Australia plans to benchmark vice-chancellor salaries

Looming changes to the make-up of Australian university councils could “put meat on the bones” of governance principles while giving more than “lip service” to notions of transparency, according to policy expert Gwilym Croucher.

But details are scant on many aspects of the proposals, including an apparent plan to more closely regulate the salaries of vice-chancellors and other senior university staff.

Federal, state and territory ministers say universities should apply “a rigorous and transparent process” in “developing remuneration policies and settings” for their executives. Pay packages and policies should be publicly reported and benchmarked against public sector entities of “comparable scale and complexity”.

Executive remuneration is one of 10 “priority areas” to be addressed by new “university governance principles and recommendations” to be developed by a yet-to-be-established expert governance council.

Other priorities include a “rigorous and transparent selection process” for university governing body membership, and mandatory inclusion of people with leadership experience at different higher education institutions.

Dr Croucher, deputy director of the Centre for the Study of Higher Education at the University of Melbourne, said most councils had long included experts in areas like finance and risk. “Those fiduciary duties could be well fulfilled, but what was sometimes missing was people who knew how universities ran or understood the dynamics of Australian higher education,” he said.

“At times, university councils have had to rely heavily on university management. What’s being suggested here is that they should have people with expertise independent from the institutions being governed. Covid reinforced how important governance can be. When everything’s going well, people sometimes downplay its role, but when there’s a real crisis, that’s when you want the right people there.”

The new principles, to be signed off by education ministers before the end of the year, will replace a voluntary code of best practice for governance adopted in 2010.

The priority areas also include gender balance and indigenous representation on university councils, along with transparent processes to capture staff and student input into university strategies, policies and performance. Dr Croucher said that while all university councils already had student and staff representation, the proposals would encourage consistency.

“This is about trying to bring some regularity across all universities in Australia,” he said. “It’s about messaging as much as anything. It’s more than the voluntary code – it’s stronger.”

He said additional transparency over many governance processes, including remuneration, was desirable. “These are all steps in the right direction.”

Executive pay has long enraged university critics in both major political parties as well as the academic union. Australian vice-chancellors tend to earn considerably more than their international counterparts, apart from the top-paid American university presidents.

Their average pay peaked at close to A$1 million (£520,000) in 2019 before falling more than A$40,000 in the first year of the Covid-19 pandemic, according to institutional financial statements. By 2022 they had regained over half of these losses.

A voluntary vice-chancellor and senior staff remuneration code, adopted by the University Chancellors Council in 2021, has made little difference to executive pay packets or how they are reported.

john.ross@timeshighereducation.com