For more information please visit our Permissions help page. Earlier, we noted that agency theory posits that principals and managerial agents both seek to maximise their own financial position at the expense of the other (Ross, Citation1973). In 2018-19 vice-chancellors received nearly 350,000 (A$635,000) on average. The only thing on its research agenda is commercialisation, which, if we are honest, is never going to fill the coffers that have been emptied by absent international students. Help using this website - Accessibility statement, negotiated a salary that was $300,000 less than his predecessor, University Foreign Interference Taskforce. Agency theory casts owners as principals and managers as their agents, with both seeking to maximise their own financial position at the expense of the other (Ross, Citation1973). Credit: Photo: Chris Hopkins. Pay for the averageadministrator also rose by 2.4 per cent to about A$77,200, abouta 12th of a vice-chancellors remuneration. The 4.5% comprises the incremental increases originally scheduled to occur in November 2020 and November 2021 of 2% and 2.5% respectively in its Enterprise Agreements negotiated in 2019, but which were paused and deferred until 31 January 2022 by . It will be hard for an incoming Labor government not to put the screws on those universities that made money while laying off staff.. Brian Schmidt, the worlds only Nobel Laureate to head a university, was Australias lowest paid vice-chancellor in 2020 pushing his earnings to nearly half the sector average. * sharing experiences of implementation and ongoing refinement of governance and reporting. 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. In both Australia and the UK, VCs remuneration is determined by a remuneration committee of the council for each university. The Australian National Tertiary Education Union (NTEU) argued that Australian VCs were the highest paid in the world (Kniest, Citation2017). When he became vice-chancellor, he negotiated a salary that was $300,000 less than his predecessor making him the second-lowest-paid vice-chancellor in the country, despite the eminence of his institution. The balance of internal power shifted away from academic senates to university councils which became smaller and focused on strategic and financial matters (Rowlands, Citation2017). Core to that process has been the transition of vice-chancellors from being first among equals in academic communities to entrepreneurial chief executive officers of quasi-corporations. New governance arrangements triggered the trend and might be needed to rein it in. Schmidt is garrulous; his Montana drawl tamed by 30 years in Australia. That power is expressed through ANUs seven deans. The couple tied the knot in 1992. Executives get paid more than their work is worth, but less than the cost shareholders would incur in more closely monitoring them and executives are freed up to act entrepreneurially. Australian National University vice-chancellor Professor Brian Schmidt. /XObject 41 0 R Professor Schmidt earned $560,000 in 2020 after giving himself a $90,000 pay cut on 2019, according to information obtained by The Australian Financial Review. /Parent 2 0 R Mr Norton said that it was ironic that vice-chancellor salaries attracted more criticism in the UK than Australia. /ExtGState 40 0 R Former Victoria University vice-chancellor Peter Dawkins, who stepped down this year, received a pay rise of more than $100,000 and had a full salary of $849,000 last year, but he also donated his increase to a fund for students in hardship. Salaries are paid in contractual exchange for work undertaken and are a cost of production. We then review the existing literature on VCs remuneration, and describe the techniques utilised that drive increases. We argue that this area requires urgent governance reform. The Australian market is way out of whack with the rest of the world but fundamentally the market does work. /Title (Australian Public Universities Vice-Chancellor Salaries and Workforce Casualisation: Ethical Tension?) It also gets him an invitation to Davos every year, which he accepts. Governments could, for instance, set fixed ratios between VCs remuneration and mean academic salaries. The Morning Edition newsletter is our guide to the days most important and interesting stories, analysis and insights. /Type /Pages I do this job out of passion, right? Professor Schmidt said. Licensed to the public under Creative Commons Creative Commons Attribution 4.0 International License license. During our lunch, Schmidt tells me more than half a dozen times that being a vice-chancellor is hard, really hard. Richard Adams Education editor. 