Demand-driven uni delivers pay dirt for vice-chancellors

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By Leith van Onselen

I have complained previously that Australia’s universities have turned into ‘degree factories’, whereby they teach as many students as possible to accumulate Commonwealth government funding through HELP/HECS debts. At the same time, quality of teaching, and students’ ability to secure subsequent employment, remain distant priorities.

This view is evidenced by the escalation of total outstanding HELP loans, much of which will never be repaid, putting increasing pressures on the federal Budget:

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As well as the dramatic lowering of university entrance scores, suggesting that every person and their dog can now get a degree, devaluing their worth.

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Indeed, the Department of Employment’s latest skills shortages report showed there were a record 1 million domestic students enrolled in a bachelor degree:

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However, bachelor degree graduate employment outcomes are falling and are at “historically low levels”:

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So there are problems with Australia’s demand-driven university system, which has grown in cost but is delivering poorer outcomes.

There is, however, one segment of society that has benefited greatly from the uncapping of university places in 2009, which led to a $2.8 billion taxpayer-funded bonanza for universities: vice chancellors. As reported in The Australian earlier this week (here and here), vice chancellors have seen their salaries balloon since the demand-driven university system was implemented, with nine now earning more than $1 million per year:

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Nine vice-chancellors earned more than $1 million each last year, with University of Sydney chief Michael Spence topping the list with a salary package of $1,385,000. [Dr Spence’s] salary package has increased by more than 60 per cent since 2010 when he earned $849,000…

Overall, the average pay for the heads of Australia’s public universities was $873,571 last year, up $30,000 on 2014.

Only three vice-chancellors had packages of less than $600,000…

“In my judgment, having a university vice-chancellor paid more than the head of a major budget area in government … ­appears problematic,” [Remuneration expert John Egan] said…

Compared with British vice-chancellors, Australian university heads are on a good wicket. An analysis by Times Higher Education reveals that Oxford’s Andrew Hamilton received, £462,000 ($799,000) in 2014-15, including pension, less than 21 of his Australian colleagues. Leszek Borysiewicz of Cambridge received just $597,000, slightly more than Scott Bowman from Central Queensland University but less than Jan Thomas from the University of Southern Queensland.

Nice work if you can get it!

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.