1.
WORKING PARTY ON SENATE PROCESSES
10 September 2003
MINUTES
Present: / Judge Kate O’Brien (chair)Prof Geoffrey Bolton (Chancellor)
Mr Andrew Bain
Ms Alison Gaines
Prof Jen McComb
Mrs Gaye McMath
Apology: / Mr Mal Bradley
1.National Governance Protocols for Public Higher EducationInstitutions
The last meeting of the Committee had briefly discussed these Protocols, which had been released by the federal Government on 13 May as part of the federal Budget. The budget papers include a requirement that all universities adhere to the Protocols if they are to receive increased funding. The agenda for this meeting included a paper outlining the extent to which the University meets each of the 12 Protocols, and action that the University would need to take to comply fully with them.
The meeting was generally supportive of the measures contained in the Protocols, noting that the University already complies with most of them. Several of the Protocols were discussed:
#3.The enabling legislation of the institution should specify the duties of the members of the governing body and sanctions for the breach of these duties. Each member should be appointed or elected ad personam and should be responsible and accountable to the governing body (council) and act solely in the interests of the university rather than as a delegate or representative of a particular constituency. Duties of members should include the requirements to:
- act solely in the interests of the institution taken as a whole having regard for its objects;
- act in good faith, honestly and for a proper purpose;
- exercise appropriate care and diligence;
- not improperly use their position to gain an advantage for themselves or someone else; and
- disclose and avoid conflicts of interest.
Sanctions should include a requirement that the governing body has the power to and must remove any member of the governing body from office if the member breaches the duties specified above, is or becomes disqualified from managing corporations under Part 2D.6 of the Corporations Act.
The meeting agreed that these are the duties of Senate members. A group of NSW Chancellors had expressed concern at the requirement that members act “solely” in the interests of the institution taken as a whole, suggesting this be redrafted as their “paramount” fiduciary obligation. The meeting was not overly concerned about this, noting that Senators’ fiduciary obligations require them to act in what each sees as being the best interests of the University as a whole, while at the same time staff and student Senators are entitled to report the views of their constituencies.
The meeting felt that the principle of being able to remove Senators who breach their duties is sound. The working party was unaware of the University having ever experienced breaches of Senate duties that would warrant such action, so it believed such sanctions would rarely arise. It felt that sanctions should be specified by regulation rather than in the Act: the duties should be spelt out in the Act, and procedures for removal in regulations. The Murdoch University Act provides that a Senator is disqualified from office only if the Governor terminates the Senator's term on Senate for inability, inefficiency or misbehaviour; is an undischarged bankrupt; has a guardianship order in force; is convicted of an indictable offence; is absent (without leave) from all meetings of the Senate for six consecutive months, or from more than one-half of the meetings during 12 consecutive months; or is an elected student or academic staff Senator and ceases to be a student or academic staff member. It was suggested that the intention of the Protocols might be captured under “misbehaviour”.
#4. Each governing body should have in place a formal program of professional development for members to build the expertise of the governing body and to ensure that all members are aware of the nature of their duties and responsibilities.
The University has a comprehensive induction program for new Senators, and financial management training for all interested Senators. The working party agreed that it is desirable to have a program of professional development for continuing Senators. Suggestions floated included asking the Australian Institute of Company Directors (AICD) to run a tailored half-day course for Senators; paying for Senators to attend AICD courses; and taping onto CD an interactive training program which can be used later by individual Senators (this approach is used by the Australian Taxation Institute). It was agreed to ask the University’s Staff Development Manager (Michael Jones) to suggest a program for professional development of Senators.
#5. The size of governing body is not to exceed 18 members. There should be at least two members having financial expertise and at least one member with commercial expertise. There should be a majority of external independent members on the governing body and not include current members of any State or Commonwealth parliament or legislative assembly.
Senate satisfies all the requirements about categories of membership, but this Protocol would require a reduction in the number of Senators from 25 to 18. The working party believed that the University should not volunteer this reduction, but if this size becomes the norm, the University should be prepared to conform with it.
#6. The institution is to adopt systematic procedures for the nomination of prospective members of the governing body for appointment by the Governor in Council, the relevant Minister, or the council itself. This responsibility is to be delegated explicitly to a nominations committee of council. The institution is to publicly nominate at least one preferred candidate for any current or imminent vacancy on the governing body to be appointed by the Governor in Council or relevant Minister.