14 0 obj Second, principals can align agents interests to their own using remuneration managers will seek to maximise shareholder wealth if they share in it (Jensen & Meckling, Citation1976). /Contents 56 0 R The authors gratefully acknowledge the assistance to access published historical documents provided by a number of Australian universities and access to archival records provided by the National Tertiary Education Union of Australia. Teaching went online. . /Type /Page Further, there is a demonstrated link between these increases and formulaic pay-setting mechanisms such as benchmarking (Gschwandtner & McManus, Citation2018). My boss the people who hire and fire me is technically the council. 3 Approximately half of the chancellors of Australian university councils are remunerated (as are some council members) but in general the levels of remuneration are modest and do not compare with the fees paid to company directors. There were 22 changes to vice-chancellor appointments in these three years. Lyn Mills. 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. Rent-seeking points to a significant breakdown in university governance. Chasing jobs around the globe, Schmidt applied for and was rejected for a post-doctoral fellowship at ANUs Mount Stromlo three times before finally being made an offer. I raised my hand before all of this and lowered my intake, right? Come harvesting day, Schmidt brings together what is probably the highest IQ grape-picking team in the universe, with more than 100 professors, students, colleagues and friends snipping the ripe grapes from their vines. If winning the Nobel has not changed him as a person, has being a vice-chancellor? /Subtype /XML When universities are challenged about these salary packages, they say vice-chancellors run complex businesses in competitive global markets, and their salaries reflect the work done and results achieved. VCs were to serve as chief executive officers of universities that were, in turn, expected to be more business-like and entrepreneurial (Harman & Treadgold, Citation2007). /ModDate (D:20220220173829+01'00') /Resources << We suggest this is precisely what has occurred in relation to VC remuneration. This included a number of institutions outside the top 200 global rankings (only the Australian National University, Melbourne, Sydney, NSW and Monash are in the top 100). The NTEU said that academic salary increases had ranged from 4.5 per cent at one university to zero at five others, with the timing of enterprise negotiations affecting some pay rises. /Contents 43 0 R 5 0 obj Between 20112012 and 20162017 UK VCs remuneration rose by an average of 3.1% a year during which time a 1% pay rise cap applied to academic staff (Hubble & Bolton, Citation2018). It was not debated before the state election and will be reintroduced by Greens MP Robert Simms, who has argued it is inappropriate for vice-chancellors to be paid like multinational corporate CEOs. 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. RMIT University vice-chancellor Martin Bean, who is due to resign this month. Vice-chancellors pay has soared over recent decades (although most accepted pay cuts this year as part of COVID-related savings). I just dont care that much about money. It has been pummeled by hail, flood, fire and a massive cyberattack. 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. Governors do not want to go through the hassle of appointing a new vice-chancellor, so they make sure they give [the existing one] a little more each year. The salary gap between Australia's university bosses and their staff has widened after solid pay rises launched more vice-chancellors into the million-dollar club. Research demonstrates rapid and relatively recent increases in VCs remuneration with little connection between pay and performance (Bachan & Reilly, Citation2015; Johnes & Virmani, Citation2020). /Type /Page These are generally dismissed as being too expensive and an unnecessary imposition on universities as self-governing and autonomous entities. He was fourth on the list, but fortunately for Schmidt, the three other contenders received offers elsewhere. 3536). Im just not interested.. /Resources << They might even prefer to pay their vice-chancellor over the odds because it makes their university look more prestigious. 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. The NTEU said that the average starting pay for a senior lecturer had risen 2.4 per cent to about A$117,300. /Type /Page University of Melbourne vice-chancellor Duncan Maskell is due to become Australias highest-paid vice-chancellor from next month.Credit: Justin McManus. University councils are de jure endogenous principals, but are weak in agency terms because they are not legal owners, are financially disinterested (i.e., they are not shareholders), and have empowered VCs to act entrepreneurially. Professionals were seen as unaccountable and self-serving, making the self-governing universities with significant public funding an obvious target (McNay, Citation1999). Its where they raised their two