (HDR) load is distributed on the basis of research and research training outcomes; and

• The setting of targets for growth in domestic fee-paying postgraduate places, fee-paying international onshore and offshore places and other commercial revenue.

In addition, school allocations include over $5.4 million of funds available based on research and research training performance.

An annual review of these internal performance funding pools ensures they are aligned with the emerging Commonwealth institutional funding and related performance measures.

The funding mechanisms provide positive incentives for schools to enhance the quality of teaching and learning and grow research activities.

10

2.4 Student Load The table below identifies the student load by funding source and by level of course for 2020 with comparison to the 2019 Budget Reforecast. It reflects a conservative, but realistic, position. The University anticipates a 4.1% increase in student load compared to 2019.

Funding Source2019

Reforecast2020

Budget Change

(EFTSL) (EFTSL) %

Commonwealth Supported Places

Postgraduate Coursework 737 934 26.8%

Undergraduate (including Enabling) 13,109 13,059 -0.4%

Total 13,845 13,993 1.1%

Fee-Paying Overseas (Onshore)

Higher Degree Research 175 163 -6.8%

Postgraduate Coursework 2,133 2,465 15.5%

Undergraduate (including Enabling) 1,845 2,009 8.9%

Total 4,153 4,637 11.7%

Domestic Tuition Fee


Undergraduate (including Enabling) 6 5 -22.8%

Total 852 933 9.5%

Fee-Paying Overseas (Offshore)


Undergraduate (including Enabling) 345 377 9.0%

Total 451 550 21.9%

Other

HDR ECU Funded Places 4 3 -27.4%

Commonwealth Research Training Program (RTP) 298 300 0.8%

Vocational Education and Training (VET) 339 349 2.9%

640 651 1.8%

Grand Total 19,942 20,765 4.1%

Level of Course2019

Reforecast 2020

Budget Change

(EFTSL) (EFTSL) %

Higher Degree Research 477 466 -2.2%

Postgraduate Coursework 3,822 4,501 17.8%

Undergraduate (including Enabling) 15,304 15,450 0.9%

Vocational Education and Training (VET) 339 349 2.9%

Grand Total 19,942 20,765 4.1%

Notes:1. 2020 Budget EFTSL as per estimate July 2019. 2. ECU offers all eligible domestic Higher Degree Research (HDR) students either an RTP place or a place funded by ECU. The Graduate Research School determines final allocations. 3. Totals may not sum due to rounding.

11

2.5 ResearchECU receives block funding from the Australian Government Department of Education and Training (DET) based on research performance. The Research Block Grant (RBG) is based on the quantum of secured competitive external research funds and HDR completions. Block Grant funding from DET is projected to decrease in 2020 as a result of the freeze on indexation until 2022. The Research Training Program (RTP) component of the RBG will provide funds for research training expenses, including scholarships. The RBG’s Research Support Program funds the systemic indirect and infrastructure research costs.

Whilst a conservative budget position has been taken on competitive grant revenues, external income is expected to increase.

The Deputy Vice-Chancellor (Research) has been implementing the major recommendations arising from the 2018 review of the University’s research strategy and resourcing. This has included refocussing ECU’s strategic investment in research support, including alignment to its new Research Themes and Priority Areas.

2.6 Risks to BudgetThe 2020 Budget reflects a prudent approach to student load, revenue and expenditure commitments. It is recognised that a number of potential risks may impact the budget results in 2020 and medium-term forecast outcomes in 2021 to 2024.

The new Collective Agreement contains manageable salary increases over the Agreement term, which reduces the risk of unforeseen material expenditure variances. The salary increases equate to 6.7% over the five years and, on an annual basis, fee increases and grant indexation should offset these.

The 2020 Budget maintains a level of central funding available for strategic initiatives and contingencies as they arise throughout the year. These central allocations are also available to assist in minimising the impact of reduced student revenues prior to adjusting school and central service funding.

Beyond 2020, capped Commonwealth higher education funding, increased competition for both international and domestic students and competition for academic talent will place increased pressure on ECU’s operations over the forecast period 2021 to 2024. ECU continues to explore revenue diversification opportunities.

A number of external sources continue to monitor ECU’s financial position. These include: the Western Australian Office of the Auditor General which conducts the annual audit; Australian Government Department of Education and Training; Western Australian Treasury Corporation (WATC) which provides the University’s loan facility; and Tertiary Education Quality Standards Agency (TEQSA) through its standards framework and registration process.

