Chapter 3 - University Governance and management issues
It is very strange that a Liberal Government prefers
‘bureaucratic central planning’ with its attendant rigidities over a flexible,
more devolved, mechanism which would be more responsive to market forces and
Professor Gavin Brown,
Vice-Chancellor, University of Sydney.
23.1 This chapter
deals with elements of the Backing Australia’s Future policy on
governance and the interface between the Government and the universities at
both the ministerial and the administrative levels. It also describes the
effect of policy transformation into legislation and the reaction of higher
23.2 One of the most
disturbing and completely unforeseen provisions in the Higher Education Support
Bill is the extent of centralised control over universities which the Minister
has proposed to operate through the Department of Education, Science and
Training. As noted in the introductory chapter, there is some irony in the
observation of an inverse relationship between Commonwealth funding and micro
management of university operations: as the funding is reduced, the supervisory
intrusion increases. The reasons for this will become evident through this
23.3 The extent to
which the vice-chancellors were caught by surprise at this development was most
forcefully enunciated in evidence to the committee from Professor Alan Gilbert,
Vice-Chancellor of the University of Melbourne, and most outspokenly, a strong
supporter of the deregulatory policy thrust which he had erroneously believed
to be central to Government policy. His sense of betrayal is well captured in
Because I regard the package at a policy level as a once in a
lifetime opportunity for Australian higher education, it is with the deepest
regret and with considerable astonishment that I have witnessed the gradual
emergence of the guidelines that are being developed by DEST to implement the
provisions of the Higher Education Support Bill 2003 should it become law.
Unless there is some rethinking of these various guidelines—not all of which we
have seen of course—which will impose a degree of bureaucratic complexity and
micromanagement on Australian universities that is without precedent, the
essential dynamism of the reforms will be lost. The interventionist regime that
would be created by the IR guidelines is but a single example of
across-the-board bureaucracy run riot. By not exercising enough control over
the development of these guidelines I believe the government is in danger of
losing control of its own agenda. It was launched with the minister assuring Australia’s
universities that the package would reduce the amount of red tape bedevilling
the system. If that is, as I hope and believe, still the government’s aim, then
the higher education bureaucracy has let it down completely.
Gilbert is understandably aggrieved at ‘the shifting of the goal posts’, to use
Professor Deryck Schreuder’s expression, and the committee can only speculate
as to how the situation came about that the principal supporters of the
legislation, the vice-chancellors, were so wrong-footed. It can only speculate
also on why the Government should choose to put off-side those who are its
principal supporters. There is an inference in Professor Gilbert’s evidence
that the Minister has allowed DEST to run the legislative agenda without
sufficient ministerial direction. If this is the case, the Government is paying
the price of its ineptitude, with unfortunate consequences for the
universities, as Professor Gilbert has argued.
23.5 Professor Gilbert’s
comments followed similar ideas expressed by the Vice-Chancellor of the University
of Tasmania, Professor Daryl Le Grew, in one of those appearances before the
committee which illustrated how much stronger and more focused opposition to
parts of the bill became once its details were known. Professor Le Grew told
the committee of the care taken by the university in shaping course offerings
to meet state and national needs, all the while maintaining the closest links
with business, the professions and government agencies. The vice-chancellor
stated that the university expected to negotiate with the Government over
courses and profiles, and he gave no indication to the committee that there had
so far been any difficulties arising from this. But Professor Le Grew went on
What is a problem is the way in which the legislation is shaped.
It gives potential for an overemphasis on control and for intrusion on the
integrity and autonomy of the university. Remember, we have 1,000 years of
history built on the charter of Bologna—something that all governments in the
developed world have complied with—which guarantees universities
internationally a sense of autonomy. We are reasonable about the way in which
all of these things can be shaped in negotiation between the government and the
university; we recognise the political realities. But there are limits, and we
think that what is built into the legislation in terms of developing the
potential to control us down to the course level is going too far. We have no
problem with a negotiation about broad profile and direction, but we cannot
accept absolute control at the course level.
23.6 It is hard to
imagine that the Government has been much influenced in its policy making by the
Charter of Bologna. That is one interesting aspect of the problem. While
vice-chancellors head institutions that are dedicated to the furtherance of
knowledge and reason, these are not always valued by those who make public
policy. Ramming square pegs into round holes is a recognised political
The sub-text of micromanagement policy
23.7 In its
governance and management issues paper the Government committed itself to
reducing bureaucratic intervention in the management of universities. It stated
that the extent to which this was possible depended on the confidence that it
had, first, in university governance arrangements, and second in regard to
whether agreements can be reached on outcome measures to replace unnecessary
emphasis on ‘process and inputs’.
The committee observes, that in the first of these conditions to do with
university governance (which it deals with in a later section in this chapter),
there is no connection that can be identified in the Higher Education Support
Bill between the governance protocols and the reduction of red tape. As to the
second condition, the bill sets out in explicit detail the increased and
onerous obligations on university and makes no mention of how the arrangements
legislated for may be altered by negotiation. The statement of Government
policy in the issues paper has been shown to be both fatuous and irrelevant.
