The 2025 senate inquiry into university governance laid out the scale of the problem. Vice-chancellor remuneration has quadrupled in real terms since 1985. Casual and sessional staff now make up 49 percent of the university workforce. More than 40 percent of universities have spent most of the past five years in deficit.
This has played out differently in each of Australia’s northern universities: James Cook University (JCU), Charles Darwin University (CDU) and Central Queensland University (CQU). However, all three share common patterns: international revenue dependence, an infrastructure-first mindset, executive incentive misalignment and reactive cost-cutting that has eroded capability.
In northern Australia, where one university might be the only option for hundreds of kilometres, that confusion has real consequences: jobs lost, courses cut and fewer people trained for the jobs that industry demands and communities need.
Australia’s public universities are created by state laws but funded by the federal government. These are publicly funded institutions. Government revenue, by and large, underpins their operations and subsidises much of their infrastructure investment. Universities also operate with significant autonomy over how they spend, what they build and who they hire. Unlike commercial entities, they don’t bear the full cost when strategies fail, because ultimately, they are public goods. Unlike government agencies, no one sets their priorities. The result is autonomous decision-making with socialised risk.
The Universities Accord (Australian Tertiary Education Commission) Bill 2025 establishes a new body, the Australian Tertiary Education Commission (ATEC), to negotiate mission-based compacts with every university. Compacts offer a framework to align institutional strategy with public purpose, link funding to performance, and differentiate missions across the sector. On paper, this is the right mechanism.
But the senate committee inquiry into the bill heard compelling evidence that the compact framework, as currently drafted, may not deliver on this promise. The commission would have just three commissioners to negotiate compacts with 37 universities. Its staff would be appointed at the discretion of the secretary of the Department of Education. It would need ministerial approval to publish its own advice. Several universities and the National Tertiary Education Union told the inquiry this does not look like independence.
The Tertiary Education Quality and Standards Agency has its own problems. Education Minister Jason Clare has acknowledged the regulator has a ‘sledgehammer and a feather, and not much in-between’. In a city such as Darwin or Townsville, where one institution serves an entire region, heavy-handed intervention or no intervention at all are both bad options.
A compact framework designed around the operating assumptions of large metropolitan universities will not address the structural conditions facing CDU, JCU or CQU. Northern universities operate in thin markets with small student catchments, limited labour mobility and disproportionate infrastructure risk. Their missions span higher education and vocational training, Defence workforce development, First Nations participation, and health workforce pipelines for communities with some of the worst health outcomes in the country. The compact framework needs to be designed with that reality in mind.
That means compacts must reflect regional mission, not just sector-wide priorities. A compact negotiated with CDU should account for the fact that Darwin is the only city in a jurisdiction larger than France and Spain combined, serving communities across one of the most remote regions on earth. Generic performance metrics designed for universities with 50,000 students will not capture what matters in these contexts.
It also means the state-federal accountability gap has to be addressed directly. ATEC should be required to consult with state and territory governments on compact content, and compacts should clarify which level of government bears responsibility when institutional strategy fails. At the moment, state-legislated institutions pursue Commonwealth-funded strategies with minimal coordination between the two. The compact framework could resolve that, but only if it is designed to.
Compacts should also require coordination across institutions that share the same regional markets. Northern Australia does not need three universities independently pursuing international expansion, duplicating program offerings, or competing for the same thin domestic market. In Darwin, CDU now delivers its own Menzies Medical Program alongside the Flinders University Northern Territory Medical Program. The result is two programs competing for the same small pool of clinical placements and supervisors in a jurisdiction that struggles to retain the doctors it already trains.
And compact design must account for dual-sector complexity. CDU and CQU deliver both higher education and vocational training. Their vocational-training obligations are funded, regulated, and accredited through entirely different frameworks. A compact that addresses only the higher education mission will miss half the picture and half the risk.
The ATEC legislation represents a genuine opportunity to get this right. If mission-based compacts are designed with regional institutions in mind, they could provide the accountability and coordination that northern Australia’s universities have lacked. If they are designed generically, they will simply layer new compliance over the same structural tensions.
The senate inquiry opened the door. The compact framework is the mechanism. The question is whether the architecture will be built to fit.