In recent years — especially since the COVID-19 pandemic — executive pay in Australian public universities has drawn increasing public and political scrutiny.

Job losses, program closures, staff underpayment scandals and concerns over mismanagement have sharpened debate about whether current scandalously high remuneration levels for vice-chancellors and senior executives are justified.

This debate has reached federal Parliament, with crossbench members introducing bills to limit VC salaries. It also features prominently in the final Universities Accord report and the recent ongoing Senate inquiry into university governance. The issue is not merely one of dollars, but of governance, transparency and the alignment of leadership with the public mission of higher education.

How we got here

Vice-chancellor salaries in Australia now frequently exceed A$1 million per year, far outpacing public sector peers and their UK and US counterparts. These levels are not incidental; they are the product of legislative and policy changes since the Dawkins reforms of the early 1990s. Influenced by New Public Management principles, these reforms reframed universities as economic drivers, tasked with producing private benefits for graduates rather than serving primarily as public institutions of scholarship and learning.

In practice, this has meant dismantling collegial governance structures and reconstituting university councils to emphasise commercial and financial expertise over sectoral knowledge. Across the country, two-thirds of governing body members now have business backgrounds but little or no higher education experience. In contrast, corporate boards typically maintain a majority of members with relevant industry expertise. Universities abroad often ensure strong democratic representation from academic staff and students.

The shift to corporate governance has encouraged VC roles to be viewed — and remunerated — like corporate chief executive positions. With governing bodies dominated by members steeped in private-sector norms, “remuneration benchmarking” has become common practice, fuelling pay inflation across the sector regardless of performance.

The risks of weak governance

Emerging research has identified significant institutional risks when too much authority rests with a small executive elite. Leaders with narcissistic or psychopathic tendencies can erode teaching quality, research performance, and institutional reputation. They often pursue high-profile capital works or expansionist projects that fail to deliver long-term benefits, while damaging financial sustainability.

Weak governance arrangements — particularly those lacking independent checks on executive decision-making — can enable such behaviour. High salaries are not, in this context, a reward for superior leadership. Indeed, studies suggest no positive correlation between remuneration and institutional performance in higher education.

Lack of transparency

Unlike the public service, where senior executive pay is regulated and subject to parliamentary oversight, university remuneration committees operate with minimal external scrutiny. In most cases, these committees exclude elected staff and student members, meet in private, and are under no obligation to make their deliberations or rationales public.

This opacity undermines public trust and makes it difficult to justify why Australian VCs earn so much more than leaders of comparably complex institutions — such as government departments — who shoulder greater responsibilities. It also allows poor performance to go effectively unpunished, with no systemic mechanisms for salary reduction or removal in cases of leadership failure.

The way forward

Reining in executive pay and restoring accountability will require legislative change. Most university governance frameworks are embedded in state and territory legislation; reforms must therefore reverse the structural changes of the past three decades that concentrated authority in the hands of appointed members with narrow commercial expertise.

A key step would be to ensure that at least half of all governing body positions — including those on remuneration and key oversight committees — are held by elected academic and professional staff and student representatives. These roles should be appropriately supported and remunerated to enable effective participation. Such changes would reintroduce a diversity of perspectives, strengthen scrutiny of executive decision-making and ensure that remuneration reflects public service values rather than corporate emulation.

The Universities Accord has acknowledged the need for greater board independence and diversity. However, it did not address the deeper problem: the erosion of democratic governance that has left executives with broad discretion to set their pay and shape institutional priorities with limited accountability. Without tackling this structural issue, reforms risk being cosmetic.

Learning from elsewhere

Internationally, many European universities still maintain governance systems with high levels of elected representation, including institutions with world-leading research reputations. James is a visiting Professor at Bologna University at the moment. Head of schools, deans, all the way to the rector, are elected positions. These systems demonstrate that democratic governance and academic excellence are not mutually exclusive; indeed, they can reinforce one another by embedding decision-making in the values and mission of the institution.

Restoring democratic accountability in Australian universities would not only check excessive salaries, but also mitigate the risks posed by executive overreach. It would reconnect leadership remuneration to actual institutional performance, and to the broader public interest these universities are meant to serve.

A public mission, not a corporate one

Excessive executive pay is a symptom of a deeper governance malaise — one that privileges the corporate norms of hierarchical decision-making and information control over academic norms of collegiality and the free dissemination of knowledge. Restoring public trust and institutional integrity will not only require legislative reform to rebalance governance structures. Those reforms should also include remuneration policies for university executives and senior managers linked to maintaining and building teaching and research capacity, rather than property and investment portfolios ring-fenced from the public mission and core activities of the institutions that employ them.

Public universities are not commercial corporations. Their purpose is to advance knowledge, foster critical inquiry and contribute to civic and cultural life. Executive remuneration should reflect that mission. Salaries should be commensurate with the responsibilities of the role and the expectations of the public, not inflated by a competitive benchmarking process divorced from demonstrable results.

In the end, the question is not whether Australian vice-chancellors should be well-paid. It is whether their pay should so greatly exceed that of other senior public leaders, without commensurate evidence of their contribution to building the capacity of the institutions they are responsible for steering. As institutions that still largely depend on public funding and exist to serve the public good, the pay and performance of their executives and senior managers should be subject to far more internal and external scrutiny and accountability.

The views expressed in this article may or may not reflect those of Pearls and Irritations.