23.8 Professor Gavin Brown,
one of the majority of vice-chancellors disappointed with the translation of Backing
Australia’s Future into legislation, described the potential of the
legislation to frustrate the aspirational outcomes that should arise from the
making of good higher education policy. As his submission states:
Inasmuch as the intent of the package is to foster diversity of
mission and to increase opportunities for universities to improve the quality
and range of their activities, we endorse that approach, but the reality,
translated through bureaucratic prescription and complexity, could easily
become the opposite. For each of the measures in the package, the touchstone
should be ‘Does this improve flexibility, does it empower institutions to
improve their performance, does it enrich the learning environment for students
and does it make local policy-setting and management simpler and more effective?’
In too many cases, the rules and implementation are either too clumsy and
restrictive or mysterious and non-transparent. Good intentions will produce
only wasted opportunities if Dr Nelson’s commitment to reduce red tape
cannot be honoured.
23.9 What appears
remarkable to the committee is the detail in which the extent of
micromanagement is explicitly stated in the legislation. If parts of the bill
read like a standard public service contract, it is only because that is what
it is intended to be, albeit in ‘model contract’ form. DEST officials were
asked by committee members why the word ‘university’ appeared so rarely in the
text of the bill. The response was that not all institutes of higher education
were universities, and that the use of the more generic term ‘higher education
provider’ was much to be preferred. What they might have explained is that the
use of the latter term is much more appropriate given the direction in which
government policy is moving. The Government seeks to redefine the nature of the
relationship between the government and universities.
were once funded on the basis of their being within a sector of public
education and for their contribution to the prosperity, welfare and advancement
of the nation. The radically changed attitudes over the past six years have
seen a diminution of Commonwealth grants to universities, and this is planned
to accelerate. The terminology of Government engagement works along the lines
of the ‘purchaser-provider’ model of funding. Grants formerly made on the basis
of trust now come in the form of purchase orders with more conditions attached.
The committee gains the impression that universities, being institutions of
wisdom and learning rather than of cynicism and cunning, have not yet
accustomed themselves to their changing relations with government.
23.11 This may change
when the Government takes the next logical step of purchasing educational
services from institutions of higher learning which are currently outside the
ring of properly established universities. There are 36 universities and a
handful of small and specialised institutes currently receiving funding. These
are listed as Table A providers at clause 16-15 of the bill. There may be no
good reason, by some lights, why services should not eventually be purchased
from institutions not currently listed on Table A, currently two private
universities and another handful of mainly theological or religious-based
institutions, some currently eligible to enrol PELS recipients. Clause 16-25
gives very wide powers to the Minister to approve ‘a body corporate’ as a
higher education provider. It is more than likely that, in the case of many of
these institutions, there would be minimal objection to micro-management from
DEST if their consolation was an income stream from HECS paying students.
23.12 The committee
notes that the Council of Private Higher Education has called in its submission
to the inquiry for the extension of targeted HECS-liable places to its member
institutes, where they offer the best means of achieving particular public
It does not take too much imagination to see that the micro-management
arrangements, combined with the more active provision for ministerial
discretion will eventually see private higher education institutions (unlikely
to be accepted as ‘universities’) receive Commonwealth funding on the same
basis as universities.
That all clauses in Division 22 of the bill be redrawn in
recognition of the operations of universities as public institutions.
Funding agreements: ministerial
discretion and micro-management
23.13 Under the bill
universities will be under intense pressure maintain rigorous surveillance over
their enrolment numbers and course categories. A brief description of some of
the provisions reveals what vice-chancellors are describing as outrageous
intrusions into areas of student administration.
Guidelines and micro-management
23.14 The committee
has identified the following clauses of the Higher Education Funding Bill and
provides some comment on them. The following points set out, in very detailed
form, would normally not be required in legislation relating to established
universities. The Government obviously believes that a tight rein will need to
be exercised over newer and lesser institutions which are yet to be identified
as private providers. Established public universities should not be subject to
such intensive legislation. The following clauses are defective and/or likely
to cause concern in operation:
- Clause 13–5 provides for Higher Education Provider Guidelines (to
be disallowable instruments) issued by the Minister from time to time and which
will detail ‘quality and accountability requirements’ of institutions. Drafts
of the first set of these Guidelines (apart from IR guidelines) were released
on November 3, 2003. Other guidelines will not be available, in some cases, for
years, presumably when they are required. There is some ambiguity about the use
of Guidelines in the case of this legislation. DEST advised the committee that the
disallowance of Guidelines would not necessarily stop the implementation of
arrangements which are provided for in the Guidelines as there was considered
to be sufficient detail in the bill to guide administrative arrangements.
The question then arises, why is it necessary to make Guidelines at all. This
may result in some interesting correspondence between the Minister and the
Senate Committee on Regulations and Ordinances.