The meeting opposed the requirement that institutions “publicly” nominate persons to be appointed to the governing body by the Minister. This was seen as undesirable, causing unnecessary embarrassment to the individual if the nomination was not accepted by the Minister. It was agreed that the University should seek clarification of what is intended by this Protocol. The University might benefit by advertising to seek expressions of interest for appointment to Senate, when vacancies are imminent. Or it could advertise annually for expressions of interest to be added to a register. It would be useful to know if this would satisfy the Protocol.
#11. The governing body is required to effectively oversee controlled entities which incur risk by:
- ensuring that the entity’s board possesses the skills, knowledge and experience; necessary to provide proper stewardship and control of the entity;
- appointing some independent directors to the board of the entity, where possible;
- ensuring that the board regularly adopts and evaluates a written statement of its own governance principles;
- ensuring that the board documents a clear corporate and business strategy which reports and updates annually the organisation’s long-term objectives and includes an annual business plan containing achievable and measurable performance targets and milestones; and
- establishing and documenting clear expectations of reporting to the governing body, such as a draft business plan for consideration and approval before the commencement of each financial year and at least quarterly reports against the business plan.
It was noted that the University policy on Establishment and Operation of Incorporated Entities may need amending to incorporate the 5th bullet, thereby ensuring regular reports to Senate from controlled entities. The meeting agreed that the University should comply fully with this Protocol.
The working party concluded that it would be beneficial for the University to have some input into the content of the Protocols, especially #3 and #6. Any such letter should also indicate that the University takes governance very seriously, has already done a lot in this area, is already compliant with most of the Protocols, and is broadly supportive of the Protocols.
ResolvedtoRECOMMEND:7/2003 / (a) / that Senate support the principle of being able to remove from office Senators who breach their duties, with the mechanism for this to be specified by regulation rather than in the Murdoch University Act;
(b) / that Senate support the introduction of a program of professional development for Senators;
(c) / that Senate recommend to the Vice Chancellor that the University policy on Establishment and Operation of Incorporated Entities be amended to satisfy the fifth bullet of Protocol 11;
(d) / that the University write to the Commonwealth and WA Ministers for Education, advising that the University is broadly supportive of the proposed National Governance Protocols for Public Higher EducationInstitutions and already complies with most of them, while seeking clarification of Protocols 3 and 6 and opposing public nomination of persons to be appointed to the governing body by the Minister.
[Note: the Vice Chancellor has accepted recommendation (c). The necessary amendments are currently being drafted.]
2.Governance Working Party
The Chancellor’s Committee had recommended that the Senate Processes Working Party consider and report to Senate on its name and status; whether it should be reconstituted as the Senate Governance Committee; and, if so, what should be its terms of reference and constitution. The Committee had noted that the Senate Processes Working Party has been in existence since February 2001. Its initial terms of reference were “to consider how best to meet the information needs of Senate, the induction of Senators, and the role and functioning of Senate in light of the issues identified in the agenda papers of this meeting, and to bring forward recommendations to the Senate". A number of other issues have been referred to it in the last year, and last month the Chancellor’s Committee had referred to it two additional issues (see items 3-4 below). Furthermore, governance is gaining an increased focus for universities nationally. If there is a continuing need for such a group, the Committee felt it timely to consider whether the WP should be established as a standing committee of Senate. This could also position the University well in the national debate on university governance, consistent with Senate’s resolution that the University should aim for best practice in governance. The members of the working party have been appointed mostly on a personal basis, while ensuring a spread of backgrounds.
The agenda papers included the terms of reference of an equivalent committee at Deakin University, and a draft constitution and terms of reference if the working party supported its reconstitution as a standing committee.
Members all agreed that there is a continuing need for the working party. However, there were differing views on whether this would be best served by a standing committee or a working party, and how long the group would continue to be needed. The Chancellor and Pro Chancellor proposed a committee on the grounds that governance is sufficiently important to warrant a committee; it would pre-digest a lot of material that goes to Senate; and it is important to have governance at the forefront of Senators’ minds, promoting a culture that creates good governance. On the other hand, some members felt that Senate should keep a tight limit on the number of its committees, it would be a shame to wind up this working party which has worked incredibly well, and governance should not become an objective in itself. The meeting considered having a committee with a sunset clause, but in the end opted for rebadging the working party and updating its terms of reference.
