In a report to investors, the agency warns of a $2 billion funding shortfall, and the prospect of greater funding volatility and risk for universities as Government investment recedes.

Universities Australia Acting Chief Executive Catriona said the ratings agency was simply stating the facts.

“Moody’s makes it crystal clear. The funding freeze imposed by the Government is risking the financial health and sustainability of Australian universities and that hits students and the national economy,” Ms Jackson said.

“The billion dollar funding shortfall means the university system isn’t properly funded to deal with the needs of the economy and emerging skills shortages,” she said.

“Universities play a critical part in national prosperity. The international education sector alone brings in $28 billion a year while university research has added $10 billion to Australia’s GDP each year for the last 30 years.”

“Sustaining this important economic contribution has been put at risk by successive Government budget cuts.”

While Universities Australia has stressed that the impacts will be felt across the whole university sector, the Moody’s report notes regional and growing universities will be hit particularly hard.

“The rating agency has confirmed what universities have been saying since December. Institutions that are developing new campuses or catering to growing student demand will feel these cuts very keenly,” Ms Jackson said.

“That is bad news for the institutions themselves and worse news for the local communities they serve.”