- 16 – 1 This clause states that a higher education provider is any
corporate body approved to receive grants or whose students can receive
scholarships or loans under the Act. The word ‘university’ is rarely used in
the bill. This new catch-all terminology has two main effects:
It emphasises a ‘purchaser-provider’
relationship between the Government as buying agency and institution as
supplying agency, with the purchaser defining what it will (and will not) buy
and the conditions under which it is prepared to buy.
It avoids distinguishing
universities as having particular academic characteristics, and having
statutory identity, or traditions of autonomy, and having characteristics
which, in the public mind, distinguish them from commercial enterprises.
Hence, the framework of the entire
legislation is shaped by the need to protect Government purchasers and student
consumers in a deregulated environment where private providers operate.
- Clause 16–15 Table A providers (those institutions currently
receiving general purpose funding under HEFA) have a particular status under
the HEFA Act. They are deemed to have approval for the purposes of the Act
(16-5.1) and they are exempt from the Tuition Assurance requirements (19-40.1)
because those exemptions are made explicit, all other parts of the Act will
apply to Table A universities.
The quality and accountability requirements
- Clause 19–1 sets out the 5 sets of requirements (financial,
quality, fairness, compliance and fees).
- Clause 19–2 notes that the Act of itself does not compulsorily
impose requirements on institutions; the requirements are conditional on the
institution accepting the Government’s terms of purchase.
- Clause 19–5 does not define the basic requirements: ‘must be
financially viable’ and ‘must be likely to remain financially viable’. The
committee asks whether a university with an operating deficit over, for
instance, two continuous years meet the requirements. What financial
performance measures would an institution have to report against (eg. safety
margin, liabilities; assets) and what would be the benchmarks for acceptable performance?
- Clause 19–10 prescribes the form of financial statements to be
approved by the Commonwealth Minister for Education. No reference is made to
consistency with reporting requirements of states, or the CAC Act. The annual
financial statement must be provided together with an independent audit report
within 4 months of the end of the reporting period. The committee notes that
this may not always be a realistic timeframe, especially when there are
negotiations over possible audit qualifications to statements.
- Clause 19–15 stipulates that the provider must provide ‘an
appropriate level of quality’, but this is not defined. The question arises as
to who will determine what is appropriate and against which criteria. This
appears to be left to ‘a quality auditing body’, defined in the dictionary
attached to the bill as ‘a body listed in the Higher Education Provider
Guidelines’ as such a body). For universities this is likely to mean the AUQA.
But AUQA currently operates as a quality assurance verifying agency;
that is, AUQA assesses the extent to which universities deliver what they claim
to deliver and apply the checks they say they apply. The universities, not
AUQA, define ‘appropriate level of quality’ according to their missions. The
bill suggests external standards may be applied.
- Clause 19–20 (c) provides that the Minister will have the power
to direct a university to comply with any requirement the Minister imposes in
order to implement the recommendations of a quality auditing body. This
represents a significant shift from current practice, where the responsibility
for responding to the findings and recommendations of AUQA rests with the
university itself. It would be possible for a university to be required to
adopt an audit recommendation that it may have grounds for rejecting.
- Clause 19–25 requires a university to do all things required by a
quality auditing body and pay all costs of an audit. There is no provision for
a university to challenge the reasonableness of the audit body’s proposals.
- Clause 19–35 (1) concerns benefits and opportunities for
students. While fairness of treatment is laudable the meaning of the sub-clause
is unclear. What is meant by the distinction between ‘the benefits of, and the
opportunities created by, the assistance are made equally available to all such
students? Equality of opportunity can be achieved but equality of outcomes
cannot be guaranteed by an institution.
- Clause 19-35 (2) & (3) relates to student selection
decisions. While there is no in-principle difficulty with the text of the bill
there is a potential for government intrusion into admissions autonomy through
subsequent Guidelines issued under this part of the bill for the purposes of
monitoring institutional compliance with ‘open, fair and transparent procedures
based on merit’. Internal allocations of grants (such as for promising
researchers) could also be subject to scrutiny under this part of the bill if
enacted and related Guidelines.
- Clause 19–45 requires that all providers must have student
grievance and review procedures in place. Again, this normal function of
university governance is being taken into Commonwealth law. Specifically;
universities must have grievance and review procedures that ‘comply with the
requirements of the Higher Education Provider Guidelines’. Sub-clause 19-45 (6)
implies that compliance with these requirements will be audited.
- Clause 19-50 and 19-55 requires the appointment of review
officers. This would result not only in serious intrusion into university
autonomy but would make universities liable to high compliance costs and
duplicate a number of existing review processes.
- Sub-clause 19–60 (3) requires providers to comply with the
requirements of the Higher Education Provider Guidelines relating to personal
information about students. This is open ended and potentially could require
universities to provide information to the Government about student behaviour
and other characteristics that universities have traditionally safeguarded for
the protection of students.
- Sub-clauses 19–65 (1), (2) & (3) are open ended: universities
must comply with the requirements of the Act, regulations and Guidelines; must
provide information required by the Minister; and must have administrative
systems that support this compliance. This is too open-ended, and requires
- Sub-clause 19–70 (1) requires universities to give the Minister
any statistical or other information the Minister asks for about the provision
of higher education and compliance with the requirements of the Act. And (2)
says the information must be in a form approved by the Minister and ‘in
accordance with such other requirements as the Minister makes’. This power is
open ended and apparently not reliant on Guidelines that are disallowable.
