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The Real Benefit of a University Campus to a Regional Town

What is a campus actually worth to a regional town? The answers that circulate are almost always too low: most impact assessments miss the human-capital value that accumulates once graduates go to work in the surrounding region.

By Dr Tony Irish, CA Business Valuation Specialist 26 August 2026 · 7 min

What is this campus actually worth to our town?

It is not a rhetorical question. It has a defensible, quantifiable answer, but the answers that circulate in council chambers, state budget submissions and RDA papers are almost always too low. The reason is technical, and it matters. Most economic impact assessments of regional universities measure only the visible flow of money each year the campus is open: payroll, operating spend, student expenditure, and the input-output multipliers those flows generate. More sophisticated approaches account for the wage premiums earned by graduates and include an assessment of the research conducted by the University. That work is legitimate, but it misses a key part of the value that only accumulates once graduates leave the lecture theatre and go to work in the surrounding region. On the best available evidence, that part is where most of the real value sits.

Why regional universities are anchor institutions

Regional Australia has spent the past decade watching universities become genuine anchor institutions. The Regional Universities Network (CQUniversity, Southern Cross, University of New England, University of Southern Queensland, University of the Sunshine Coast, and Federation University) found its member institutions contributed $2.4 billion to regional GDP and supported over 11,300 jobs in 2018, a 41% increase in regional GDP contribution and an 82% increase in jobs since 2015. Modelling by the Centre of Policy Studies found RUN-member universities contribute between 3.5% and 12.9% of GDP and 1.9% to 9.6% of employment in the regions hosting their dominant campus.

At town level, individual campuses tell the same story. The University of Wollongong’s assessment quantifies $1.2 billion of contribution to national GDP, $815 million captured locally in the Illawarra, and 7,195 FTE jobs supported regionally. La Trobe’s Bendigo campus alone (957 staff and 4,324 students) has been estimated to support 2,099 jobs and $201.4 million in Gross Regional Product per annum once flow-on effects are included. Even the much smaller Shepparton campus still generated an estimated $12.5 million in GRP and 130 supported jobs. A university is rarely just an education provider in a regional town; it is frequently among the largest employers and one of the single biggest drivers of non-mining private investment.

None of that is in dispute. Whether those figures are the full picture is, or should be. On the evidence, they are not.

The human capital effect

An often-used methodology for regional-campus economic impact studies is input-output analysis. It quantifies three streams of activity: the university’s own direct spending, the flow-on spending as suppliers restock, and the induced spending as wages recirculate through the local economy. It then multiplies them out to a headline GRP and jobs number. Type 1 and Type 2 multipliers of around 1.9 to 2.0 are typical: every direct dollar of university activity generates roughly a further dollar of activity in the surrounding economy. That is a defensible measurement of the annual expenditure footprint.

It is not, however, a measurement of what a university actually does. A university’s central product is not the payroll it runs each year; it is the graduates it produces. And the economic value of a graduate does not sit inside the year in which the tuition was paid. Its value is cumulative. Instead it sits in the following forty years of that graduate’s working life, in the region where that graduate takes a job, and in the productivity effect that graduate has on every other worker around them.

This is the human-capital argument, and it is not new. Enrico Moretti’s foundational research in the American Economic Review and his subsequent work on the new geography of jobs established what is now the standard finding in the labour-economics literature: each additional degree-qualified graduate retained in a local economy raises the wages and productivity of the workers around them, not just their own. The multiplier is empirically derived, it is regionally variable, and it is substantial. RUN’s own Centre of Policy Studies modelling, applied to Australian regional universities, tells the same story.

The Productivity Commission’s five-year productivity inquiry reinforced the point at national level: human capital accumulation, not physical capital or commodity cycles, is now the primary driver of long-run productivity growth, and the returns to education compound. Yet the value captured in a standard regional-campus economic impact assessment understates these spillover or externality benefits. An input-output model quantifies the campus’s cash flows and stops. It has nothing to say about the graduate cohort walking out the door each November, the sectors those graduates enter, the productivity spillover they create on their colleagues, or the years of compounding that follows.

