University vice-chancellors and their salaries

After 17 years in federal parliament, five-and-a-half of them as opposition leader and taking the party to two close election losses, Bill Shorten announced he was pulling the pin on his political career.

Last Thursday, standing beside Anthony Albanese, who supplanted him as Labor leader and won the prime ministership that had eluded him, Shorten said he was moving on to a new career consistent with the ideals about people fulfilling their potential that had driven him to join the union movement 30 years ago.

“Core to the future of Australia is ensuring our nation can choose its own path,” he said. “That means choosing education, choosing skills, choosing the reskilling of our Australians, choosing lifelong knowledge acquisition. That is why I am excited to say that from February of next year I have been chosen to be the vice-chancellor of the University of Canberra.”

Some elements of the media chose not to focus on Shorten’s principles but on his pay packet, suggesting he stood to earn three times as much as the prime minister in his new role.

We don’t yet know actually how much he will be paid, as Shorten’s remuneration is still being negotiated. The speculation was based on the fact his predecessor, Paddy Nixon, was paid almost $1.8 million in 2023.

That was an anomaly, caused by Nixon’s abrupt resignation in January, inflated by the payment of some $800,000 in what the university called “accrued entitlements” after almost four years in the job.

A better guide to the likely pay on offer to Shorten is Nixon’s 2022 remuneration: $1,045,000 – which still compares very favourably with the $607,500 the prime minister gets. So, pretty good recompense for thwarted political ambition.

A million dollars a year might seem an overly generous salary for heading up an institution that boasts being ranked 403rd in the world, but it is actually par for the course among Australia’s vice-chancellors. According to university remuneration reports tabulated by the National Tertiary Education Union, the average VC pay was $1.027 million in 2023.

The highest VC pay was for the University of Melbourne, just shy of $1.5 million. At least it can be said that it ranked 13th in the world and caters to more than 50,000 students. Yet the vice-chancellors of many other institutions, ranked many hundreds of places lower and having far smaller student bodies, also take home big bucks.

“Vice-chancellor wages are excessive and out of touch with community expectation,” says the national president of National Tertiary Education Union, Dr Alison Barnes.

“And you can’t look at the wages in isolation. They are, I think, particularly obscene in the context of that broader crisis of governance which is the hallmark of Australian public universities at this point in time.”

Barnes alludes to the most recent update by the union of its catalogue of wage theft by Australian tertiary institutions, which stood at just over $382 million as of June.

That included some $203 million in confirmed underpayments of staff at 30 public universities, plus $168 million in provisions for underpayments recorded by nine universities in their annual reports, plus another $10 million “in estimated underpayments occurring at one institution that has confirmed systemic underpayments, but has concealed the dollar amount”.

According to Barnes, since the report was released the stolen wages for university staff had risen by another $6 million, to $388 million.

She further complains that academic staff are increasingly employed under tenuous conditions, with casual or fixed-term contracts now the dominant form of employment.

“These are public institutions,” she says. “How can vice-chancellors be paid these enormous sums of money and oversee these regimes that are bottom-of-the-barrel business models …?”

In its submission last year to a government review of the tertiary sector, the Universities Accord, the union advocated a cap on executive salaries. So did the Australian Association of University Professors, arguing that salaries should be capped at about double the earnings of a senior professor, or about $400,000 a year.

Speaking with The Saturday Paper, Andrew Norton, professor of higher education policy at the Australian National University, says vice-chancellor pay is “out of proportion to what CEOs of other public sector or not-for-profit organisations receive”.

“I’m sure if you offered $600,000 or $700,000, you’d still get plenty of applicants,” he says.

There are examples of VCs who have shown restraint, out of consideration of community expectations, but they are rare and therefore highly newsworthy.

In 2016, when Nobel Prize-winning astrophysicist Brian Schmidt became VC of the ANU, he negotiated his salary down to $617,500 – more than $300,000 less than his predecessor, Ian Young. Schmidt continued to be one of the lowest-earning VCs throughout his eight-year tenure, despite the fact the ANU – global ranking 30 – is one of Australia’s most prestigious universities.

“I just don’t care that much about money,” Schmidt told The Australian Financial Review in a 2021 interview. “All my excess money, I donate. It’s just not that important to me. I’ve got enough.”

More recently, the newly appointed vice-chancellor of Western Sydney University, Professor George Williams, revealed he too had negotiated down his salary.

“I was going low and [the chancellor] went high,” he said at an event at the university’s Parramatta campus three weeks ago. “We negotiated and came around in the middle in the end.”

The compromise was a cut of “about 20 to 25 per cent” from Williams’s predecessor, Barney Glover. He did not specify a number, but given Glover was paid $1.065 million, that would mean a yearly wage of about $800,000 to $850,000.

Williams said his starting point when negotiating his wage was that he was leading a public sector organisation, not a business, and that he thought it appropriate VC salaries should be benchmarked to the lowest paid federal departmental secretaries.

He cited VC salaries as evidence universities had “lost their way”. The sector was too inwardly focused and needed to reset the conversation around students, staff and the community, he said.

As to how they lost their way, Andrew Norton offers a plausible theory.

“What’s happened is that in the 1990s and the 2000s, governments reduced the size of university councils and senates, kicked off most of the internal constituents, and brought in externals including, usually, a requirement for people with business experience.

“And I think those people, when they’re on their remuneration committee, think a million dollars for a CEO is actually quite cheap. And it is, in some of the businesses they’re coming from.”