12

13

3.1 Sources of FundsThe following graph and table provide a summary of the operating revenue streams.

3.0

Budget Summaries

2019 Reforecast

2020 Budget

Change

Item $’000 $’000 %

Operating Revenue

Commonwealth Grants (inc Student Contribution) 248,535 253,494 2%

State Grants 8,571 9,401 10%

Student Fees 139,331 156,892 13%

Research Income 28,728 27,341 -5%

Royalties, Commercial and Trading Income 21,388 21,636 1%

Other Income 19,190 18,489 -4%

Gross Revenue 465,744 487,252 5%

Council Mandated Operating Surplus (at least 4%) 20,420 21,151 4%

Net Operating Revenue 445,324 466,101 5%


Operating revenue by source

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$/EFTSL FPON

$/EFTSL DTF



Long Term Debt




14

The major factors influencing the movements in Operating Revenue in 2020 are:

Commonwealth Grants Scheme• Grant income increases as a result

of PBF and indexation on student contributions.

State Grants• The State Operating Grant for the

Western Australian Academy of Performing Arts (WAAPA) is expected to be higher than 2019 due to increased teaching hours.

Student Fees• International and domestic tuition fee

revenues increase due to fee indexation and growth in student numbers.

Research Income• Commonwealth institutional block

grants are estimated to decrease as these will not be indexed in 2020; and

• A conservative budget position has been taken for the awarding of new competitive grants.

DIVERSITY OF REVENUE

Royalties, Commercial and Trading Income• Minimal increase in revenues.

Other Income• Other Income decreases due to

decreased investment returns.

Diversification of Revenue• The forward projections highlight

the expected success of revenue growth and diversification strategies with a decline in dependency on Government Financial Assistance over the forecast period.

0%

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ResearchIncome


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Research Support


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020,00040,00060,00080,000

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$’000


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2020-212019-202018-192017-18

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$’000













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$/EFTSL FPON

$/EFTSL DTF



Long Term Debt




15

3.2 Application of FundsThe graph and table below provide a summary of revenue allocations by major activity.

NET OPERATING REVENUE DISTRIBUTION

2019 Reforecast

% of Total

2020 Budget

% of Total

Change

Item $’000 $’000 %

Operating Revenue Distribution

Schools, Academic Centres and Partner Organisations

213,356 48% 227,224 49% 6%

Student Learning and Research Support 55,948 13% 57,662 12% 3%

Facilities and Maintenance 40,450 9% 41,985 9% 4%

Information Technology 35,984 8% 37,732 8% 5%

University Central Services 25,339 6% 26,064 6% 3%

Corporate Expenses and Strategic Initiatives 31,140 7% 31,126 7% 0%

Student Acquisition and Advancement 22,709 5% 23,105 5% 2%

Trading and Interest 20,397 5% 21,203 5% 4%

Operating Revenue 445,324 100% 466,101 100% 5%


0%

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0

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ResearchIncome


0

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Ratio


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$’000









Research Support


Organisations

0

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$’000


0

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020,00040,00060,00080,000

100,000120,000140,000160,000180,000

200,000220,000

$’000


0

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0

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2020-212019-202018-192017-18

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$’000













0

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0%

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0%

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% of TOR


0

5,000

10,000

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40,000

$/EFTSL


0

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$/EFTSL


0

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$/EFTSL FPON

$/EFTSL DTF



Long Term Debt




16

The core activities of teaching, learning and research are areas of priority and receive the major proportion of funding. The following major allocations in 2020 are in line with the University’s strategic priorities:

• Schools, Academic Centres and Partner Organisations comprises of all schools, Centre for Learning and Teaching, Graduate Research School, Kurongkurl Katitjin, the ECU South West Campus and partner institutions;

• Student Learning and Research Support includes Research Services, Library, Student Administration, Student Life, International Office, ECU Research Funding and specific-purpose funding, including Student Services and Amenities Fund and scholarships;

• Information Technology comprises the IT Services Centre along with technology costs from the AMP;

• Facilities and Maintenance comprises the Facilities and Services Centre along with facilities, refurbishment and maintenance costs from the AMP, utilities and depreciation costs of buildings and fleet assets;

• University Central Services includes Finance and Business, Human Resources, Strategic and Governance Services, Strategic Relationship Management and Enterprise Project Management Office. These central support services provide a range of student, staff and corporate support services which facilitate the University’s operations;

• Student Acquisition and Advancement comprises Brand and Marketing, Business Growth and Development, Office of Development and Alumni Relations and advertising and marketing;

• Trading and Interest includes commercial trading operations managed by the Facilities and Services Centre, Edith Cowan Accommodation Holdings, Australian Pathway Education Group, interest and investment income; and

• Corporate Expenses and Strategic Initiatives include Chancellery, corporate expenses and strategic and contingency funds. These funding pools are utilised throughout the year to fund emerging priorities and initiatives.

