Why university governance fails, and how to fix it: The case for new accountability bodies for Australian universities

Governance failures at Australian universities have surfaced in the public sphere repeatedly over the past decade — usually through anti-corruption commissions, courts or the media, and rarely through universities’ own governance systems. We argue this is the unintended consequence of corporate governance reforms in the 2000s, which gave universities the form of the public company without its accountability mechanisms. In public companies, shareholders can remove directors. In democracies, voters can remove governments. But nobody can remove university council members for poor performance — except the council itself. And councils often lack the tools and incentives they need to govern well. Councils depend on management for information about management’s own performance. And Chancellors often control appointments to council, favouring network familiarity over merit or diversity of expertise. Those who bear the consequences of council’s decisions, students, staff and the public, have no internal way to hold council to account.

What has brought university governance onto the public policy agenda in recent years is that the economic headwinds facing the sector have exposed a two-decade-old weakness. The first half of this paper diagnoses this problem as one resulting from a broken delegation-accountability loop. The second half of the paper proposes a way to close this broken loop.

We propose the creation of a university forum, a standing statutory body written into Australian university establishing acts, sitting alongside council, the academic board and the executive as a fourth element in universities’ governance architecture. The forum would be an accountability body only, not displacing the governance roles of the council and the academic board, or the management role of the executive. Other responses to governance failures have focused on strengthening external regulation, or on expanding staff and student consultation and participation. We argue neither is sufficient on its own. External regulation typically arrives after harm has occurred, and participation without powers does not change who is accountable to whom. The forum is designed to close the accountability gap directly, and is complementary to recent changes to the regulator’s powers and the threshold standards requiring consultation with staff and students on decisions that affect them.

We use the Australian National University Act 1991 to illustrate the design in full, as the ANU is the only university established by an Act of the federal Parliament. But nothing about the model relies on the ANU’s particularities — it could be applied with minimal modification to any Australian university.

The forum would be composed of the stakeholders of the university, in proportion to their stake in the institution. Each university’s establishing act would allocate seats according to that university’s own balance of stakeholder interests.

The university forum would have five functions:

deliberation on any university matter;

voice, through providing advice and reports to the council or the executive;

scrutiny, including the power to compel documents and require officers to attend and answer questions;

a role in council appointments through participation in a nominations committee; and,

the power to remove council members, subject to safeguards that mean it would only be triggered in exceptional circumstances

We also suggest that a First Nations constituent group of the forum could exercise the powers of advice, scrutiny and deliberation on its own. In effect, this would mean that First Nations representatives could have a distinct and direct governance relationship with the university, in addition to participating in the forum on equal terms with other constituent groups. However, this innovation requires proper consultation with First Nations stakeholders.

A key design principle is that the forum would influence who sits on council but not what the council decides. A forum would not be an ‘upper house’ of Council holding veto rights, or a body which holds powers to decide on certain matters. It would not hold the power to approve, delay, or overturn any decision Council makes. The council would remain the governing body and the accountable authority under whatever legal accountability framework applies to the institution. Council members would still serve in their own right rather than as delegates of those who nominated them, and would still owe duties to the University as a whole. And the Vice-Chancellor would still run the University.

What would change is that the council would no longer be accountable only to itself. The forum would be an accountability body, not a decision-making body. A forum would hold scrutiny powers to require university leaders to explain decisions and supply information, and to offer advice in turn.

To be effective, the forum’s status must be entrenched in its university’s establishing Act, rather than being specified in an instrument that the university council controls. If the council can narrow the forum’s powers — or abolish it outright — when it becomes inconvenient, the forum would be unlikely to use the powers it is granted.

Most of the benefits of a forum for good university governance will result from the anticipation of scrutiny rather than from the actions of the forum themselves. A council that knows it may be called on to publicly explain a decision has an incentive to make that decision carefully. A council that can operate in secrecy has less incentive to be so diligent. Accordingly, the forum is designed so that governance failures can be caught and corrected early and internally, before they generate the reputational and financial costs seen across the sector in recent years.

The model proposed here is institutionally conservative. It provides new guardrails rather than a redistribution of decision-making power, reforming the university from inside rather than adding another instrument for a regulator to wield. No governance design can solve every problem an institution faces. The aim here is more modest: to build structures and incentives that help the university identify and solve the right problems, balancing the interests of students, staff and the public against the practical demands of running a large, complex organisation.