Degrees of difficulty

Clark Kerr, the renowned president of the University of California, once joked that a university is “a series of individual faculty entrepreneurs held together by a common grievance over car parking”. He was doubtless correct. Apart from their title, the professor of neurosurgery has little in common with the professor of cultural studies. Their disciplines are worlds apart, their priorities often clash, and yet the president must somehow reconcile them — while also placating governments, students, unions, alumni, and employers.

This is the predicament facing vice-chancellors, who are the equivalent of presidents in British and Australian universities. Some vice-chancellors are announcing job cuts amid declining revenues. Staff unions are mobilising, newspapers are lamenting, and politicians are hand-wringing. But anyone who has run a university knows the arithmetic is unforgiving.

For decades, international students have been the Australian higher education sector’s financial lifeline. They paid higher fees than local students, they kept the lecture theatres open, and they provided revenue for research. Governments were perfectly content to let universities balance their budgets this way.

Then came COVID, followed by visa slowdowns and sudden policy reversals, and the business model that had sustained entire institutions was suddenly crumbling. Vice-chancellors were left holding the bag.

Universities have lofty purposes, but they are also businesses. They purchase equipment, consume supplies, and employ labour to create products and services, which they sell at a price. If their income fails to exceed their expenditures, then universities go broke. In short, they have all the characteristics of a normal business.

Yet to many academics, treating a university as a business is a kind of heresy. Suggest that revenues must match expenditures, and the vice-chancellor will be accused of ‘neo-liberalism’ or some other thought crime. But accounts, unlike ideologies, must add up.

Balancing the books is harder than it looks. Academic research is expensive, and most research papers are rarely cited. Teaching is costly too, structured around one of the shortest working years in the economy. Long, languid summer breaks leave expensive buildings standing empty. Imagine a hotel that closed for a third of the year but kept all staff on full pay. And productivity gains are virtually unknown in universities. It takes the same amount of time to deliver a one-hour lecture today as it did centuries ago when universities were founded.

The Australian government does not make the vice-chancellor’s job easier. Universities are Australia’s most over-regulated industry. Ministers turn over frequently; I dealt with 15 of them during my career. Not one could resist tinkering with the system.

One week, universities are told to produce job-ready graduates; the next, to defend free speech; the next, to be commercial innovators or regional job creators. Tertiary education ‘commissions’ are created, disbanded and then created again. The rules change constantly, funding formulas are rewritten, and reporting requirements multiply.

Universities are like Lego in the hands of a child — forever pulled apart and reassembled in new shapes, never left to settle. Is it any wonder, then, that vice-chancellors fall back on the only lever still available: staffing levels?

It is not that they enjoy cutting jobs. Quite the opposite. Vice-chancellors know each redundancy means hardship for colleagues and disruption for students. But ignoring financial reality does not pay the bills. Unlike governments, universities cannot print money.

Of course, staff will protest, and their unions exist to defend their members. But the public should not confuse understandable dismay with evidence of managerial malice. Vice-chancellors are not villains twirling moustaches while gleefully slashing budgets. They are closer to airline CEOs: everybody insists on cheap fares, no cancellations, and world-class service — but nobody wants to pay what it costs to deliver them.