Last year, he donated his $14,000 long-service leave payment to a staff welfare fund. No one was going to care.. 3 Purpose and Objectives. However, that literature does not address, because the methodology is unsuited, the governance factors that determine the allocation of remuneration. Professor Scott told a podcast this week that $400 million of the $1 billion surplus was the result of spectacular investment earnings. 2022-08-01 /Rotate 0 /Parent 2 0 R There are a small number of parallel studies of universities. /Type /Metadata Australia's 38 public university vice-chancellors were paid an average $890,000 in 2016, and 12 earned more than $1 million. But the comparison is wrong because vice-chancellors run public institutions, students are different to employees and there is little evidence any VCs have created new strategic directions in the face of the hit to their income during COVID-19. Savage cuts to university budgets from 1981 led the non-statutory Committee of Vice-Chancellors and Principals (now Universities UK) to establish the Jarratt Committee with Sir Adrian Cadbury, a significant figure in corporate governance reform, as a member. . Your name Credit: Photo: Chris Hopkins. I think a lot about how to get my meaning out without becoming a headline.. Over the past 30 years, Australian and British universities have been marketised, emulating private-sector for-profit organisations. /Font 46 0 R /Type /Catalog It had around 175,000 people. The Tribunal (Citation1974) found they were well paid in relation to equivalent roles elsewhere in society, a view unpopular with the then Australian Vice-Chancellors Committee and some individual VCs who protested that the tribunal risked undermining universities independence and should be abolished (Academic Salaries Tribunal, Citation1974). /Parent 2 0 R Policies and Procedures Library - The University of Queensland, Australia Many bosses lead from the front, ceding 20-plus per cent of their pay to help plug pandemic shortfalls . 8 0 obj One of the reasons why the business people on Australian universities' senior pay committees 'have a very unrealistic sense of what salaries should be in the higher education sector' is because Australian business bosses' pay has also increased disproportionately to that of their workers and that of their international counterparts. But what is the incentive for me to do this? "What strategic options have they been generating during COVID, apart from just laying people off? In real market businesses, CEOs hold a lot of power, including the power to enrich themselves at the cost of the dividends paid to shareholders. >> Our universities were nowhere near as loud as Australian ones in claiming poverty during COVID-19 and did not resort to mass lay-offs either, Mr Usher said. Benchmarking therefore casts an aura of market-based objectivity, but is essentially self-fulfilling (Essaji & Horton, Citation2009). That is, university councils are not sufficiently empowered or self-interested in the financial affairs of the university to act as effective principals none of their actions have the potential to maximise their own financial positionFootnote3 at the expense of vice-chancellors as agents and hence they are unable to exercise effective control as governors with respect to levels of VC remuneration. /ProcSet [/PDF /Text] [2] He is currently the President and Provost of University College London. The decline of public sector funding has contributed to a process of privatisation of the income stream, and corporatisation of the governance mechanisms and Im a beneficiary of that process, as deputy dean.. endobj His predecessor, Michael Spence, earned more than $1.6 million in 2019, which included rent-free accommodation in a Victorian mansion in Sydneys Woollahra that has since been sold for $9 million. Please prove you are human by selecting the Car. 2022: $1.195m. As part of Deakin's COVID-19 response Professor Martin chose not to seek any portion of his contractual performance incentives for 2020. 2729). /ProcSet [/PDF /ImageC /Text] /Type /Page 2. But, in Australia and the UK, governments have opted for a hands-off approach, urging universities to behave like free-market organisations and not interfering in their internal affairs. But the big difference is, if the CEOs of big companies are doing a good job strategically and bringing in billions of dollars, then shareholders are happy if they get a couple of million, Professor Smith said. Register a free Taylor & Francis Online account today to boost your research and gain these benefits: Paying the piper: the governance of vice-chancellors remuneration in Australian and UK universities, a New Social Research, University of Tampere, Tampere, Finland, b School of Education, Deakin University, Geelong, Australia, Robbins remembered and dismembered, contextualising the anniversary, Department of Education Science and Training. /Resources << Through Freedom of Information Act requests, the UK University and College Union found that, in 2018, 95% of