3.3 Capital Budget Summary The Capital Budget Summary provides a breakdown of ECU’s capital budget for 2020 in terms of sources and application of funds. Further detail is contained in Section 5.

2019 Reforecast

2020 Budget

Change

Item $’000 $’000 %

Capital Expenditure

Major Building Projects 53,542 20,101

IT Infrastructure 3,052 1,540

Minor Works and Other Projects 16,361 9,411

Total Cash flow 72,955 31,051 -57%

Funded From

Net Cash from Operations / Loan Funding available for AMP 69,463 29,310

School Funded and Centre Projects, New Courses and Library Collections 3,492 1,742

Total Funding 72,955 31,052 -57%


17

4.0

Financial Statements

18

4.1 Income StatementIdentifies the operating result of ECU over the budget and forecast period to 2024. The lower part of the statement entitled “Non-Operating Items” shows Capital grants and other abnormal items. At this stage, there are no Non-Operating Items for the forecast period 2020 to 2024.

2018 Actual

2019 Reforecast

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

$'000 $'000 $'000 $'000 $'000 $'000 $'000

Operating Revenue

Government Financial Assistance 257,681 257,107 262,895 264,982 268,890 273,334 278,056

Fees and Charges 126,749 139,331 156,892 178,046 198,050 217,810 239,737

Research 27,981 28,728 27,341 28,298 29,289 30,314 31,526

Commercial and Self-Funded 36,427 34,200 33,575 35,041 36,074 37,837 39,791

Other Income 7,310 6,378 6,549 6,746 7,016 7,296 7,588

Total Operating Revenue 456,146 465,744 487,252 513,113 539,319 566,591 596,698

Operating Expenses

Salaries and Oncosts

Academic Salaries and Oncosts 120,669 130,587 135,575 140,440 146,152 152,255 158,963

Professional Salaries and Oncosts 133,992 138,760 143,632 147,320 152,446 157,418 162,900

Total Salaries and Oncosts 254,661 269,347 279,206 287,760 298,598 309,672 321,863

Other Operating Expenses

Agency and Other Consulting Fees 18,837 14,800 16,076 16,423 16,871 17,343 17,863

Travel, Staff Development and Entertainment 12,029 13,091 13,335 13,812 14,333 14,864 15,449

Student Related Expenditure 35,375 38,795 44,397 48,935 54,172 59,364 65,107

Facilities Costs 24,004 24,684 24,652 25,419 26,227 27,048 27,896

Computing and Other Equipment 37,412 37,828 38,032 37,971 38,851 40,113 41,343

Other Operating Expenditure 21,216 24,106 25,455 25,621 26,254 26,908 27,586

Total Other Operating Expenses 148,873 153,305 161,947 168,182 176,707 185,640 195,245

Depreciation 22,758 22,672 24,948 25,980 27,234 27,780 28,312

Total Operating Expenses 426,293 445,324 466,101 481,921 502,539 523,092 545,419

Net Operating Result after Non-Operating Items 22,036 26,420 22,151 31,192 36,780 43,499 51,279

Operating Result after Non-Operating / Total Revenue 4.9% 5.6% 4.5% 6.1% 6.8% 7.7% 8.6%

Salaries / Operating Revenue 55.8% 57.8% 57.3% 56.1% 55.4% 54.7% 53.9%

Interest cover (Net Operating result before interest charges / Interest charges)

9.3 4.6 4.6 6.9 8.0 9.4 11.1

Facilities Cost / PPE 3.0% 2.9% 2.9% 2.8% 2.9% 2.9% 3.0%


19

Interest Coverage (Number of times)

0%

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020,00040,00060,00080,000

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Long Term Debt




Total salary expense

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020,00040,00060,00080,000

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0

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$/EFTSL FPON

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Long Term Debt




20

4.2 Revenue DiversificationECU’s strategic planning process incorporates strategies to increase differentiation of sources of revenue

and to position the University in an increasingly competitive environment. A key diversification strategy is to attract international fee-paying students from both onshore and transnational (offshore) markets.

Fee-Paying IncomeThe forecast for 2020 to 2024 includes:

• Total Fee-Paying income to increase to around 39% of total operating revenue by 2024;

• Fee-Paying International Onshore income to increase to 32% of total operating revenue by 2024;

• Fee-Paying International Offshore income is to be 1% of total operating revenue; and

• Domestic Tuition Fee and other fee income to increase to around 5% of total operating revenue by 2024.