Once one does it, it becomes a benchmark for others.

“When they start seeing in the annual reports that their competitors, other VCs, are getting paid a million dollars, they say, ‘What about me?’ ” Norton says.

A survey of the personnel on the boards that oversee the operations of our universities, released by the NTEU in April, lends support to Norton’s view. It found university boards were increasingly “stacked with unelected members brought in from big business”.

Of 545 positions on university governing bodies, more than two thirds – 366 – were external appointments. Of those, 143 were from business backgrounds, including banking and finance and other such highly paid backgrounds. The report said only 137 board appointments were “elected from the staff, students and graduates of the institutions they serve”.

Others argue universities are actually more akin to large businesses than to the public service. As one vice-chancellor for a mid-sized university tells The Saturday Paper: “In the public service they don’t face commercial risk like I do. It’s a quite challenging commercial operation, which public sector department heads don’t have to worry about. Their budget rolls in every year, whatever they do.”

The VC continues: “I don’t just get my budget delivered by the government every year. I have to go out and hunt and gather for it. And if it doesn’t come in, I don’t have even the flexibility to increase my prices or change my operating model, because it’s completely regulated by the government.”

Furthermore, says the VC, senior departmental secretaries earn salaries comparable with the average vice-chancellor.

The head of the Department of the Prime Minister and Cabinet is paid just over a million and the secretary of Treasury just under. Another 11 departmental heads earn $960,000.

A couple of dozen heads of various government business enterprises earn more still. The head of the NBN, for example, gets more than $3 million.

In this VC’s view, the focus on remuneration is a “furphy”, encouraged by the National Tertiary Education Union. They argue it is counterproductive because it “contributes to a public perception that universities are bloated and fat and therefore don’t need any more money”.

“It’s a distraction from what government should be being asked about, which is, how are universities funded? The answer to that is, not adequately.

“Even if we halved our pay, it would make absolutely no difference to the funding problems that the higher education sector faces.”

Those problems are much larger than the pay packets of senior executives. At the heart of them is the fact universities have come to rely on the revenue from fees paid by international students to compensate for government funding cuts. Now the government is cutting that revenue stream, too, by capping their number.

The “stark and frightening reality”, Universities Australia chair Professor David Lloyd told the National Press Club on Wednesday, “is that two thirds of publicly funded universities were in deficit in 2022 and 2023”.

“As if that isn’t enough financial pain,” he said, “the Albanese government and the Peter Dutton-led Coalition are now outdoing one another in their rush to reduce the number of overseas students studying at Australia’s universities.”

Universities had been hammered during the Covid period, when the Morrison government pushed overseas students to leave Australia and denied universities access to the JobKeeper income support scheme. Now, just as they are recovering, both major parties are engaged in what he called a “poll-driven attack”, making international students “scapegoats to blame the housing crisis on”.

The problem began long before the pandemic. “Over the last few decades,” Lloyd says, “Australia’s higher education system has been subjected to a unique blend of passive neglect punctuated with occasional bursts of well-intended, ideologically driven intervention. Successive governments from both sides of politics have underfunded university teaching and research and shut down programs designed to fund university infrastructure.”

Lloyd detailed Australia’s decline, relative to other advanced economies. In the decade to 2007, under the Howard government, public investment in universities fell 7 per cent. Across the rest of the OECD there was an average 48 per cent increase.

Then Labor won power, promising an education revolution and warning that Australia’s prosperity would hit a wall unless the quality and funding of education was raised substantially.

As Lloyd explained: “The supporting policy paper quoted statistics showing Australia’s productivity had declined in line with education funding.”

From 2008 until the Coalition axed Labor’s demand-driven model in 2017, enrolments of students from lower socioeconomic backgrounds rose by two thirds. Enrolments of Indigenous students and those with disabilities more than doubled. Enrolments from regional and remote areas jumped by 50 per cent. Spending as a share of gross domestic product also went up.

It didn’t last, however. By 2020, with the Coalition parties again in power, the share of GDP spent on higher education was lower than it had been in 2008.

“The last seven years, the majority under a Coalition government, have been particularly difficult, starting with the re-capping of university places in 2017,” Lloyd said. “Since then, other changes to higher education policy have resulted in significant funding shortfalls for universities to the tune of billions of dollars.”

Labor’s cuts to student numbers are again making things harder. Even though the legislation imposing caps on numbers is yet to pass, Lloyd said, “the government has already taken a sledgehammer to the international education sector”.

A ministerial directive signed by the former minister for Home Affairs, Clare O’Neil, in December last year had slowed visa grants “to a trickle”. Visa numbers were down 23 per cent, equivalent to almost 60,000 students.

Lloyd said 14,000 jobs in the sector could be lost.

“We saw the harm done to this critical export industry when Scott Morrison told Australia’s international students to ‘go home’,” Lloyd said. “The long-term damage in Anthony Albanese now telling Australia’s international students to ‘stay home’ remains to be seen. Chances are, it won’t be pretty.”

The vice-chancellors and the tertiary education union might have their differences, but on that they agree. They hate this government policy.

It all suggests Bill Shorten has some hard decisions to make. Will he, like Brian Schmidt and George Williams, eschew a million-dollar salary?

Will the union man back the NTEU in its long campaign for more secure work and better treatment from the universities?

Perhaps hardest of all, after 17 years of running the party line, will he side with his new colleagues and call out the government’s policy for the dog they all believe it to be? 

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