- Clause 19–75 requires universities to notify the Minister in
writing about ‘any event affecting the provider or a related body corporate of
the provider’ that may affect the provider’s capacity to comply with the
conditions of grant or the quality and accountability requirements. The
significance of an event is not defined nor the amount of reporting detail.
- Clause 19–80 empowers the Secretary of DEST to appoint
departmental officers or other persons who will have access ‘to any premises
or records of the provider for the purpose of conducting audit and
compliance activities related to this Act’. This is an extraordinarily
intrusive power (with no equivalent in HEFA) and it is even stronger than the
provisions in the ESOS Act, which requires a magistrate to be satisfied that
cause exists to issue a search warrant of a CRICOS registered provider. No such
court authority is required here. Sub-section 19-80 (2) requires a provider to
comply with the arrangements.
- Clauses 19–90 and 19– 5 requires universities to set tuition
prices for students, to notify the Minister of the price for each unit of study
offered in a year (in a schedule approved by the Minister) and to publish the
schedule free of charge to all students and prospective students in ways that
make clear to them how much they have to pay for each unit and for a course of
study in a year.
- Clause 22– 5 gives the Minister power to revoke a body’s approval
as a higher education provider for the purposes of the Act where the Minister
is satisfied the provider has breached a condition of grant or any one of the
quality and accountability requirements. In considering a decision to revoke,
the Minister may have regard, inter alia, to the impact of the breach on the
reputation of Australian higher education or any other matter set out in the
Higher Education Provider Guidelines. Clause 22-30 gives the Minister power to
suspend approval of a provider under the Act. This is potentially able to cause
a university to cease to function through lack of access to funds and an
inability to enrol students in receipt of grants or loans from the
- Clause 22-30 provides that the Minister may suspend a ‘provider’s
approval’ to operate pending a decision in clause 22 – 15.
- Clause 30–1 refers to the constitutional powers of the
Commonwealth in respect of ‘benefits to students’ as the basis for funding
student places at an institution. Sub-clause 30-1 (2) makes such grants payable
on condition that the provider enters into a funding agreement with the
- Clause 30–10 permits the Minister (‘may’) to allocate a number of
Commonwealth funded places to an institution for a year. The Minister ‘must
specify the distribution of those places between ‘funding clusters’. Clause
30-15 identifies 12 funding clusters, noting ‘The Commonwealth Grant Scheme Guidelines
may delete, vary or add to the funding clusters’. This gives the Minister
direct power to fund or not to fund specific curriculum areas in a particular
institution. In the committee’s view the clause should require the Minister to
consult universities and reach agreement with them on the number and mix of
government supported places.
- Clause 30-25 of the Higher Education Support Bill sets out
the conditions to which Commonwealth Grants are attached. The agreement
may specify the minimum number of Commonwealth supported places in each
year; the number of undergraduate and graduate places in each course year;
the maximum number of places with a regional loading; the number of
medical student places. There may be additional unspecified conditions
imposed. The Commonwealth may also restrict the type of courses in which a
university may offer Commonwealth supported places. Should a university
breach a condition of the grant, the Commonwealth will make ‘adjustments’.
- Clause 33–15 makes increases in basic grants conditional on
university compliance with ‘National Governance Protocols’ and workplace
relations requirements. These requirements are specified elsewhere. Compliance
activities are likely to require vice-chancellors to testify that all
requirements are met (such as no union access to university intranet) and to be
able to produce evidence to that effect as required (or have their premises,
records and web sites open to random audit by departmental officers).
Clause 33–25 provides for adjustments to the basic grant for a
year where a university enrols more than 5 per cent above the agreed number of
Commonwealth funded places or when actual student enrolments vary from the
allocated distribution of places by funding cluster. Universities may well find
it difficult to match their actual student enrolment to the prior allocated
distribution of places by cluster.
- Clause 36-35 allows for 100 per cent of places in a course to be
full fee paying, at the Minister’s discretion. This is unprecedented, and
directly conflicts with the Government’s policy that specifies that only 50 per
cent of any course can be occupied by full-fee paying students. This clause has
the potential to lock poorer students out of some courses altogether.
- Clause 169-20 gives the Minister the power to determine that
students may be exempt from student contribution amounts. This ministerial
intervention comes over the top of the powers given to universities to
determine the student contribution amount, adding another layer of discretion.
Ministerial discretion should be deleted in regard to fee exemptions because it
may be open to abuse. Transparent decision-making processes in universities
should operate in relation to this matter.
