Australian VCs top global earnings

The substantial salaries of Australian university vice-chancellors regularly stir up discussion within the higher education sector.

Now, a study by Canadian consultant Alex Usher has reignited debated over whether VCs’ salaries fairly reflect the value these leaders provide to their institutions and the broader society.

Drawing on his 10 years’ experience comparing VC salaries across Canada, the US, Britain, New Zealand and Australia, Mr Usher’s study highlights the exceptionally generous financial incentives associated with these positions in Australia.

The study found that Australian university heads received the highest salaries in the world, often earning significantly more than – and sometimes even double –their international peers.

Singling out research-intensive universities, the average VC salary in Australia is $1,066,758. It eclipses the average VC salary in the US ($1,042,927), in New Zealand ($741,741), in Britain ($738,123) and in Canada ($546,204).

Study aside, the other significant point of contention is the rate at which remuneration has increased.

Over the past few decades, the remuneration packages for Australian VCs have grown significantly, outpacing inflation and average wage increases.

Deciding whether Australian VC salary packages are justified requires an understanding of the role of the head of the tertiary education institution: one of significant influence and responsibility for leading a large and complex operation.

VCs do more than just oversee academic matters; they are chief executives of their institutions.

The job involves guiding their universities towards excellence in education and research, managing thousands of students and staff, ensuring their organisation’s financial wellbeing, and contributing to the broader community.

VCs must work within government regulations, meet the diverse needs of students, and keep their universities competitive on a global scale.

The role is critically important and requires a unique mix of academic knowledge, strategic thinking and leadership skills.

The lingering question, however, is whether the average VC remuneration of about $1 million is commensurate with these responsibilities.

VC remuneration packages usually include a base salary, bonuses and other benefits.

As with other industries, VC remuneration can vary widely from institution to institution, influenced by factors such as the university’s size and reputation, along with the individual’s experience and ability to negotiate.

Those supportive of high VC salaries argue that competitive remuneration is necessary to attract and retain individuals with the unique blend of skills required for these top positions.

The market for university leaders is global; offering an attractive salary can be a prerequisite to luring and securing top talent.

Supporters of high salaries argue a top-tier VC is not a cost but an investment that can bring substantial returns to the institution and its stakeholders. VCs can be instrumental in securing funding, large donations and research grants that far exceed their pay.

And many argue that, even though the remuneration of VCs seems high, it represents only a small part of universities’ overall budgets.

However, critics of the current remuneration model question whether these high salaries are justifiable, especially in the context of the broader challenges facing the education sector.

They argue the substantial sums allocated to VC salaries could be redistributed to address pressing needs such as improving teaching facilities, funding research, or cutting tuition fees.

Another concern revolves around the message conveyed by these high salaries at a time of growing income inequality.

Viewing the substantial VC remunerations against the challenges faced by casual academics and staff, including job insecurity and financial difficulties, raises questions about the values and priorities within the education sector.

In addition, VC remuneration is made public and can attract criticism and affect how people view universities.

Since universities receive a significant amount of taxpayer funding, there is a valid expectation this financial support should be spent on education and research for the public benefit.

The issue of VC remuneration, therefore, continues to be contentious.

The future requires university governing bodies to strike a balance between attracting top talent and distributing resources fairly in education.

While the VC role is crucial, it is important for the sector to consistently review and modify the compensation afforded for those responsibilities.

Only then will we ensure the remuneration packages of university leaders are not only market competitive, but ethically and socially justified.

• Professor Gary Martin is chief executive of the Australian Institute of Management WA