8 | FEATURE
How to corporatise A UNIVERSITY (IN FOUR STEPS) The past 18 months in Australian higher education has seen destructive funding cuts, 40,000 job losses and revelations of widespread underpayment of casual staff. In this feature, Honi traces how we got to this low point in four parts: corporatised university governance; privatisation of funding; cost-cutting and efficiency measures; and underreporting of the true levels of casualisation.
STEP 1: CORPORATE GOVERNANCE Maxim Shanahan
T
he corporate capture of Australian university governing bodies – generally known as councils or senates – has resulted in leadership bodies unable to guide universities through crises; unwilling to defend the interests of staff, students and their own institutions; and severely lacking in the skills necessary to govern a university. Appointees to university councils are overwhelmingly drawn from the corporate sector, excluding those from non-commercial backgrounds and, more importantly, those with ‘industry experience’ in higher education and academia. The principle of university self-governance has been steadily eroded through decades of government policy choices and the self-perpetuating cycle of corporate governance. A deliberate step towards corporate governance The classical ideal of a university is of a self-governing community of scholars that serves the public interest through serving knowledge. Decades of incremental policy changes have made such an ideal fanciful to staff and students of Australian universities. However, university self-governance still predominates in Europe, and research finds a strong correlation between self-governance and academic excellence. In Australia, the trend away from selfgovernance began in earnest with the 1988 Dawkins Report, which described governing bodies – which then ranged from 20-30 seats, with a majority of members drawn from elected staff, students and alumni – as “too large for effective governance.” It criticised elected members for “a tendency to see their primary role as advocates for particular interests” rather than the university as a whole. In a 2002 report on the higher education sector, which lay the ground for subsequent legislation, then-Education Minister Brendan Nelson said that “Universities are not businesses but nevertheless manage multi-million dollar budgets. As such they need to be run in a business-like fashion.” The following year, amendments to the Higher Education Support Act were passed, which rationalised the size of governing bodies and required that “There must be at least two members having financial expertise and at least one with commercial expertise..” Governing body make-up ignores basic principles The make-up of university councils in 2021 demonstrates the effect this legislation has had in ensuring and entrenching corporate governance of universities. Across 37 institutions, there are 379 appointed members of university governing bodies (the majority of whom are appointed by councils, while a minority are government appointees nominated by councils). Only 59 of those appointees (15.5%) have ever worked in the tertiary sector (including TAFE). By contrast, 188 members (49.6%) have experience in private-sector corporate management. Only 11 (2.9%) are drawn from the not-for-profit sector. The constitution of these boards has real-world effects. Where an overwhelming majority of members are drawn from the for-profit private sector, universities are likely to pursue profit and managerialism in the organisation of their affairs. Where a measly 1.6% of members are drawn from the arts, humanities and social sciences, universities are highly unlikely to put up much opposition to government policy which actively discourages enrolment in those areas. Adam Lucas, a staff-elected councillor
at the University of Wollongong, told Honi that “there’s very little interrogation of any of the decision-making that happens [on council].” Lucas further questioned why, if corporate board appointees were so fiscally competent, universities continued to cut jobs and courses. Even when applying their own corporate standards, the lopsided make-up of university governing bodies contravenes a basic principle of governance. Principle no.2 of the ASX’s Corporate Governance Principles and Recommendations holds that “The board should…collectively have the skills, commitment and knowledge of the entity and the industry in which it operates, to enable it to discharge its duties effectively and add value.” For example, 73% of Rio Tinto’s board has experience in the resources and mining sector. Representation is similar across other large mining companies. Likewise, banks’ boards are drawn largely from former bankers, financial industry experts and private equity mavens. Banks and mining companies are ultimately interested in the same goal – increasing profits and shareholder value – yet their governance is tailored to their particular industries. By contrast, appointments to the
corporate managers. But the problem is that universities are not corporations. They might have a corporate structure, but they’re not corporations.” “What we’re producing is knowledge, not money, and the process of producing knowledge is collective. So the application of the corporate model from the private sector does not easily work. Equating the university to a corporation is like equating the army or the judiciary to a corporation.” Legislative requirements Governing body members must fulfil two legislative requirements regarding qualifications and experience. A self-perpetuating scheme Firstly, at least two members must have high-level private or public sector financial experience, and at least one must have similar private or public commercial experience. Universities have overwhelmingly interpreted these provisions, perhaps reasonably, to mean financial and commercial experience at large private firms at the expense of public sector experience. The very existence of this legislation demonstrates a hostility
sector commercial presence far beyond the legislative minimum. Functions and values Secondly, all governing body members are required to (a) have “expertise and experience relevant to the functions exercisable by the [governing body] and (b) an appreciation of the object, values, functions and activities of the University.” According to the legislation, the functions of the governing body are to oversee, among other things, matters of investment and financial accommodation, and to approve its “business plan.” However, it is also required to oversee the university’s performance as well as its “academic activities” and to approve the university’s mission and strategic direction. Where councils are dominated by corporate figures, the university’s performance is reduced to financial indicators and baseless metrics such as rankings, major academic decisions are rubber-stamped by incompetent members. The university’s mission is defined in terms of business and financial outcomes, rather than student experience, teaching quality and research achievement. Furthermore, corporate council members regularly hold
Figure 1, Unpublished data: Academics for Public Universities, 2021
governing bodies of universities – which have radically different structures to private companies, and are interested in entirely different outcomes – are made to fit a generic corporate board profile. Bankers and consultants abound; there are more appointees from Macquarie Group alone than there are from arts backgrounds, and career directors stake their turf. Universities are not-for-profit entities, yet their governance ‘skills matrix’ points entirely towards unabashed profit-making. Universities are interested in the production of high-quality public interest research and teaching, yet people with a basic knowledge of higher education and representatives of academic fellows have been pushed out to make way for Fellows of the Australian Institute of Company Directors. Alessandro Pelizzon, an academicelected member of the Southern Cross University council says that there is a “schizophrenic relationship” between governing bodies and universities. He told Honi that “these corporate managers are very effective and very well-functioning
to university self-governance in the first place. However, beyond this minimum legislative requirement, university councils have, by their own appointments, become stacked with members from the finance and commercial worlds. Inevitably, corporate governance entrenches itself. Adam Lucas told Honi that “elected staff members [on councils] are inevitably locked out of committees” by corporate-oriented majorities. One result of this has been the skyrocketing pay of Vice-Chancellors, with remuneration committees stacked with private sector appointees aligning executive salaries with corporate standards. More relevant is control over nominations committees. For example, at the University of Sydney, the seven-person committee contains no staff or student-elected members. With such control, nominations are more likely to be made from existing corporate networks, rather than from the academic and education ‘industries’ which are foreign to the committee’s members. In this sense, corporate governance perpetuates itself, leading to a private-
multiple directorships, limiting the attention that can be given to understanding the specificities of universities, and the issues which they face. It is highly questionable that governing bodies dominated by CBD CV stackers can have the “expertise and experience” relevant to the non-commercial aspects of university governance. The same problem applies to the duty to have an appreciation of the object and values of the university. How can council members who have no university experience beyond a decades-prior Bachelor’s degree satisfy this requirement? Previously, these shortcomings may have been balanced out by the presence of higher education ‘industry experience’ and a greater number of elected members. However, the corporate capture of governing bodies has prevented this, redefining the “objects and values” away from knowledge and public service towards profit and corporatisation.