children and planted 1.1 hectares of pinot grapes. Those highlighted affects year-to-year remuneration comparisons, assumption that the years highest remunerated officer was the VC. And I save a lot, even on my current salary.. What would have happened to that ground-breaking research if he hadnt got the job? Figures are just starting to be published showing the ratio of VC-to-staff average pay at each UK institution. Schmidt calculated his initial vice-chancellors salary which was $150,000 more than his 2020 pay packet by benchmarking himself against international equivalents and the professoriate at ANU. The escalation of VC remuneration in this context suggests rent-taking. * report annually (Q2) each year on adoption of the UCC code. /Resources << Gordon, in the meantime, applied for six jobs and was offered all of them. It was a sophisticated city in the middle of nowhere.. Young man, what are you doing? she asked me. Benchmarking is the setting of remuneration by reference to analogous organisations/job roles an attempt to set a self-fulfilling market for pay (DiPrete et al., Citation2010). /Type /Page In response, the federal government stipulated that any university that exceeded the recommended VC remuneration levels would have that amount deducted from their recurrent government grant. To the extent that salaries are not justifiable by reference to performance, they can be said to constitute rent. << The second root cause of the over-compensation of VCs in both Australia and the UK, as we have highlighted, is that many officially sit on their own universities remuneration committees. Warm Regards, Jenn Stringer, Associate Vice Chancellor for IT and Chief Information Officer. But in reality its the deans. This number represents the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users. 17 0 obj You dont create Rome in a day. Despite government promises of greater accountability (Dodd, Citation2017), little appears to change. 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. For example, in 2018, the Australian Catholic Universitys VC was paid AUD $1,325,000 [726,633,000], exceeding the salaries at some more prestigious universities. endobj His family moved around as his father, Dana, pursued an education in fisheries and aquatic biology. You might also be interested in the following pages: List of Vice-Chancellor Pay & Salary Packages, Revenues and Surpluses At Australian Universities, Historical Development of Australian University Sector, ERA 2018 Outcomes Research Rankings List, University Bachelor Degree Completion Rates, QS Employability Rankings Australian Universities, ARWU World Rankings of Australian Universities. It should oversee and administer appropriate and transparent remuneration of vice-chancellors and senior staff. 2021: $1.213m. There is a voluble and cyclical public debate in the UK and Australia regarding the levels of vice chancellorsFootnote1 (VCs) remuneration at publicly funded universities (Adams & Gamperl, Citation2018; Heffernan, Citation2019; Loussikian, Citation2018). /Parent 2 0 R Its a poke bowl hole-in-the-wall and, despite the wintry chill in the air, we sit outside on a metal bench at a tiny table that accommodates our food (two poke party bowls) and drinks (a mineral water and a kombucha) and not much else. 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. 12 0 obj In. There is evidence that remuneration setting tools, such as remuneration tournaments and benchmarking, are influential in driving up remuneration. Its easy to be flippant about it, he says. This has weakened collegiality and strengthened hierarchical managerial control by VCs and, to a lesser extent, university councils (governing bodies) (Trakman, Citation2008). "Australia is not the colonies any more. For instance, a vice-chancellor may start in May and have eight months of remuneration recorded. Australia's 38 public university vice-chancellors were paid an average $890,000 in 2016, and 12 earned more than $1 million. The union said that a typical university chief would earn the equivalent of a professional employees annual pay rise by lunchtime in a single day, and a senior lecturers salary increase by afternoon tea. In agency terms, these findings beg the question as to whether information and power asymmetries within universities are influencing the setting of remuneration as, in agency terms, VCs are achieving unjustifiably high remuneration. They generate strategic direction and that equals value creation," said Professor Smith who is the head of the Department of Applied Finance at Macquarie University. In January, we were delighted to welcome the Hon Julie Bishop to our University's most senior office: the first woman appointed Chancellor of ANU. In particular, governing councils and, exogenously, governments came to assume principal-like roles with VCs as their agents (Kivist, Citation2008).