23.15 The committee
has heard a great deal about the opposition of universities to
micro-management. The provisions summarised above give an idea of the
administrative task in store for universities. No doubt they will require
additional resources in DEST as well. The committee’s view is that this extent
of regulation, and the unfettered discretions of the Minister, are out of place
in modern legislation, and certainly are contrary to a devolutionary trend in
public administration. Professor Alan Gilbert told the committee, from a
I could imagine that all of those provisions would be defensible
if the guidelines that supported them were minimalist and highly circumscribed
the circumstances with which a minister would exercise those discretions. What
concerns me is that the meaning of the legislation and its operation are going
to depend on a very detailed structure of guidelines that accompany it and on
current evidence we have reason to fear that all of those powers that you have
referred to are going to be subject to wide discretion and represent, I think,
an interventionist regime of the kind we have not seen before in Australian
The committee recommends that the Government release the full and
final set of guidelines before the Senate debates the bills, given that incomplete
draft guidelines were provided on 3 November 2003, four days before the inquiry
Existing appropriations under the Higher Education
Funding Act (HEFA) are sufficient to allow for the full functioning of Australia’s
universities in 2004. It is therefore recommended that the Senate not be rushed
into determining a position on these bills before the end of 2003, as this
would inhibit the full and detailed consideration that they demand.
That clause 30-25 be amended to remove ministerial discretion over
the funding of specific courses, in order to prevent intrusion into the
autonomy of self-accrediting institutions.
Clause 16-25 Approval by the Minister
That clause 16-25 be amended to provide that where private
entities seek Commonwealth funding, that application is subject to an open
process, conducted by DEST, and that the process be subject to parliamentary
approval, and in accord with the National Protocols.
Defining financial benchmarks of viability
That clause 19–5 be amended to define the basic requirements of
financial viability and to set financial performance measures against which an
institution has to report, and to set benchmarks for acceptable performance.
Financial information that must be provided
That clause 19–10 be amended to reflect the consistency between
Commonwealth and state reporting requirements and the extent of Commonwealth
recognition of reporting requirements of states, or the CAC Act, and the
timeframes within which these annual financial statement must be provided.
Defining criteria for assessment of quality
That clause 19–15 be amended to define ‘an appropriate level of
quality’, as required by the act; and the authority or agency who will set the
criteria against which this is to be assessed.
Requirement to comply with national protocols
That clause 19–20 (c) be amended to provide for universities to
contest the veracity of AUQA audits and provide appropriate review processes.
Right to challenge audit reports
That clause 19–25 be amended to provide that a university may
challenge the reasonableness of the audit body’s proposals.
That clauses 19-50 and 19-55 in relation to the appointment of
review officers be withdrawn on the grounds that they present a serious
intrusion into university autonomy, make universities liable to high compliance
costs and duplicate a number of existing review processes. Both clauses must be
amended to include the same standards of judicial review, as exist in the ESOS
Act, namely a warrant granted by a magistrate must be obtained before search
and seize missions can be launched on university premises.
Disclosure of personal information
That in order to protect students’ personal information sub-clause
19–60 (3) be amended to specify the categories of information that universities
That sub-clause 19–70 (1) be amended to restrict the level of
information required, because the provisions are too broad.
That clause 19–75, requiring universities to notify the Minister
in writing about ‘any event affecting the provider or a related body corporate
of the provider’ that may affect the provider’s capacity to comply with the
conditions of grant or the quality and accountability requirements, be amended
to define the occasions where breaches have occurred, not when they may occur
in the future.
Requiring a search warrant for DEST inspections
That clause 19–80 relating to search powers be amended to provide
for the requirement of a search warrant issued by a magistrate in the event
that departmental officers need to open the books of a provider against the
Process for national allocation of places
Amend 30-10 to establish a transparent process for the allocation
of places on a national basis.
Discretion over Funding Clusters
That clause 30-15 giving the Minister direct power to fund or not
to fund specific curriculum areas in a particular institution be amended to
require that the Minister consult universities, and reach agreement with them
on the number and mix of government supported places, and make public the reasons
for the decisions.
Exempting students from HECS
That clause 169-20 be re-written, so that the Minister does not
have discretion to exempt specific students from making HECS or other loans
That in order to recognise the status of universities, the phrase
‘higher education providers’ be deleted and replaced with ‘universities’ or
‘universities and other providers’ where necessary.
23.16 Mention should
be made of the Higher Education Information Management System which DEST
expects to become operational from 1 January 2005. The Government is to provide
just over $10 million in 2003-04 for costs associated with the implementation
of a computer program which will administer the students loan program and provide
for the transfer of financial and statistical data between universities and
DEST. A total of just over $20 million will be provided overall for this
development project, which will extend to 2006-07.
23.17 HEIMS is to
become the instrument of micro-management. Each university is to be given
$200,000 to cover implementation cost, or as one vice-chancellor indicated to
the committee, less than the cost of ‘an indecent consultancy’. One university
singled it out as a source of concern.
The magnitude and complexity of
the system required to track SLE would result in major IT issues and costs in
universities endeavouring to link their own systems to it, and would be likely
to spawn a whole layer of bureaucracy to track and manage the data produced.
The problems it is aiming to manage and rectify may well be less acute than the
proposed cure. The transition costs for universities will be very large.