As a further diversification initiative, ECU has established ECU Holdings, an entity focussed on providing commercial and investment returns to the University. ECU Holdings will become fully operational across 2020.

International Student Fees• Average income per EFTSL for Fee-Paying Onshore students is expected to increase

across the forecast period in line with ECU competitors and normal fee rate indexation.

FEE PAYING INCOME

0%

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020,00040,00060,00080,000

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0

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0

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Long Term Debt




INTERNATIONAL STUDENT FEES AND $/EFTSL

0%

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ResearchIncome


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Research Support


Organisations

0

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$’000


0

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020,00040,00060,00080,000

100,000120,000140,000160,000180,000

200,000220,000

$’000


0

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0

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2020-212019-202018-192017-18

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$’000













0

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$/EFTSL


0

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15,000

20,000

25,000

30,000

$/EFTSL


0

100,000

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$/EFTSL FPON

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Long Term Debt




21

Domestic Student Fees• Average income per EFTSL increases across the forecast period in line with ECU competitors and normal fee rate indexation.

DOMESTIC STUDENT FEES and $/EFTSL

0%

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020,00040,00060,00080,000

100,000120,000140,000160,000180,000

200,000220,000

$’000


0

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0

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$/EFTSL


0

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$/EFTSL FPON

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Long Term Debt




22

4.3 Statement of Financial PositionThe Statement of Financial Position summarises the financial position of ECU at year-end.

2018 Actual

2019 Reforecast

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Current Assets

Cash and Cash Equivalents 51,553 53,545 50,047 52,624 57,126 60,001 61,722

Receivables 26,381 24,166 25,107 26,146 27,409 28,729 30,159

Other Financial Assets 114,799 114,799 74,799 74,799 74,799 74,799 84,799

Total Current Assets 192,733 192,510 149,952 153,568 159,335 163,529 176,680

Non-Current Assets

Receivables 19,554 19,750 19,948 20,147 20,348 20,552 20,757

Property, Plant and Equipment 805,703 852,846 860,181 909,113 915,127 922,009 929,986

Other Financial Assets 164,089 245,089 286,089 268,089 293,089 323,089 353,089

Investment Properties 18,550 18,550 18,550 18,550 18,550 18,550 18,550

Intangibles 16,958 20,098 18,866 17,465 21,204 24,570 27,598

Total Non-Current Assets 1,024,855 1,156,333 1,203,634 1,233,364 1,268,319 1,308,769 1,349,981

Total Assets 1,217,588 1,348,843 1,353,586 1,386,932 1,427,654 1,472,299 1,526,660

Current Liabilities

Trade and Other Payables 52,536 60,735 63,558 65,146 68,134 68,331 70,303

Borrowings 21,977 22,571 1,715 1,781 1,849 1,920 1,993

Provisions 55,821 53,835 55,559 57,209 59,294 61,423 63,765

Total Current Liabilities 130,334 137,141 120,831 124,135 129,276 131,674 136,062

Non-Current Liabilities

Borrowings 61,053 158,482 156,767 154,987 153,138 151,218 149,225

Provisions 26,924 27,524 28,140 28,771 29,420 30,088 30,777

Total Non-Current Liabilities 87,977 186,005 184,907 183,758 182,558 181,306 180,001

Total Liabilities 218,311 323,146 305,738 307,893 311,834 312,981 316,063

Net Assets 999,277 1,025,697 1,047,848 1,079,040 1,115,820 1,159,318 1,210,597

Equity

Reserves and Retained Earnings 999,277 1,025,697 1,047,848 1,079,040 1,115,820 1,159,318 1,210,597

Total Equity 999,277 1,025,697 1,047,848 1,079,040 1,115,820 1,159,318 1,210,597

Current Ratio 1.5 1.4 1.2 1.2 1.2 1.2 1.3

Borrowing to Equity 8% 18% 15% 15% 14% 13% 12%


Domestic Student Fees• Average income per EFTSL increases across the forecast period in line with ECU competitors and normal fee rate indexation.

23

Financial Position RatiosOver the budget and forecast period 2020 to 2024, ECU meets the Debt to Equity target.

CURRENT RATIO (CURRENT ASSETS/CURRENT LIABILITIES)

0%

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0

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$’000


0

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020,00040,00060,00080,000

100,000120,000140,000160,000180,000

200,000220,000

$’000


0

5,000

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$’000


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0

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$/EFTSL FPON

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Long Term Debt




DEBT TO EQUITY (LONG TERM DEBT/EQUITY)

0%

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Organisations

0

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020,00040,00060,00080,000

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Long Term Debt




24

4.4 Statement of Cash FlowThe Statement of Cash Flow summarises the cash flow position of ECU. Additional explanation of components incorporated within the Statement of Cash Flow is overleaf.