VCs were either members of the remuneration committee that set their own salary or were entitled to attend meetings (Weale, Citation2018). Schmidts motivation was that by keeping ANU small and elite, a high-quality education and experience could be guaranteed for all students, international and domestic. /MediaBox [0 0 595 842] NTEU president Jeannie Rea said that vice-chancellors rising pay packets contrasted with a constant decline in ongoing decent jobs at universities. As such, they dont have controlling owners/shareholders. Vice-chancellors take a pay cut but three remain in $1m club - The Age The NTEU said that the average starting pay for a senior lecturer had risen 2.4 per cent to about A$117,300. First, principals may institute costly governance systems that delimit, control and monitor agents actions. In 1975, our research suggests, vice-chancellors at elite Australian research-intensive universities received about 2.9 times the pay of regular lecturers on Level B the second-lowest and most numerous academic grade. I do this job out of passion, right? Professor Schmidt said. << Managers remuneration, therefore, reflects the cost of ensuring that they can be trusted, not the economic value of their contribution. That power is expressed through ANUs seven deans. Source: Boden & Rowlands (2020). By 2020, Australia had 39 self-governing and self-owning publicly funded universities. Rent-seeking behaviour is where actors extract a greater share of remuneration than is economically justified in terms of work undertaken or risks endured; it is a consequence of having unchecked power (Krueger, Citation1974). We argue that this area requires urgent governance reform. In 2019, it posted a $300 million net surplus. These bands are set by the owners of public universities, that is, state and territory governments. Until the 1990s, academics were the primary collegial decision makers and VCs were primus inter pares (Marginson & Considine, Citation2000; Shattock, Citation2017). /ExtGState 18 0 R /Kids [5 0 R 6 0 R 7 0 R 8 0 R 9 0 R 10 0 R 11 0 R 12 0 R 13 0 R 14 0 R There is evidence from Australia and from the UK, that the coronavirus pandemic has drawn attention to and exerted some mitigating effects on vice-chancellors remuneration in 2020, with some having taken remuneration cuts in the face of financial exigencies facing their universities (Ross, Citation2020a). University of Melbourne vice-chancellor Duncan Maskell is due to become Australias highest-paid vice-chancellor from next month.Credit: Justin McManus. /Font 42 0 R That was pretty bad. application/pdf (link is external) conference on June 18. Murray also recommended that universities be funded by specifically targeted recurrent triennial grants from the federal government, distributed via the states. After a short description of remuneration-setting mechanisms, we argue in the conclusion that part of VCs remuneration can be argued to be rent rather than salary, and make the case for governance reform. 10.32725/det.2021.023 2022-02-20T17:38:29+01:00 13 0 obj In 2018-19 vice-chancellors received nearly 350,000 (A$635,000) on average. #2 Submitted by T. on September 2, 2018 - 5:53pm. >> >> He said Sydney was arguably the highest paying university in Australia in what is on average the highest paying university system in the world. "Dr Spence is going to get half of what he does now, in a far more prestigious university, and the UCL salary is actually worldwide competitive," he said. Despite finding the job really hard, Brian Schmidt, the only Nobel Laureate to head an Australian university, doesnt care about being paid as much as his peers. The estimated total pay for a Assistant Vice Chancellor at Vanderbilt University is $148,517 per year. These reforms have since deepened and accelerated, especially in England where deregulation and student fees have heralded significant competition and marketisation. Your email It was a sophisticated city in the middle of nowhere.. The UCC should act on its code. Soaring vice-chancellors' salaries in Australia and the UK reflect a "clear failure of university governance" that demands political intervention, researchers say. 12 0 obj There is evidence that such deductions were subsequently made on a number of occasions (Academic Salaries Tribunal, Citation1985). But $1 billion is an astronomical amount of money; it is more than the entire revenue of most universities, said Andrew Norton from the Centre for Social Research and Methods at the Australian National University. Top 10 Vice-Chancellor Salary Packages; Rank Uni VC Name Salary Package ($) 1: University of Melbourne: Glyn Davis* 1,589,999: 2: University of Sydney: Michael Spence: . academic workforce casualization Just a few months earlier he had met her mother, Daphne who was at Harvard visiting her daughter when she came across Schmidt making strudel on a bedsheet in the residential halls kitchen. /Rotate 0 /ExtGState 40 0 R Professor Shields said that many Australian universities were now only nominally government institutions, with