Funding support proposed by the Government for HEIMS is minimal and the
apparent lack of a cost/benefit analysis is of concern.
Vice-Chancellor of RMIT told the committee that one of the issues in the RMIT’s
experience with computerized student management systems was the extent of
modification to the base software system. One of the most problematic areas was
tuition calculation. According to her reading of the bill and her understanding
the guidelines, there is huge complexity in the way that the tuition and
financial arrangements are going to have to be implemented.
Professor Dunkin said she was anticipating significant extra costs would need
to be met by universities for the implementation of HEIMS.
23.19 The committee
will be maintaining a watching brief on the development of HEIMS. The record of
the Commonwealth in managing IT programs over the years has provided numerous
case studies in what can go wrong with ambitious programs such as this. Whether
the IT solution to the Government’s plan is successful will depend ultimately
on whether the policy is robust and has integrity at the level of human
liaison. HEIMS may be called to do much to make up for deficiencies at that
23.20 The requirement
in the bill for states and territories to amend their legislation which
establishes the legal entity of the universities within their jurisdictions is
also problematic. The required legislation will set a limit to the size of
university councils or senates, remove student and academic staff
representatives and ensure that external appointees will form a majority of the
governing body. All state governments made submissions to this inquiry and all
had senior departmental officers appear before the committee.
Remaking university governing bodies
governing bodies currently remain strongly representative of the stakeholders
in the universities as public institutions. Typically, the major stakeholders
are the vice-chancellor and senior academics or officers of the university,
academic staff representatives, general staff representatives and student
representatives. Distinguished members of convocation and representatives of
business and the community, as well as parliamentary representatives in some
States and Territories, make up the typical core of outside appointees to
councils and senates. These vary in size depending on the establishment
legislation. The committee heard no evidence which suggested that any
university, regardless of the size and composition of its governing body, was
unhappy with its existing governance arrangements. For most universities which
addressed this issue in submissions, the performance of their councils or
senates was a matter of considerable pride.
23.22 The committee
gained a strong impression that universities were rather nonplussed about the
attention paid by the Government to the issue of the governance and the
management of universities at the council or senate level. While no submission
supported the Government’s policies, few submissions speculated on the
Government’s intentions, or attempted any analysis of the relevant issue paper
in the Crossroads review. A wide range of views were canvassed in the
issues paper, but the official line which emerged later in the Minister’s
budget papers, was clearly evident. These are consistent with the core premise
underlying the rest of Backing Australia’s Future. Dr Nelson is fond of
saying that the ‘one-size fits all’ approach is a threat to excellence and
diversity. This is exactly the formula he is imposing on Governance.
23.23 The Government
defines universities as ‘providers of educational services’. This bleakly
utilitarian view takes little account of scholastic values or the culture of
teaching and learning which universities have developed over centuries. The
Government appears to see its role in this legislation as assisting the
transformation of universities from what they see to be cloistered institutions
toward a more entrepreneurial role. That the universities have been effecting
this transformation themselves, over many years, without the need for Federal
Government intervention, has apparently gone unnoticed.
23.24 The Government
has decided that a shift away from public funding toward a ‘user-pays’
principle, associated with a more entrepreneurial approach to financial
management requires a different stamp of governance. While the Crossroads
issues paper stated that universities have to be regulated and monitored to
ensure public accountability, it warns that:
However, universities are also large-scale business
organisations. Increasingly they are diversifying their sources of funding
through revenue derived from fees, charges and investments. It is vital that
they seize opportunities to commercialise intellectual property of the
university through royalties, trademarks, licensing and equity ventures. They
need corporate governance structures that can encourage and support such
activities, including entering into commercial relationships with the private
At present many universities feel constrained in the extent to
which they can respond to, and capitalise on, business and innovation
opportunities in timeframes appropriate to the commercial world. ...Boards,
Councils or Senates often remain unwieldy structures, unable to provide the
support and advice necessary to Vice-Chancellors managing a large-scale
organisation. Governing bodies ... still average 21 members. Some of these
members believe they are representing particular constituency interests rather
than acting as the collective leadership of the university.
23.25 The issues paper
continues with the observation that appointments to governing bodies should be
made on the basis of skills and attributes useful to the changing role of
universities. This explains the provision for outside council members,
preferably with business experience, and the elimination of student and staff
representatives who may be more likely to oppose commercial operations which
universities may choose to engage in. It is argued that there is a case for
legally codifying members’ duties, so as to prevent conflict of interest and to
ensure that they act in the best interest of the university. There was a
suggestion that members of governing bodies should be subject to legal
sanctions for breaching their fiduciary duties, and be required to meet the
standards set for company directors.
This provision managed to make it through to the Nelson protocols, which were
part of the 2003-04 Budget package.