2018 Actual

2019 Reforecast

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

$'000 $'000 $'000 $'000 $'000 $'000 $'000

Operating Activities

Government Grants Received 306,795 285,835 290,236 293,280 298,179 303,648 309,582

Receipts from Student Fees and Other Customers 146,628 179,508 196,812 219,383 240,684 262,469 286,595

Payments to Employees and Suppliers (401,384) (407,774) (431,078) (447,533) (465,344) (488,197) (508,133)

Interest and Miscellaneous (3,704) (5,644) (5,846) (5,327) (5,249) (5,168) (5,085)

Net Cash from Operating Activities 48,335 51,924 50,124 59,802 68,270 72,751 82,959

Investing Activities

Investments in Financial Assets (9,713) (75,000) - 18,000 (25,000) (30,000) (40,000)

Payments for Major Capital Works (23,436) (53,542) (20,101) (62,700) (21,000) (22,000) (23,000)

Payments for other Property, Plant and Equipment (10,647) (19,413) (10,950) (10,811) (15,988) (16,026) (16,318)

Net Cash from Investing Activities (43,796) (147,955) (31,051) (55,511) (61,988) (68,026) (79,318)

Financing Activities

Proceeds from Borrowings - 120,000 - - - - -

Repayment of Borrowings (21,577) (21,977) (22,571) (1,715) (1,781) (1,849) (1,920)

Net Cash from Financing Activities (21,577) 98,023 (22,571) (1,715) (1,781) (1,849) (1,920)

Net Increase/(Decrease) in Cash and Cash Equivalents (17,038) 1,992 (3,498) 2,577 4,502 2,876 1,721

Cash and Cash Equivalents at Beginning of the Financial Year 68,591 51,553 53,545 50,047 52,624 57,126 60,001

Cash and Cash Equivalents at the End of the Financial Year 51,553 53,545 50,047 52,624 57,126 60,001 61,722

Total Borrowings Facilities 83,029 181,053 158,482 156,767 154,987 153,138 151,218


25

CASH, OTHER FINANCIAL ASSETS AND BORROWINGS

0%

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020,00040,00060,00080,000

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Long Term Debt




RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES

0%

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Research Support


Organisations

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020,00040,00060,00080,000

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$/EFTSL


0

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0

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$/EFTSL FPON

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Long Term Debt




26

The cash flow budget reflects the University’s goal to retain a strong liquidity position by holding sufficient cash and cash equivalents to cover liquidity and repayment of borrowings throughout the budget and forecast period. Careful management of the University’s growing investment portfolio is also required to assist maintaining liquidity.

For planning purposes, the AMP includes projects at the early conceptual stages that will require specific business cases as each project concept matures over time. For forecasting purposes, internal cash and investments notionally fund these projects. The forecasts will be updated to reflect the planned project

funding sources and cash flows as the project business cases are developed and approved.

Net cash from operating activities Identifies the cash inflows and outflows from the daily operations of the University. These cash flows, in part, support the investing activities of the University.

A strong cash flow from operating activities is a key component to support the University’s AMP and helps to minimise the need for additional borrowings.

Net cash from operating activities remains relatively steady over the next five years in line with projected revenues and a continued focus on managing costs.

Net cash from investing activities Identifies the cash received and expended from investing activities, including capital outlay on property, plant and equipment as well as investments, proceeds from the sale thereof and capital grants received.

Net cash from financing activities Represents repayment of approved borrowings and any planned loan drawdowns that the University may require in order to fund current and future infrastructure projects and developmental strategies.

27

5.0

Asset Management Plan 2020 to 2024

28

5.1 Introduction The AMP incorporates expenditure proposals for major building projects, improvement works, building maintenance, information technology and communications services for the years 2020 to 2024. Full details of all major projects in the AMP are in Section 5.6.

The Strategic Asset Management Framework (SAMF) is the foundation for the AMP and is the process for consultation with the University’s stakeholders. It incorporates known buildings and Information Communications and Technology (ICT) requirements or options for the next five years.

Priorities for major building projects and ICT infrastructure have been determined in the context of ECU’s strategic priorities. The process of prioritisation involves consideration of proposed projects by a range of key committees and has taken into account the academic profile of the University and the planned profile for the South West, Mount Lawley and Joondalup campuses.