ResolvedtoRECOMMEND:8/2003 / (a) / that the Senate Processes Working Party be renamed as the Governance Working Party;
(b) / that it be given the following new terms of reference:
- To advise Senate on the good governance of the University, including on:
(a)any governance changes that are necessary or desirable to meet the requirements of National Governance Protocols for universities and other best practice guidelines or trends, given Senate’s objective of best practice in governance;
(b)how Senate should review its own performance each year;
(c)any changes it considers desirable to improve the efficiency and effectiveness of Senate and of Senate committees;
(d)induction and professional development activities for Senate members;
(e)Senate delegations, which it shall review every two years;
(f)the content of Senate Standing Orders (with the drafting resting with Legislation Committee);
(g)any other corporate governance matters Senate may refer to it.
2. To plan any Senate retreat(s).
[Note: The meeting made one change to the draft terms of reference, extending the brief beyond Senate governance to governance “of the University”. It was agreed that these would be finalised by circulation, after the Pro Chancellor has the opportunity to check on terms of reference she had seen for a similar committee at USQ. The above resolution records the outcome of that process.]
3.Decisions on Senior Executive Remuneration
Mrs McMath declared a conflict of interest for this item, and participated in the discussion.
The Chancellor’s Committee has asked that this Working Party review the University’s procedures for determining senior executive remuneration in light of corporate governance trends, including consideration of whether or not Senate should have a Remuneration Committee, and advise Senate on what practice it believes the University should adopt. It was noted that corporate governance trends favour the establishment of a remuneration committee to determine senior executive remuneration. The Committee felt that this option needs to be considered.
The agenda papers for the working party contained relevant extracts from various statements of best practice in corporate and university governance; results received to date of a survey of practices within Australian universities; and the Senior Executive Remuneration Guidelines approved by Senate in October 2002.
The Chancellor reported that the Chancellor’s Committee favoured the Vice Chancellor’s remuneration being set by a smaller group, as a subcommittee of the Chancellor’s Committee (rather than the full seven-person Committee). The working party supported this approach. The associated issue was whether Senate should have some oversight over remuneration of the senior executives. It was noted that Senate had delegated to the Vice Chancellor the responsibility of managing the staff of the University. At the same time, various members suggested there is a trend to have Remuneration Committees involved in senior executive remuneration; it is important the Vice Chancellor provide Senate with a philosophy of remuneration of senior executives; and the Remuneration Committee needs to know how our senior executives are remunerated compared to their counterparts at other universities. It was agreed that there should be a Remuneration Committee as a subcommittee of the Chancellor’s Committee. It was also agreed to ask the Chancellor, Vice Chancellor and Mrs McMath to look at these issues, plus what information should be provided to the Committee and terms of reference for the Remuneration Committee.
The meeting considered the existing Senior Executive Remuneration Guidelines. It felt these need revision, e.g. the Chancellor does not need to approve leave carry forwards; and the requirement for an annual medical examination should clarify that the executive is not required to provide the results to the University. Mrs McMath was asked to update these and bring forward a revised version.
There was a brief discussion about the information on senior executive remuneration provided in the University’s Annual Report. It was suggested that this is not very transparent (especially where staff have served less than a full year or had leave paid out), and does not comply with the new ASX Best Practice Recommendations, though it does meet the requirements of the WA Auditor General. Mrs McMath offered to look into whether the relevant Note to the accounts could be made clearer.
4.Role of the University Secretary
The Chancellor’s Committee had asked that this Working Party define the role of the University Secretary in line with modern governance trends, and recommend to Senate a policy on the role of the position. The meeting noted that as part of its governance review in 2001, the Senate Processes Working Party had addressed some issues relating to the role of the secretary of the governing body. The Committee felt this needs to be considered further. The working party’s agenda papers contained Senate resolutions on the position of University Secretary, and extracts from best practice guidelines.
Mrs McMath offered to provide the next meeting with a job description of the new position of Director, Legal and Governance. It was felt that this and the new organisational structure would assist consideration of this matter.
5.Title of Pro Chancellor
The meeting considered whether the position of Pro Chancellor should be retitled as Deputy Chancellor. The Pro Chancellor felt that the current title lacks transparency, especially outside universities, where people have no idea what it means. A survey of University Acts around the country found that currently 7 universities use the title Pro Chancellor, while the overwhelming majority (82%) instead use the title Deputy Chancellor. The only ones using the title Pro Chancellor are 4 of the 5 in WA (Curtin, ECU, Murdoch, UWA), Australian Catholic University, Flinders and the ANU. Changing the title would require a change to the Murdoch University Act.TheAct is likely to be amended next year to comply with the NationalGovernanceProtocols, creating an opportunity for other amendments also to be considered.