The result, on any campus for which the graduate pipeline is a material output, is systematic undervaluation. The visible payroll and student-spend numbers are real, but they are the small end of the wedge. The wage premium of graduates is also defensible and real. The human-capital contribution is the large end. It is the part the standard method leaves on the table.

What a defensible campus assessment should measure

A properly built economic impact assessment for a regional university needs to layer three distinct effects, each measured on its own terms rather than compressed into a single input-output multiplier:

  • Annual operating footprint. The direct, indirect and induced expenditure the campus generates each year, using region-specific input-output data, not a national average applied uniformly. Student expenditure should be adjusted for “would-be-here-anyway” residents.
  • Graduate pipeline. The annual flow of graduates into the regional labour market, net of the counterfactual: the students who would have completed a similar qualification elsewhere absent this campus. Regional graduate retention rates, sectoral composition (health and education are typically the largest cohorts in regional universities, and both face structural workforce shortages), and the specific labour markets absorbing those graduates all need to be measured directly rather than assumed.
  • Human capital creation. The compounding productivity effect of successive graduate cohorts on the regional workforce, calibrated using Moretti-type multipliers appropriate to the region’s setting. Metropolitan-fringe campuses use a lower spillover ratio than deep regional campuses.

Discount rate selection matters enormously for the human capital layer, because benefits compound over twenty-five years or more. A 5% discount rate produces very different numbers to a 7% rate. The choice materially changes the headline finding and needs to be defended against the funder’s framework.

Beyond the three quantified layers, at least three further effects belong in the assessment, either monetised where the data supports it or narrated explicitly where it does not:

  • Anchor-tenant and knowledge-economy attraction. Where a campus operates a co-located technology park or research precinct, workforce renewal in those tenants usually depends on the graduate pipeline. Tenant investment decisions become a function of campus presence, and that dynamic rarely shows up in an expenditure-based model.
  • Vocational (TAFE) pipeline. Where a university is dual-sector, the TAFE pipeline supplies trades, aged-care, early-childhood and community-services workers who are the enabling infrastructure for the knowledge economy. This cohort cannot be replaced by higher education and is often ignored in university impact studies entirely.
  • Counterfactual robustness. Every impact figure must be net of what the region would have produced without the campus, including the students who would have travelled elsewhere for the same qualification and returned. Gross graduate numbers overstate the campus’s marginal contribution; the honest measure is the net structural vacancy the pipeline fills.

SED’s approach

SED Advisory has recently completed work for Federation University using this three-layer human-capital methodology to derive the economic contribution of its three primary regional campuses. The work built on the standard input-output foundation but layered on the graduate pipeline and the Moretti-based human-capital compounding effects that a standard economic impact assessment overlooks. One finding in particular is worth noting: the human-capital layer, over a twenty-five-year horizon, is materially larger than the annual expenditure layer, and it is irreplaceable. The gap between those two numbers is the gap between what a regional university looks like it is worth and what a regional university actually is worth.

For a regional council, an RDA committee or a state department building a case for tertiary infrastructure, or defending an existing campus against rationalisation, the practical implication is direct. A rough multiplier lifted from another region’s report, applied to your town’s staff and student numbers, will materially undervalue the campus and materially weaken the case. Discount rates, retention rates, sectoral composition of the graduate cohort, Moretti multiplier calibration, and counterfactual assumptions all move the headline number by amounts that decide fundability.

SED Advisory has spent nearly three decades building investment and business cases for regional Australia. Dr Tony Irish’s PhD research on knowledge-intensive business services in regional locations underpins the practice’s distinctive approach to anchor-institution and human-capital analysis. If you are building a case for a campus, a hospital, or any other anchor institution in your region, get in touch with SED Advisory.

Sources cited

About the author

Dr Tony Irish is a director of SED Regional Advisory. He is a Chartered Accountant, holds a PhD in regional economic development, and is accredited as a CA Business Valuation Specialist by Chartered Accountants Australia and New Zealand.

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