5.2 Strategic Asset Management FrameworkThe Strategic Asset Management Committee reviews the AMP to ensure that it is not only addressing long-term strategic needs, but is also responding to emerging accommodation and IT requirements and changes in the operating and funding environment.

The development, management and maintenance of appropriate spaces, information communications and technology to meet the needs of the University’s teaching, learning, research and engagement priorities is a core function of the Facilities and Services Centre and the Information Technology Services Centre.

5.3 Major Building Projects – PrioritiesThe following major building projects are being progressed:

• Joondalup Science Building ($2.4 million in 2020, $48 million in total).

This project will provide the University with a new suite of Physical Containment (PC2) and Research Laboratories for utilisation by the School of Medical and Health Sciences, School of Science and School of Nursing and Midwifery. This new teaching facility consists of a four-storey building which includes two levels to meet specialist lab requirements, a laboratory preparation space and

commercial engagement space providing opportunities for industry engagement, backed by commercial rental returns.

• Mt Lawley Arts Building ($8 million in 2020, $50 million in total).

The functional requirements and accommodation schedule have been developed for the proposed new facility on the Mt Lawley campus. The business case is being developed and will be presented to University Executive for consideration. Total project value is $50 million with $25 million to be raised through philanthropy.

Section 5.7 shows a detailed list of all projects.

5.4 Information Technology Infrastructure and Service ProjectsThe 2020 IT AMP funding builds upon the consolidation and optimisation of our IT services. Continuing our digital transformation to improve the experience the University provides to its students, a number of major projects will build future capabilities for 2020 and beyond. Major projects identified for 2020 include:

• Cloud Transition;

• Space Utilisation;

• Teaching and Learning Digital Transformation Program;

• Information Management;

• Mobility;

• Service Excellence Program;

• Audio Visual;

• Virtual Labs and Applications; and

• Maintain Application Upgrade Program.

Cloud Transition This project will migrate workloads from the ATOS data centres to Azure public cloud in order to achieve substantial savings, increase flexibility and gain access to enhanced technologies and capabilities. This places the University at the forefront of flexible, cost effective technology services.

Space Utilisation The implementation of this project will provide the University with real-time information on usage of its inventory of teaching and support spaces. The key benefit is the opportunity to base future accommodation planning decisions on more comprehensive information, and provide an enhanced customer experience for students. The data collected will be referenced against timetable and enrolment data, so that a complete picture of asset utilisation can be used to inform space and planning decisions.

Teaching and Learning Digital Transformation Program The Program will continue into 2020 and enable delivery of ECU’s commitment to ensuring that students experience the very best learning, enabled by contemporary learning technologies. The Program delivers the following capabilities, which will transform the learning and teaching experience at ECU:

• Automated Lecture Capture;

• Digital Media Production and Video Editing;

• Digital Object Repository; and

• Student digital media creation capability.

Information Management This project will review our information management processes to ensure critical information is stored and accessed in accordance with University requirements.

Mobility This project will develop a mobile capability and applications for use by ECU students and staff. This capability will include a Digital Assistant to improve how students and staff interact with the vast array of information and systems at the University.

Service Excellence Program As part of the closeout of the Service Excellence Program, Information Technology Services Centre will fully transition the technology aspects of the program into operational support.

Audio VisualThe University’s Audio Visual (AV) systems in general teaching spaces will be uplifted to meet the new AV Standards developed as part of the Teaching and Learning Digital Transformation Program.

Virtual Labs and ApplicationsIn order to deliver greater student experience and flexibility, another key deliverable is the University’s ability to deploy software without the need for the student to be on campus. Students will be able to access and use required software from anywhere and at any time. This will also allow for faster and easier deployment of relevant course material to any real or virtual campus anywhere in the world.

Maintain Application Upgrade ProgramThis program continues to maintain and upgrade the University’s large software fleet. Continual review of the fleet looks for opportunities to move software to cloud-based services wherever possible, thus removing the complexity of managing a multi-layered technology environment and dependencies that are inherent in large “on premise” installations of software.

29

5.5 Proposed Funding Strategy The key expenditures included in the AMP 2020 to 2024 are:

The AMP continues to maximise the use of the University’s working capital and is based on the following key outcomes:

• Net cash from operating activities of at least $50 million p.a.;

• Establishment of new debt facilities in 2019 has provided additional funding of $120 million to support the AMP;

• Borrowings facilities to be repaid as they fall due; and

• The University maintains adequate cash reserves and maintains an acceptable risk rating per Department of Education institutional sustainability criteria.

BorrowingsECU’s Bond and facility with the WATC funds major infrastructure building projects to support the University’s strategic direction.