the bulk of their money coming from student fees and other private sources. In 2020, the president of the world's top university, Harvard, received only $60,000 more than Australia's then best-paid vice-chancellor, the University of Sydney's Michael Spence. Page updated 15 Price 2020 . Australian Public Universities Vice-Chancellor Salaries and Workforce Casualisation: Ethical Tension? /ProcSet [/PDF /Text] /Contents 33 0 R It was the biggest town I had ever lived in. This is unsurprising - in Australia their average pay at the 37 public universities topped A$1 million in 2019. Meric Gertler, the head of Canadas top-rated University of Toronto (global ranking 22) earns just a third the package given to Duncan Maskell, the head of Australias top-ranked university, Melbourne (33). You might also be interested in the following pages: Its where they raised their two children and planted 1.1 hectares of pinot grapes. This shift chimed with the managerial, enterprise governance that has been in place in Australian universities since the 1990s (Marginson & Considine, Citation2000). /Parent 2 0 R /ExtGState 24 0 R University councils, it argued, should assert their power vis-a-vis collegial senates. Salary. This placed considerable day-to-day executive power in the hands of VCs council members being lay, external, and overwhelmingly non-remunerated volunteers with relatively low organisational time commitments and no personal financial interests in the organisation. Bachan and Reilly (Citation2015) found that UK elite university VCs tended to be paid more than their less prestigious counterparts. The problem is council members dont have the same financial self-interest as shareholders the vice-chancellors pay does not reduce their own profits. >> He donated $100,000 of his share in the 10 million Swedish krona (roughly $1.5 million in todays money) Nobel Prize money to a primary school science program the federal government had just defunded. Yet, despite the eye-watering sums, executive pay remains less of a hot topic in Australia than in the UK, where vice-chancellor pay is much lower. Sharp increases from the 1990s corresponded with the lifting of government control over VCs remuneration, the inception of local enterprise bargaining, and a transition from collegial to corporate governance models. https://doi.org/10.32725/det.2021.023 Universities are public institutions funded primarily by fee-paying students and taxpayers. Emeritus Professor James Guthrie AM, Professor of Accounting, Macquarie Business School, Source: 2019-2021 Annual and Financial Reports, Note 1: salary bands were disclosed in annual reports, the high end of the pay has been used for the table. Alex Ellinghausen. University of Melbourne vice-chancellor Duncan Maskell is due to become Australias highest-paid vice-chancellor from next month. Richard Adams Education editor. The only disclosure of vice-chancellors remuneration I found that was not in the financial statements and bands was that of Western Sydney University as follows: Professor Barney Glover AO, Position: Vice-Chancellor and President Total Remuneration Package: $988,380 Period in Position: Full Year, Results: Met all objectives. to get daily updates on what's happening in the world of Australian Higher Education. This caused information asymmetries and shifted the balance of power in managers favour (Balago, Citation2014); managers could no longer be implicitly trusted. A survey of vice-chancellors salaries by AFR Weekend based on available data shows that in 2020 the average pay packet was $900,000, with nine earning in excess of $1 million. /ProcSet [/PDF /ImageC /Text] Vice-chancellors take a pay cut but three remain in $1m club. Vice-Chancellor Salary Packages (Archive 2017) - Australian University The time for the UCC to talk about transparency is over it should act now, given that universities are engaged in enterprise bargaining and have seen significant staff cuts. Thats true at Harvard and Oxford and more so at ANU than any other Australian university.. Research demonstrates rapid and relatively recent increases in VCs remuneration with little connection between pay and performance (Bachan & Reilly, Citation2015; Johnes & Virmani, Citation2020). /Parent 2 0 R VCs remuneration, in contrast, has always been at the discretion of each university with no external controls. Copyright (c) 2021 The author(s). I keep reminding people that a university is not a corporation, says Schmidt. To unpick that, we explored the governance structures of universities. Australia and the UK experience regular annual outrage over vice-chancellors pay. Click here for the Complete List of Vice-Chancellor Pay & Salary Packages At Australian Universities. Crucial to this was recognising the Vice-Chancellor not only as academic leader but also as chief executive of the university (CVCP, Citation1985, para 5.5d). I searched for actual salary disclosures and then disclosures via bands. Now I am being absolutely brutalised by the shock, with no support, despite