Speech to The Australian Higher Education Summit

• Thanks Helen and thanks for inviting me to participate in today's panel discussion.
• I propose presenting some observations on behalf of the Business Council of Australia in my capacity as a member of the BCA's Education and Training Task Force.
• Then I will offer a few personal observations which should not be attributed to the BCA.
• First the BCA's position.
• As you are probably aware, the membership of the BCA comprises the CEOs of Australia's leading 100 companies.
• BCA is involved in policy development and advocacy on behalf of the corporate sector on a range of key areas.
• One of those key areas is education and particularly higher education.
  - In fact education is right at the top of our current agenda.
• We believe the success of the higher education sector is absolutely critical to Australia's business and economic future.
• Higher education will play a vital role in meeting the BCA's aspiration for Australia that it should be a great place to live, learn, work and do business.
• David Murray - the Chair of BCA Education Task Force will be speaking to these issues tomorrow.
• The BCA has made a major contribution to the Nelson Review Our particular areas of focus in that contribution have been around funding, outcomes measurement and governance and governance is the topic today.
• In relation to governance BCA has two core propositions.
• First, robust and effective governance structures and processes are absolutely fundamental to the success of our universities
• Second, the governance structures and processes which we currently have in our universities can be significantly improved.
• These are not new messages they were messages in the Hoare Report in 1995
• They were messages included in the West Report in 1998.
• It is a pretty safe bet that they will be core messages coming out of the Nelson Review in 2003.
• There has been some real progress in university governance but it has not been uniform and the process is far from complete.
• Each and every one of our universities is entitled to governance structures and processes which enable it to meet the challenges which lie ahead.
• Those challenges include:
  - continued internationalisation
  - seeking out, developing and managing partnerships with the private sector
  - to successfully commercialise research
  - leveraging the significant assets and huge intellectual capital with which our universities are endowed not for the benefit of a fortunate few but for the benefit of all Australians.
• The BCA position is about developing appropriate governance structures and processes within each and every one of our tertiary institutions regardless of how old or new they are and regardless of where they happen to be located.
• The three key elements in the BCA's Submission to the Nelson Review on governance issues cover:
  1. Objectives clearly articulated objectives for each university and for the role of its governing body
  2. Qualifications and Capabilities ensuring that every university governing body has the range of expertise and depth of knowledge to effectively set direction, monitor performance and manage risk in the complex and competitive environment of 2003.
  3. Responsibilities and Accountabilities To ensure that the members of governing bodies accept their responsibility to further the objectives and interests of the institution rather than the parochial objectives and interests of particular sector interests.
• Could I now offer a couple of personal observations on those three key elements.
  Objectives
  Qualifications and Capabilities
  Responsibility and Accountability
• These are my own views not necessarily the views of the BCA or my firm.
• First in relation to objectives
• The constitution, powers and objectives of our tertiary institutions
  - must take account of public responsibilities
  - must safeguard academic independence
  - must facilitate prudent and sensible commercial dealings
  - must permit effective commercialisation of research in partnership with appropriate parties
  - must permit leveraging of lazy assets for long term benefit of the institution.
• I agree that in some respects this distinguishes universities from say public companies. Perhaps they are more like large professional firms.
• I am told that the constitutions of our newer universities for the most part do achieve these objectives.
• I remain to be convinced that the same can be said of the outdated constitutions of some of our more venerable universities including leading institutions like UQ, UNSW, USydney.
• In my view
• It is fundamental to good governance that these universities should have the power to deal with their assets without reference to any political masters.
• It is also fundamental to effective governance that these universities should have the ability
• to freely form appropriate business associations again without reference to any political masters.
• Next, Accountability
• The question is should governing body members be required to act to promote the interests of particular stakeholders or should they act to promote the interests of the whole institution and all of its stakeholders.
• I believe representation of stakeholders students, staff, community is entirely appropriate.
• But at a point in every debate basic corporate governance principles dictate that institutional interests must prevail over sectoral interests.
• Those "representatives" must become "counsellors".
• It seems to me that's the end of the issue.
• In the world of business the basic governance principle is promoted and indeed sanctioned by the provisions of our corporations law.
• Those same basic governance principles and those same provisions of corporations law should apply equally to the members of the governing bodies of our unis.
• A very senior university officer recently said quote the worst feature of senates is that they tend to be councils of representatives rather than governing councils unquote.
• One final personal observation on qualification of university board members.
• I cannot let this opportunity pass without saying a few words about political appointees.
• I know political appointees need university boards but do university boards really need political appointees.
• There are better ways of keeping in touch with the community.
• South Australia has shown the lead they did away with political appointees in 1996 Western Australia has followed suit.
• I recently asked one of their Vice-Chancellors whether that has worked or whether they missed the contributions of political appointees on his uni board.
• The response left me in no doubt that they were getting along fine without politicians on their council.
• I want to make it quite clear I am not criticising individual political appointees. I am sure some of them make outstanding contributions.
• My criticism is criticism of the process.
• The process of appointing representatives to university governing bodies should be a process owned and managed by those governing bodies not a process managed by political masters.
• An argument is put by some that because Canberra provides the funding it should provide the political nominees.
• With respect that suggestion completely misses the point.
• I am the first to acknowledge that it's a tough call to ask a government to do away with "jobs for the boys".
• Credit to those who have and credit to those who are prepared to do so in future.
• At a minimum could we at least take a step in the right direction and address the absurd position in some NSW universities where one politician has to come from the Lower House and one from the Upper House.
• In conclusion Having got that off my chest and probably in the process made absolutely certain that I'm unlikely to have the pleasure
• of being nominated to a university council, at least on the East Coast, I'll take you back to the BCA position.
• There are other governance issues identified by the BCA which we need to address.
• One issue is the size of university governing bodies and it's not necessarily the case that smaller is always better. There are good arguments for larger councils and more representation.
• Another issue is the pressing need to do away with onerous and wasteful reporting requirements. Universities are sending vast bundles of reports off to Canberra which I understand no-one is available to look at.
• We may be able to touch on those issues in the panel discussion but they are peripheral to the main theme.
• At the BCA we believe that in a world in which economic performance is linked to knowledge and innovation the future of Australian business is very much tied to the ongoing success of our tertiary institutions.
• We also believe that the success of our tertiary institutions is very much tied to proper funding models and to proper governance models.
• Hence our focus for the BCA response to the Nelson Review.
• The good news is the process of change in university governance is underway just as it is in business.
• The BCA's strong view is that that process must continue in universities just as it must continue in business.
• Thank you again for the opportunity to participate