Sustainability of Borrowings and Risk ManagementThe University’s financial planning and management involves the following key elements that provide a clear understanding of financial outcomes and manages the risk attached to capital projects:

• Treasury/cash management policies and processes are in place that allow the University to manage its treasury position efficiently;

• A fully integrated cash flow model that integrates the AMP, Income Statement and Balance Sheet;

• The University has developed a Master Plan for each campus, which will be refreshed in 2020. ECU’s governing Council approves this Master Plan. Together with the SAMF, this sets the strategic direction for each campus;

• As part of the AMP, relevant committees for each major building project and ICT project complete and review a business case. The AMP is then approved by Council;

• The University will not proceed with activities that are not sustainable; and

• University Executive, Resources Committee and Council receive regular reports of the University’s cash flow.

The University Executive, Resources Committee and Council understand that the achievement of the AMP 2020 to 2024 will require commitment to, and focus on, achieving sufficient operating results to sustain the infrastructure program. The committees receive regular financial reports, including key financial and liquidity ratios.

The key financial and liquidity ratios are:

• Operating Margin: This margin is established through ECU’s budget processes, annually and for the five-year forecast period. The University target is for the margin to be no less than 4%;

• Interest Cover Ratio: The University has set a minimum target of interest cover prior to non-operating items of three times. This measure will provide comfort that the University can sustain its borrowing level by generating a sufficient operating result to cover the interest commitment;

• Current Ratio: The University’s target is not to fall below 1.0; and

• Debt to Equity Ratio: The University has established a target “cap” for this ratio, as to not exceed 30% at the peak borrowings period.

Total 2020-2024

Item $'000

Major Building Projects 148,801

Library Collections, New Courses and Strategic Capital Projects 40,929

IT Infrastructure 6,665

Improvement Works 22,500

Building Maintenance and Improvement Works (Non-Capital) 35,500

Library Subscriptions and SOE Leasing Costs (General Teaching Spaces) 33,156

IT Infrastructure Support (Non-Capital) 105,979

Total 393,529


30

Project Status

Approved 1

Variation required to Approval 2

Business Case in Progress 3

Concept 4

5.6 Project Cost Information

Section One - Detailed Asset Management Plan (Capital Expenditure)

Project Status

Total Budget Project

Cost

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000 $'000

1. Major Building Projects

1.1 Joondalup Science Building 1 48,000 2,401 - - - - 2,401

1.2 Joondalup Science Building Commercial Tenancy Fit-out 4 3,500 3,500 - - - - 3,500

1.3 Joondalup Quadrangle Signage 1 800 600 - - - - 600

1.4 Joondalup Edith Cowan House 1 450 350 - - - - 350

1.5 Mt Lawley Performing Arts Building 4 50,000 8,000 41,700 - - - 49,700

1.6 ECU Yanchep Health Centre 4 2,000 1,750 - - - - 1,750

1.7 Joondalup Building 31 Library Repurposing 4 2,000 2,000 - - - - 2,000

1.8 Joondalup Campus Activation 4 1,500 1,500 - - - - 1,500

1.9 Mt Lawley Student Housing 4 1,000 - 1,000 - - - 1,000

1.10 Teaching, Learning and Research Future Buildings and Refits 4 - - 20,000 21,000 22,000 23,000 86,000

Total Major Building Projects 109,250 20,101 62,700 21,000 22,000 23,000 148,801

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000

2. Other Projects

School Funded and Centre Projects 1,742 1,829 1,920 2,017 2,117 9,625

Callista Replacement Project/Major System Improvements

- - 5,000 5,000 5,000 15,000

Salesforce Initiatives 238 - - - - 238

New Courses 2,160 2,200 2,240 2,280 2,330 11,210

Library Collections 971 971 971 971 971 4,856

Total Other Projects 5,111 5,000 10,132 10,268 10,418 40,929

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000

3. IT Infrastructure

Multimedia Equipment 1,001 1,411 1,356 1,159 1,199 6,126

Enterprise Space Utilisation 539 - - - - 539

Total IT Infrastructure 1,540 1,411 1,356 1,159 1,199 6,665


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Total Budget Project

Cost

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000 $'000

4. Improvement Works

Improvement Works and Refurbishment 4,300 4,400 4,500 4,600 4,700 22,500

Total Improvement Works 4,300 4,400 4,500 4,600 4,700 22,500

Total AMP (Capitalised) 31,051 73,511 36,988 38,026 39,318 218,894

Total Debt Repayment 22,571 1,715 1,781 1,849 1,920 29,835

Total AMP (Capitalised and Loan Repayments) 109,250 53,622 75,226 38,768 39,875 41,238 248,729


