International student bust pops VC salary bubble

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It is fair to say that one of the biggest beneficiaries of the long boom in international student fees was Australian university vice-chancellors.

From 2013 to 2019, aggregate fees from international students soared 133%, from $6.8 billion to $15.9 billion:

International student fees soared 133% between 2013 and 2019, with most flowing to universities.

Vice-chancellor remuneration also ballooned, with vice-chancellors earning well over $1 million on average in 2019, as illustrated in the table below:

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University vice-chancellors cashed-in on the international student fee boom.

For example, the pro-China vice chancellor of the University of Sydney, Michael Spence, saw his pay soar more than 60% over five years.

The closure of Australia’s international border has obviously seen international student arrivals plummet, as illustrated in the next chart from the ABS:

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International student arrivals have collapsed since Australia’s border was shut in March 2020.

Lower international student numbers obviously means less fees. And this lower fee revenue has forced “a sector-wide ‘reset’ of vice-chancellor pay packets”. According to The Australian:

  • University of Sydney’s new vice-chancellor, Mark Scott, will take a 40% pay cut compared to his the $1.6 million earned by predecessor Michael Spence.
  • Adelaide University’s new vice-chancellor, Peter Hoj, will be paid less than the $1.1 million his predecessor Peter Rathjen received.
  • Australian National University (10% cut), La Trobe University (20% cut) and Queensland University of Technology (10% cut) have also sliced vice-chancellor pay.
  • However, Monash University vice-chancellor Margaret Gardner and Melbourne University vice-chancellor Duncan Maskell will return to their 2019 salaries of $1.3 million this year.
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National Tertiary Education Union (NTEU) president Alison Barnes still believes these salaries are far too high and out of touch with university staff and the broader community:

“It’s staggering you can have vice-chancellors on more than $1m when their workers have ¬ little employment benefits, can only take modest holidays, and many have lost their jobs during the pandemic… It’s incredibly tone deaf.”

The NTEU makes a fair point. The extraordinary rise in vice-chancellor pay came off the back of gutted entry and teaching standards to facilitate the boom in international students.

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This is reflected by the ratio of students to academic staff soaring across Australia’s universities:

The number of students to academic staff soared during the international student boom.

Domestic students were been forced to carry Non-English Speaking Background students via group assignments, thereby acting like unpaid tutors to international students, cross-subsidising their marks and ensuring they pass.

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Our universities also allowed Chinese influence to run rampant, threatening both free speech and free thinking.

Australia’s universities are supposed to be ‘charitable organisations’. Yet the degree-factories they run, which rely on funneling huge numbers of international and domestic students through cookie-cutter courses, are more reflective of the very worst profit maximising corporations.

This system that enables vice-chancellors to become millionaires by debasing standards and running low quality degree mills for maximum profit must be reined in. Our universities must return to ‘higher learning’, not ‘higher earning’.

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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.