this being what they want.. List of Australian university leaders - Wikipedia This system persisted until the late 1990s, when it was replaced by decentralised local enterprise bargaining, consistent with more managerialist employment practices (Anderson et al., Citation2002), under which academic salaries were determined by each university. Instead, we show that neither nation is an outlier. The pay of Australias top-earning university leader the University of Sydneys Michael Spence, who is on A$1.4 million was nearly twice that of the UKs best-remunerated vice-chancellor last year, Bath Spa Universitys Christina Slade, ironically an Australian whose 808,000 package included a 429,000 exit payment. Most universities had awarded increases of between 1 per cent and 3.5 per cent, it said. There is a long-running cyclical public debate in the UK and Australia about the level of vice-chancellors remuneration in publicly funded universities. Lyn Mills. 20 0 obj Table 1 expresses the ratio of VCs salaries to the starting salary for the most junior level teaching and research academics at three Australian universities from 1975 to 2018. /Rotate 0 If I was to be paid three times more than the next best-paid person at ANU, then I am basically saying, I am different to you; I am not of your ilk, he says. Copyright 20102023, The Conversation Media Group Ltd. An exception to the rule, Australian National Universitys Brian Schmidt is a Nobel laureate and vice-chancellor of one of the countrys most prestigious universities, but was the second-lowest-paid on about $650,000 in 2019. Institutional accounts released so far show that 11 vice-chancellors earned more than A$1 million last year, down from 15 in 2019. Permission is granted subject to the terms of the License under which the work was published. 130-141 As a result of this flawed governance framework, universities usually allow vice-chancellors to be members of, or at least attend, the remuneration committees that set their pay. Universities were expressly excluded from JobKeeper, with the rules changed three times to keep them out. When very small institutions with an income of less than 30 million a year [AUD $54,442,074] are excluded, the ratio of total mean VC remuneration to total other mean staff remuneration in the English universities was 8.2 (data for Scotland and Wales is not available for this year) (OfS, Citation2020). /Length 62 0 R /ModDate (D:20220220173829+01'00') Teaching went online. You'll get full access to our website, print and digital editions. Licensed to the public under Creative Commons Creative Commons Attribution 4.0 International License license. Rent-seeking points to a significant breakdown in university governance. Toward a stewardship theory of management, Compensation benchmarking, leapfrogs, and the surge in executive pay, CEO governance and shareholder returns: Agency theory or stewardship theory, Governing the twenty-first century university: A view from the bridge, Silent escalation: Salaries of senior university administrators in Ontario, 19962006, Changing patterns of governance for Australian universities, Reporting on vice-chancellor salaries in Australias and the United Kingdoms media in the wake of strikes, cuts and falling performance, Theory of the firm: Managerial behavior, agency costs and ownership structure, Chief executive pay in UK higher education: The role of university performance, An assessment of agency theory as a framework for the governmentuniversity relationship, Australian universities top world rankingsfor VC pay, The political economy of the rent-seeking society, Rank order tournaments as optimum labor contracts, Changing cultures in UK higher education: The state as corporate market bureaucracy and the emergent academic enterprises, Executive compensation as a corporate governance problem, Agency theory: Review of theory and evidence on problems and perspectives, The economic theory of agency: The principal's problem, Pay developments in Britain and Germany: Collective bargaining, benchmarking, and mimetic wages, University governance in flux. /Font 32 0 R Julie's exceptional leadership, unique perspectives and range of experiences have been invaluable Of the 20 highest-paid vice-chancellors in 2017-18, London Business School had the highest ratio at 12.8 times average staff pay, with the 20th-placed University of Reading having a ratio of 9.2. If universities are indeed publicly owned and operate in the public interest, then greater transparency and accountability about vice-chancellors salaries are necessary. Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine. /ExtGState 48 0 R /Resources << Universities were penalised financially if these guidelines were breached. /ProcSet [/PDF /Text] Many universities publicly justify the remuneration levels of their VCs on the basis that the salaries are independently determined by these committees following rigorous external benchmarking exercises. "A CEO offers strategic direction. Im spinning out companies, but it takes time.