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Section Two - Detailed Asset Management Plan (Non-Capital Expenditure)

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000

1. Building Maintenance and Improvement Works

Maintenance 5,950 6,050 6,150 6,250 6,350 30,750

Improvement Works and Refurbishment 910 930 950 970 990 4,750

Total Building Maintenance and Improvement Works 6,860 6,980 7,100 7,220 7,340 35,500

2020 Budget

2021 Forecas

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000

2. Other Projects

Library Subscriptions 4,675 4,957 5,254 5,565 5,892 26,342

SOE Leasing Costs (General Teaching Spaces) 700 735 772 810 851 3,868

Teaching and Learning Digital Transformation Program 589 589 589 589 589 2,945

Total Other Projects 5,964 6,281 6,614 6,694 7,332 33,156

2020 Budget

2021 Forecast

2022 Forecast

2023 Forecast

2024 Forecast

Total 2020-2024

Item $'000 $'000 $'000 $'000 $'000 $'000

3. IT Infrastructure Support

Infrastructure Services

Network Services 2,934 2,962 2,990 3,019 3,050 14,955

Data Centre Services 3,060 2,566 2,690 2,820 2,961 14,098

Telecommunications Services 1,361 1,414 1,557 1,629 1,708 7,669

Information Security Services 701 725 767 793 840 3,826

Web Hosting Services 4 4 4 4 5 22

Callista Contribution 1,358 1,401 1,445 1,490 1,537 7,232

Computer Licensing Other Services 9,616 9,772 9,978 10,412 10,691 50,469

Applications Upgrades and Support BAU 935 820 575 555 595 3,482

Student Computing Services Provision 209 216 224 231 239 1,119

Oracle Universal Credit Cloud Service 307 318 318 318 318 1,578

Projects

Innovation Fund 250 250 250 250 250 1,250

Digital Experience Platform 280 - - - - 280

Total IT Infrastructure Support 21,015 20,446 20,801 21,523 22,194 105,979

Total AMP (Non-Capitalised) 33,839 33,707 34,516 35,707 36,866 174,634

Total AMP including Debt Obligations 87,461 108,933 73,284 75,582 78,103 423,364

Note: Totals may not sum due to rounding.33

1.1 Project Name Joondalup Science Building

Total Project Cost $48.0 million 2020 Budget $2.4 million

Description: The development of physical containment teaching laboratories to enhance the student experience.

1.2 Project Name Joondalup Science Building Commercial Tenancy Fit-out


Description: Commercial tenancy fit-out to meet prospective tenant requirements.

1.3 Project Name Joondalup Quadrangle Electronic Signage


Description: To promote University courses, events and facilities.

1.4 Project Name Joondalup Edith Cowan House


Description: Refurbishment of existing facility to create a more usable functional space for all stakeholders.

The following major projects are at conceptual stage. Further development plans will be progressed over time:

1.5 Project Name Mt Lawley Performing Arts Building


Description: A performing arts teaching facility on the Mt Lawley Campus with 50% of the project funded externally.

1.6 Project Name ECU Yanchep Health Centre


Description: Development of a Health Centre in the Yanchep area, subject to external funding.

1.7 Project Name Joondalup Building 31 Library Repurposing


Description: Activation of the library entry lobby to enhance the student experience.

1.8 Project Name Joondalup Campus Activation


Description: Upgrade of a number of sites to enhance the on-campus student experience.

1.9 Project Name Mt Lawley Student Housing

Total Project Cost $1.0 million

Description: Refurbishment of the original accommodation inventory on the Mt Lawley Campus.

1.10 Project Name Teaching, Learning and Research Future Building and Refits

Total Project Cost $55.0 million

Description: Development of Teaching, Learning and Research building to support strategic growth.

5.7 Asset Management Plan - Detailed 2020 Major Project InformationThe following major building projects are being progressed:

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Disclaimer

Every effort has been made to ensure that the information in this publication is correct at the time of production.

Greening ECUECU is committed to reducing the environmental impact associated with its operations by conducting its activities in a socially and environmentally responsible manner. This includes implementing strategies and technologies that minimise waste of resources and demonstrate environmentally sensitive development, innovation and continuous improvement.

ECU IS SM KE-FREE

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Documents

BUDGET BOOK 2020 - Edith Cowan UniversityStephen Chapman, Vice-Chancellor and President Scott Henderson, Vice-President (Corporate Services) Bradley Francis, Chief Financial Officer