Vice-Chancellor of the University of Sydney, in one of the few submissions
which tackled this issue, called the protocols which eventuated from this
issues paper a ‘knee jerk reaction’ to concerns over issues of financial management
at RMIT and Victoria University. Professor Brown was highly critical of
measures to standardise governance arrangements across the sector. In relation
to the curious notion that governing bodies should be like-minded teams of
corporate energy and virtue, Professor Brown stated:
The wording in the Nelson review concerning the governing body’s
direct responsibility for risk management could be construed as placing
unreasonable demands on the individual members of that body, requiring them to
overstep the conventional bounds of ‘supervisory oversight’ and precluding
responsible delegation. That, in turn, could render the proper task of
managing the institution unworkable and risk personal liability, including
automatic dismissal for members of the governing body under some
circumstances. A second concern is the role of elected representatives in
placing the needs of the institution first. The wording of the government
protocols fails adequately to incorporate a proper function for elected members
in bringing forth the special concerns of a subgroup when a matter is being
considered. The paramount duty of member of the governing body must be to the
university but, subject to that, representation should not be precluded.
23.27 The committee
notes the good sense of Professor Brown’s comments but has a different view on
the governance issues paper. No vice-chancellor appearing before the committee
expressed enthusiasm for being subject to a board of externally appointed
bankers, stockbrokers, corporate investors and commercial lawyers. Nor would
such people agree to be appointed, if Professor Brown’s warnings are to be
23.28 It is
interesting to note that the Crossroads issues paper on governance
canvassed the idea of ‘directors’ fees’ for governing body members, but then
dismissed the suggestion as out of keeping with the traditions of university
The committee presumes that no irony was intended in this observation, and it
interested to know what fee a university would be prepared to pay for someone
to assume fiduciary responsibilities equal to those held by members of bank
boards, and whether there will be resignations from among current senates and
councils if some of the Government’s wilder ideas are ever drafted into
Effective governing bodies
23.29 The committee
heard a number of interesting comments at hearings on the workings of governing
boards, but it heard nothing which would support the views of the Government.
Representation and diversity were the key words used to describe the operations
of successful boards. As a Murdoch University academic told the committee:
Universities and university councils, to be really successful,
need a critical mass of skills. We definitely need external people and we
definitely need internal people because they bring different kinds of skills
and expertise. Staff are not simply representatives of other staff, although we
might be elected from that constituency. What we bring to a university senate,
aside from some fairly useful potential for whistleblowing, is internal
knowledge and expertise about the education industry. Most corporate bodies
have a predominant membership of people with expertise in the industry. By and
large, the external members of university governing bodies do not have any
expertise in education, so the students and staff members of those governing
bodies actually comprise the industry expertise.
23.30 The committee
considers that there is a whiff of faddism in the Government’s views on
university management. It is always difficult to be convincing about the value
of a ‘reform’ at a time when its moment is passing. The respect for ‘corporate’
values and principles has taken a battering in recent times, with spectacular
examples of the collapse of companies with myopic vision, partly due to the
absence of diverse opinions and an open culture of discourse. To impose on
universities a structure which represents the very antithesis of what
universities stand for is a highly presumptuous action by those whose thoughts
and actions are almost always driven by political imperatives. At the core of
this presumption is contempt for universities, what they stand for, and for
those who run them.
23.31 The faddism of
the Government is partly suggested by evidence heard by the committee in Brisbane
about research done in the United States by Boston academics which, as the
Deputy Vice-Chancellor of the University of Queensland pointed out, indicated
that the Government was out of touch. The research indicated that there was
evidence that governance improved where there were numbers of people who were
intimately associated with the nature of the business. Professor Gardiner
pointed out that it would perhaps be uncomfortable if private sector boards
moved to recognise that larger numbers of both externals and internals were
appropriate for effective governance ‘when we were constrained to move in the
23.32 The need for
diversity of membership on university governing bodies is obvious to anyone who
understands the role and the culture of a learning institution. They have a far
more diffuse role than do business corporations. If, as Professor Gardiner
suggests from her reading, corporations are appointing non-business people to
their boards in increasing numbers to broaden their management thinking, this
practice must continue in universities. It is likely that members with no
experience of university management would be at sea without the instructive
presence of academic member colleagues. As one academic noted:
I was constantly struck, from the day I joined our senate, by
the way the external members relied on the internal members for expert
knowledge—on a casual basis after dinner, before meetings and during meetings
as well. In the last few months in particular, a number of people commented—as
we were raising these issues given this protocol—how they could not do their
business without the internal members because they did not have that kind of
knowledge of the institution and how it works.
23.33 There was no
evidence presented to the committee that university governing bodies are prone
to disharmony in the working relationships between individual members. The
committee believes that some Government thinking in this matter may have been
influenced by the dissent within the council of the University of Melbourne
some time ago over privatization issues. Councils come and go: matters are
eventually resolved. This issue was not raised with the committee by Professor Gilbert,
who will, as the committee notes, be dealing with a governing council of 30
when he takes up his position as Vice-Chancellor of the University of Manchester.
23.34 The issue of the
size of a governing body also arose in evidence. The arbitrary limit of 18
members set out in the governance protocols appears to have no rational basis.
