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NMIT hits a wall

Fairfax Media    |    27 May 2014

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Northern Melbourne Institute of TAFE (NMIT)  suffered financial losses of more than $30 million in 2013, prompting the auditor-general to express doubt that it can survive.

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NMIT

In a letter accompanying NMIT’s annual report, tabled in Parliament on 26 May, Auditor-General John Doyle said there is an ”uncertainty that may cast significant doubt” over NMIT’s ability to continue operating following its $31.7 million net loss.

The Education Department has provided a $16 million loan to support the TAFE’s ”short-term solvency” and NMIT also launched initiatives to stabilise its cash flows, he said.

NMIT has blamed state government funding cuts and declining student enrolments for the loss.

NMIT’s student enrolments fell by more than 5000 in 2013 from the year before.  International revenue had also dropped due to falling enrolments of foreign students.

Interim chief executive Ron Gauci said NMIT’s losses were ”significant”. He said government funding had been slashed by 41%, or $28.6 million, ”an amount that could not be recovered through offsets in other areas”.

However, Gauci asserted that the financial futures of NMIT and Melbourne Polytechnic are ”secure”, saying the auditor-general’s report examined the previous financial year and did not take into account the institute’s recovery plan to protect its future

A spokeswoman for Higher Education and Skills Minister Nick Wakeling said the government would continue to support NMIT in its ”transition process”.

Opposition higher education spokesman Steve Herbert said the financial loss was a direct result of state funding cuts, proving that the government’s TAFE policy was ”in tatters”.

NMIT’s funding shortfall comes after an auditor-general’s report recently revealed half of the state’s TAFEs were running at a loss.

The leaked assessment report, obtained by Fairfax Media, showed that state government operating contributions for the TAFE sector plunged by $119 million in 2013.

NMIT is the latest institute to post alarming financial results, after Gippsland’s Advance TAFE reported a $9.2 million loss last month.

See

NMIT statement on the departure of Andrew Giddy

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 26 February 2014    |     From the circumstances of Andy Giddy’s departure and the tone of this statement, something is obviously seriously amiss at NMIT. Speculation is that NMIT has gone from a relatively comfortable surplus in 2012 (about $6 million) to a burgeoning deficit in 2013. NMIT budgeted for a deficit of $13 million for 2013, but, in the event, it may have been more than double that.  This is speculation: we have no independent, verifiable information concerning NMIT’s current financial position

Nevertheless, it is starting to seem something like that may be the case. NMIT has a pretty strong balance sheet and ought to be able to absorb this shock result, perhaps with some short term financial support from the Victorian government.

But the question is why and how did it come as a shock?

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