University challenge: Governing the trilemma of sustainability, integrity and legitimacy
The Yale report is American in its specifics, but its conclusions resonate in Australia. Public attitudes here have also shifted, leading to increasing scrutiny of how universities are governed. Media reporting on student and staff safety failures, systemic wage underpayments, chancellor conduct and executive remuneration has contributed to that scrutiny.
Public scrutiny
Since 2024, a series of federal and state processes have examined governance in the sector. They began with the Australian Universities Accord, commissioned in 2022. Its final report found that governance and regulatory arrangements had been too slow to respond to emerging risks, particularly in relation to student wellbeing and employment practices. It recommended a coordinated national effort to improve university governance, including the composition of governing bodies, patterns of accountability, and institutional culture.
A detailed examination of governance failures also formed part of a Senate Education and Employment Legislation Committee inquiry, launched in January 2025. It examined governing body composition, financial reporting, workplace law compliance, executive remuneration and the use of consultants. The evidence it received was extensive and often confronting. The committee concluded that governance failures were systemic rather than isolated, and recommended that state and territory governments review university legislation to ensure governing bodies remain fit for purpose and focused on core purposes of education and research.
The submission by TEQSA, the national higher education regulator, to the Senate inquiry identified recurring issues across the sector, including weak financial oversight, ineffective governing bodies, poor management of conflicts of interest, gaps in regulatory compliance and deficiencies in academic governance. Workforce issues, including wage non-compliance, were also prominent. TEQSA concluded that governance failures were undermining institutional performance, harm students and staff, and erode public confidence.
Concurrently with the Senate inquiry, Commonwealth and state Education Ministers established the Expert Council on University Governance (ECUG) to develop a new governance framework. Where the Senate inquiry focused on identifying failures, the ECUG’s task was to articulate principles to guide reform. The ECUG found that governing bodies often privileged management perspectives over other voices, and that financial considerations displaced broader institutional purpose. Leadership responses to criticism were sometimes defensive. The ECUG concluded that, while formal structures are important, good governance performance depends on culture as well as design.
The ECUG developed eight principles that emphasise accountability for performance and culture; transparency in decision-making; independence in oversight; diversity of skills and perspectives; inclusive engagement with staff and students; integrity and alignment with institutional purpose; long-term sustainability supported by effective risk management; and responsible workforce practices consistent with legal and public expectations.
These principles provide a framework, but they are neither prescriptive nor self-executing. Their impact will depend on whether governing bodies and university leadership adopt them in substance rather than form, and whether behaviours, as well as structures, change.
Ongoing formal parliamentary inquiries in New South Wales and Victoria are now considering how governance frameworks should be strengthened in practice. The Victorian inquiry is examining how measures consistent with the ECUG principles might be reflected in legislation.
A unique governance model and context
University governance is unique. Universities are public facing, but they are not public entities. Most are statutory corporations established by legislation that is specific to each. They are autonomous institutions that operate within a multi-layered funding and regulatory environment. Their income comes from a mix of public funding, domestic and international student fees, research grants, and philanthropy. Unlike corporations, universities do not operate under market discipline or shareholder control, and regulatory intervention is limited and often slow. This leaves internal governance arrangements with a lot of work to do.
Most universities are governed through a tripartite structure: a governing body (the council) responsible for strategy and oversight; a Vice-Chancellor and leadership team responsible for operations; and an academic board responsible for academic standards and integrity. Effective governance depends on how well these elements work together and how clearly their roles are defined.
Public commentary often attributes governance problems to “corporatisation” – shorthand for the displacement, since the Dawkins reforms of the late 1980s, of collegial governance by a New Public Management approach. This is superficially attractive, but incomplete. As submissions to the ECUG point out, the failures identified in TEQSA’s submission to the Senate inquiry would not be tolerated in a credible business corporation where accountability mechanisms to shareholders, regulators and other stakeholders are strong. The issue is not that universities have become too corporate, but that they have adopted elements of corporatised governance without proper accountability mechanisms, while weakening collegial structures.
The university trilemma
Modern universities confront a trilemma. They must remain financially sustainable, while safeguarding academic integrity in research and teaching, and maintaining public and political support in a contested environment. While these objectives are interdependent, they often result in tension. Decisions that advance one can compromise another. Balancing the three is complex and requires a sophisticated governance structure and culture.
The inherent trade-offs must be managed in a way that is credible to stakeholders and protects the unique public purpose of the university. If they are not, pressure for external intervention is likely to increase. Each governance organ has a distinct role to play. Governing bodies should focus on setting and overseeing purpose, strategy and risk appetite. Leadership should be empowered to innovate within defined parameters. Academic boards should safeguard academic standards independently of short-term pressures. Where these roles are blurred, accountability weakens and decision-making fragments.
Addressing the trilemma requires informed judgment. Governing bodies must have the capability to understand financial risks, academic priorities and regulatory obligations, supported by reliable information. Without this, authority defaults to management or is exercised on an incomplete basis. Formal compliance with governance requirements does not ensure effective oversight if those responsible are unwilling or unable to exercise independent judgment that is anchored in institutional purpose.
Councils
University councils sit at the centre of their governance framework. Their composition is set by legislation and typically includes ministerial appointees, elected staff and student representatives, and externally appointed members.
This model provides legitimacy, but it also creates challenges. Councils are often large and diverse. Their effectiveness depends on how they organise their work—through committees, delegation and clear accountability structures. Members of governing bodies must act in the interests of the university as a whole, regardless of how they are appointed. In multi-appointor councils, this discipline is essential. Without it, governance becomes either passive or factional.
They must avoid two failures. They must not defer uncritically to management. Nor should they become representative assemblies pursuing sectional interests. Their role is to act as stewards of institutional purpose in the public interest.
Governance depends on culture as well as formal design. It is not only about structures but about how those involved exercise judgment in practice. The ECUG recognised this, emphasising the need for a broader cultural shift. Leadership must be open to scrutiny. Governing bodies must engage constructively with stakeholders. Decision-making must be transparent.
This is where reform becomes difficult. Principles are easier to articulate than to implement. Regulation can set minimum standards, but it cannot prescribe judgment or institutional ethos. TEQSA can monitor compliance, but it cannot create trust.
The ECUG framework is a foundation rather than a solution. It provides a common language for governance and clarifies expectations, but it does not resolve underlying challenge unless those responsible for governance engage with it.
University challenge
Australia’s 37 public universities vary significantly in scale, mission and complexity, but they share a common purpose. They educate around 1.6 million students, employ more than 140,000 staff and generate approximately $45 billion in annual revenue, while performing a large share of national research.
The current debate is not simply about improving governance practices. It is about whether universities can continue to exercise autonomy in setting their own priorities and managing competing demands. That autonomy depends on maintaining confidence that those responsible for governance are capable, accountable and aligned with institutional purpose.
The modern trilemma for Australian universities will persist. Financial pressures, academic integrity and public expectations will continue to pull universities in conflicting directions. Effective governance cannot eliminate these tensions, but it can make them visible and surface the way in which they are addressed. Where it does not, the pressures do not disappear—they shift outward, inviting external scrutiny and intervention.
The question is not whether governance reform, as an end in itself, is needed. It is whether universities can demonstrate, through their decisions and behaviour, that they remain capable of governing themselves in the public interest.
Dr Pamela Hanrahan FAICD is an Emerita Professor at the UNSW Business School and co-lead of the Board Advisory and Governance practice at Johnson Winter Slattery. She was the Law Council of Australia’s representative on the Education Ministers’ ECUG.