Australian v-cs are also on a sticky wicket over pay

Followers of cricket will be used to seeing Australia thrashing the Poms. This year is no exception. But there is another newsworthy sphere in which Australia leaves the UK far behind: vice-chancellors’ pay.

For all the opprobrium the £400,000-plus salaries of UK higher education’s top earners have attracted recently, the UK’s sectoral average is relatively low by international standards. If there truly is a global market in university leaders (and there is certainly some movement between the UK and Australia), the UK seems likely to lose out if pay is the main attraction of a v-c’s post.

According to a recent analysis of university leaders’ average salaries by Australia’s National Tertiary Education Union, UK levels in 2014-15 were just 58 per cent of those in Australia and 70 per cent of those in US public universities – but 45 per cent more than those in New Zealand and 65 per cent more than those in Canada.

The remuneration of continuing Australian v-cs is also, as in the UK, outstripping the rise of standard academic pay. It rose by 6.7 per cent from 2014 to 2015, according to the NTEU: more than twice the increase in average academic pay. A 2013 analysis by Timothy Devinney and Grahame Dowling also suggests that Australian v-cs earn a greater multiple of the salary of full professors: 4.7 in 2010-11, compared with 3.9 for the top 100 UK v-cs.

Successive Australian governments have cajoled universities to become more businesslike. In 1995, ministers commissioned a review to show universities how to adopt business management practices; at that time, Australian university chancellors tended to be judges, who reinforced in their governing councils and their universities generally a respect for tradition and due process.

Australian universities have responded to the prompts, at least partly. Now only 5 per cent of their chancellors are lawyers. More than half are business executives, who have brought to their councils business practices, including commercial-level remuneration of “senior executives”. Typically, councils have a senior staff remuneration committee, which engages a pay consultant to “benchmark” senior pay rates among universities, public bodies and private companies.

But v-cs seem to be a Veblen good, demand for whom increases as their price goes up. Many universities want to signal that their leaders – and, by extension, the institutions themselves – are of above-average quality, but the statistical impossibility for all v-cs to be paid more than average entails that that average is ratcheted up more than would be supported by standard measures of size, performance and complexity.

The result is that the Australian public now believes the ivory tower to be gold-plated. There are daily press stories making invidious comparisons, such as the fact that Australian v-cs earn, on average, 63 per cent more than the prime minister. Students complain that this is the reason for their high tuition fees; academics calculate the amounts that could be redirected to their preferred priorities.

The government has joined the chorus of condemnation. After having claimed that universities were underfunded and having proposed in the 2014 budget to uncap fees, ministers are now using high v-c pay to claim that universities are wasting their funds and can easily bear the 5 per cent cut it now wants to impose.

In Canada, the Ontario provincial government imposes two disciplines against bidding up the pay of senior executives in public bodies. It requires the “broader public service”, including universities, to comply with an executive compensation framework. It also requires organisations that receive public funding to publish annually a “sunshine list”, which includes the names, positions, salaries and benefits of employees paid C$100,000 (£60,000) or more. For universities, this includes most full professors, as well as more senior staff.

But these measures do little to reduce outrage from staff, students and the public. In Ontario too there are the same claims of excess, undue secrecy and mutual self-interest, similarly ascribed to greed, remoteness and the public sector’s lazy expropriation from taxpayers.

It is interesting to note that some 30 presidents of private not-for-profit US universities take token or no pay, consistent with a vow of poverty. Now there’s a thought.

Gavin Moodie is adjunct professor of education at RMIT University, Melbourne, and the University of Toronto.