Two policy experts have backed an Australian senator’s proposal to regulate vice-chancellors’ pay at a level almost 60 per cent below the current average. But the academics advocate a different mechanism, and say it should be extended to other university executives.
In a submission to the Senate Education and Employment Committee, Australian National University (ANU) political scientist Marija Taflaga and human geographer Francis Markham said regulation of university leaders’ pay was “both necessary and workable”. But instead of pegging vice-chancellor remuneration to the Australian treasurer’s current salary, as suggested in the senator’s private member’s bill, university leaders’ pay should be calculated as a “loading” on top of professors’ earnings.
“There should be no principled objection to parliament setting limits on the pay of executives in public universities,” the submission argues. “This is not an encroachment on academic freedom; it is a straightforward matter of democratic accountability over what is largely public money.”
The committee is into the “there for education, not profit” bill, tabled early this year by Tasmanian senator Jacqui Lambie. It would restrict vice-chancellors’ remuneration to no more than A$430,000 (?211,000) – 58 per cent below the public university average of about A$1.021 million in 2024, and lower than that year’s lowest package of A$505,000.
The submission argues that vice-chancellors’ “inflated” salaries incentivise a leadership focus on profit rather than universities’ core business of producing and disseminating knowledge. They also pose a “moral hazard”, where university leaders “enjoy the upside of bold strategic bets” – such as glimmering new campuses – but rarely hang around long enough to taste the consequences of failed ventures, such as job and course cuts.
High salaries also create a problem of “adverse selection”, where vice-chancellor posts are treated as “career stepping-stones” rather than opportunities to build up the institutions. They foster an “information asymmetry”, where governing councils are kept ignorant of “festering” issues by executives who have “strong incentives to massage figures, downplay problems or kick the can of difficult decisions down the road”.
Outsized executive pay also creates a “legitimacy” problem, the submission argues. “Leadership begins to look self-serving, detached from the institution’s public purpose. This is all the more concerning where a large part of a university’s budget comes from the public purse.”
Lambie’s bill is among a flurry of proposals to rein in vice-chancellors’ salaries. An interim report from the committee, which is simultaneously inquiring into university governance, says senior executives’ remuneration should conform to a “classification and remuneration range” devised by the Commonwealth Remuneration Tribunal in consultation with federal, state and territory governments.
An “expert council” is also inquiring into the issue, as part of a broader exploration of university governance. The University Chancellors Committee (UCC), which is providing secretariat services to the group, pre-empted its work by that the tribunal support “a new advisory framework for vice-chancellor remuneration”.
In fact, the tribunal’s 52-year-old legislation gives it a responsibility to monitor and report on higher education leaders’ pay, although there is little evidence that it has done this in any consistent way.
Taflaga and Markham said the tribunal should not set university executive salaries because it gave “too much weight to private market comparisons”. Vice-chancellors are “not interchangeable” with people who run banks or mining companies, the pair argued. “Yet the current approach prices them as though they could walk into the C-suite of a listed company – a fiction that drives pay packages ever higher.”
The submission cites the tribunal’s role in setting the salary of former ANU boss Genevieve Bell, who was Australia’s second highest paid vice-chancellor last year. “Outsourcing executive pay to the Remuneration Tribunal risks legitimising inflated salaries rather than curbing them,” the pair warned.
ANU said the tribunal had recommended a package between A$1 million and A$1.3 million for the leader of a “A$1.3 billion institution”. In its submission, the university advised the committee not to support Lambie’s bill.
“Universities are large and complex organisations, requiring skilled and experienced vice-chancellors whose salaries are appropriately benchmarked,” the submission says. “[Our] executive remuneration policy and practice is robust, appropriate and already incorporates the principles of independent benchmarking and expert Remuneration Tribunal advice.”
Universities Australia said it supported the UCC’s proposal. “Remuneration decisions…should continue to be a matter for independent university councils. The tribunal could play a very useful role in supporting those decisions and increasing transparency, as it does in other sectors.”
The committee is due to report on 28 November, following a public hearing on 17 November.
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