The committee imagines that it may have something to do with a bizarre and
dated idea about organizations having to be ‘lean and mean’ with the
implication that small groups make better decisions quickly, and presumably,
with less scope for dissent. Professor Gardiner also mentioned the issue of the
Government’s preference for the size of senates and councils.
There are problems with the majority of the national governance
protocols, as senators would be aware. The University of Queensland has the
largest governing body among Australian universities. There is no evidence that
we are poorly governed. Indeed, the evidence is to the contrary. We do not
believe that specifications on the size and composition of the governing body
will necessarily improve governance. Therefore, we question that level of
specificity in those protocols.
23.35 The committee
believes that the Minister or those who advise him have not properly considered
the issue of governing body size in the light of experience in the countries
which they regard as setting higher education benchmarks. Mr Gavin Moodie
provided in his submission a table showing the size of governing boards in
leading British and American universities. As Mr Moodie pointed out, these
international comparisons undermine the Commonwealth’s case.
Top US national doctoral
colleges, in US News & World Report rank order
Board of trustees
President and Fellows of Harvard College
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
Trustees of the University
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
Board of Trustees
UK Russell Group universities in alphabetical order
Newcastle upon Tyne
University College London
23.36 The committee
heard from witnesses, mostly academics who made a number of relevant
observations highlighting, to the committee’s satisfaction, the fact that no
case had been presented which warrants the changes proposed by the Government.
Academics have generally taken an unfavourable view of the Minister’s apparent
doubts about their competence to be involved in the governance of universities.
As one of them noted:
When you suggest to academics that they are not capable of
participating intelligently in any body, they tend to get very annoyed. If
academics are marked by particular things, it is a high degree of independence
and also pride, perhaps excessive pride, in the quality of their brains. So if
somebody suggests that they do not want academics to give their input to and
opinions on the management of their own institution—and, historically, for
centuries literally the universities have been our institutions—and if you
suggest that they are not fit to have their views taken seriously, academics
get very indignant indeed.
23.37 The role of
student representatives on university governing bodies has probably caused more
anxiety for the Government than has academic staff representation. They would
presumably be seen to be even more notoriously unworldly in their views than
academics, most of whom at least have a degree of income security. But the
committee has neither heard nor read evidence that student representatives have
no place on governing bodies. The evidence was to the contrary.
23.38 One student
representative on the University of Western Sydney told the committee:
... I see a great deal of value in having staff and student
representatives on university governing boards. At UWS we have quite a good
board. It is very student friendly—at least at the moment, anyway—so we have
been finding that things have been working quite well with them. But in the
past we have had issues like the Goolangullia occupation, which essentially was
to do with changes that were happening to our Aboriginal education centre. Our
undergraduate student representative did massive amounts of work with our
governing board to make them aware of the effect upon the Indigenous student
community that these changes were highlighting, resulting in an excellent
compromise within the university community as well. That helped solve that
The student and staff representatives are very much the primary
stakeholders. They are the people on the ground. They can see what the effects
of these changes are, and I think it is important that they be able to voice
that to the university governing boards.
23.39 It should also
be noted that students benefit a great deal from serving on university councils
and learning to play a role in running an important institution. Universities
should provide civic experience for students and allow them to understand the
nature of collective responsibility.
23.40 This report does
not avoid discussion of the merits or otherwise of parliamentary representation
on university governing bodies. It records, moreover, that both the chair and
the Government senator on this sub-committee are, or have been, appointees to
the council of the Australian National University as provided for by the
23.41 Some states have
quite recently abolished parliamentary representation on governing bodies.
Witnesses from New South Wales strongly supported the continuation of
parliamentary representation because it was thought to be useful both to the
universities and to the parliament. In the submission from the University of Sydney,
the vice-chancellor stated that some of the parliamentarians who have served on
the University of Sydney’s Senate had made outstanding contributions and the
university would at least want to have the capacity for Senate to choose to
have a parliamentarian as a member in his or her own right.
23.42 New South Wales
Government officials also gave the committee an official view:
The parliamentarians and the outside points of view are an
important part of the balance that New South Wales sees as appropriate in
governing bodies. There has to be a mixture of internal and external, and the
external participants are very important in ensuring that there is public
access and scrutiny. The ICAC and other issues very much lie behind the
decision to proceed with commercial guidelines and regulatory activity for
governing bodies to tighten up the functions, as I was outlining briefly
before. A very important part of that is public scrutiny, and we would not want
to see only internal representatives on those governing bodies.
23.43 The Government
does not favour the appointment of parliamentary representatives on university
governing bodies. The committee presumes that this may be because parliaments
appoint very few representatives to the boards of other institutions, so why
single out universities? This is a reasonable question.
23.44 The committee
would argue that whole parliaments may not be doing too many favours for
universities in these appointments; parliament certainly gains some vicarious
advantage in having a better idea of how these highly important institutions
work. Parliamentarians learn much from their experience.
That the Higher Education Support (Transitional
Provisions and Consequential Amendments) Bill be amended to ensure
that the ANU and AMC Acts do not prevent Members of parliament taking a seat on
their governing bodies.
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