Demand-Driven University Delivers Pay Dirt for Vice-Chancellors

Lambert here: It looks like the United States isn’t the only country to have credentialism and corruption problems in its universities; or too few jobs chasing too much student debt.

By Leith van Onselen, an economist who has previously worked at the Australian Treasury, Victorian Treasury, and Goldman Sachs. Originally published at MacroBusiness.

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:


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.

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


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


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:

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 Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Jay

    In a classic university setting, the point of getting an education . . . is to become educated. Employment prospects are incidental, as it is assumed that someone who has the capability and perseverance to attain a degree has learned *how* to learn, how to negotiate the tricky choices of young adulthood, and how to survive the many perils of academia, would be a good employment prospect.

    1. diptherio

      it is assumed that someone who has the capability and perseverance to attain a degree…would be a good employment prospect.

      It used to be assumed. It still is, by some people who don’t know any better, but plenty of us have found out the hard way that that just ain’t so. If you end up working a couple of manual labor jobs after getting your BA, you can forget about ever getting any job that isn’t. I call it “resume-lock.” You can only get hired for positions that are already on your resume, which means you have to hold out for a good job after school, or get forever locked-in to whatever you end up doing first. Sad but true. Ever tried applying for an office job when your last three jobs involved sweeping the floor? I don’t recommend it.

  2. Fred

    ‘degree factories’ Hah. In Michigan we have “dropout” factories that accomplish the same objectives – full employment at high wages for executives and administrators of said universities. As you say “Nice work if you can get it!” Better have a phd and connections though….

  3. diptherio

    I saw somewhere that a couple of professors had applied to jointly fill their university’s President/Chancellor position when it came open. As I recall, they offered to each work for $100,000/yr and so could offer double the people-power for a fraction of the price. I think we need to start pushing that kind of thing. We should make these guys (mostly guys, I assume) justify their salaries — make them explain just exactly how they’ll be able to accomplish more than three or four other professionals splitting up the tasks. The absurdity of the situation will quickly become apparent.

      1. diptherio

        Thanks for providing the link.

        In my experience, you’re generally better off working under a female middle manager than a male, but when it comes to upper management it doesn’t seem to make much difference.

  4. readerOfTeaLeaves

    Many years ago, I was incredibly fortunate to have an opportunity to study in Australia and I can’t say enough good things about the caliber of the program and students. (None of which translated into me being an exemplary student; there was a whole big ocean to surf on ;-)

    My point is that it was like a huge candy factory for anyone who wanted to learn — although, in all truth, I was mystified at the tiny library until I realized the incredible expense of getting books shipped so far.

    In recent years, friends in (Queensland) Australia have expressed loathing contempt for the way that the for-profit, private university system has enabled people from throughout the Commonwealth and Asia to get residency permits in Oz via the fact they are ‘students’ — I don’t think it is racism, but I do think it is a resentment of people ‘buying their way in’, when in earlier decades the system was viewed as a meritocracy. This problem is compounded when, just as in my region of the Pacific Northwest, deep pockets out of Mumbai or Taiwan or Seoul buy up nice properties, leaving the earlier residents unable to compete for nicer housing.

    My two $USD cents…

  5. norm de plume

    ‘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…’

    I worked there for 20 years and witnessed a tragic descent into neoliberal nirvana. The VC is just the tip of a huge iceberg of less prominent administration, the vast bulk of which did not exist 20 years ago. Whole levels of management, commanding commensurately stratospheric salaries, have been interleaved between the time-honoured basic structure of VC – Principal – Registrar – Deans/Section Head… Deputy Pro-VCs and the like at the top end, but also upper middle management cadres to keep the natives restless, by making their roles ‘redundant’ if they ventured to say boo, this ‘change management’ often justified by very expensive consultancy work performed by certain global accountancy firms with links to certain high level administrators. And then they’d advertise the same jobs with different titles and comb thru the thickets of applicants looking for like minds.

    It’s not just higher ed, it’s all public service everywhere here. I’m sure we’re nor alone.

  6. afisher

    Here in TX, the pay of >$1M is reserved for football coaches – you know stuff that is really important /s

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