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DANIEL:

From Schwartz Media. I’m Daniel James, this is 7am.

A quiet transformation is underway at Australian universities. Behind closed doors, powerful consulting firms are helping to reshape higher education; cutting courses, centralising power, and outsourcing staff.

One firm in particular, Nous Group, is now embedded in some of the country’s most prestigious institutions. At the Australian National University, its role in a $250 million restructure has been concealed, even from Parliament, raising serious concerns about transparency and accountability.

Today, Senior Reporter for The Saturday Paper Rick Morton, on how consultants gained control of the university sector, and what it could mean for the future of higher education.

It’s Monday, June 16.

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DANIEL:

Rick, Universities as a sector have been sounding the alarm for a long time that government policy, including funding cuts and student caps, has been having a big impact on their ability to function. So can you give me some examples of how consultants fit into that? How are universities using them?

RICK:

So consultants appear to be coming in and a great example that is one I covered recently at University of Technology Sydney where KPMG were brought in, but were... You know essentially told go and look at individual research output from individual researchers and produce a master list of those who are you know not contributing enough profit to the university which as it was put to me would probably contravene the enterprise bargaining agreement at that university because you can't – you can you can performance manage someone for not meeting expectations you can't make redundancies based on performance. That's not how this is meant to work. And so the consultants, of course, took a particularly corporate view across the board. They're looking at profit and loss, they're looking at ways to rationalise and centralise services. But the actual structure of a university is incredibly special for a reason. It's meant to be a kind of a distributed network of knowledge centres, faculties, you know, people. Who are learned in their field, who contribute to the life of the university and who are cooperative in the way that university is run and increasingly, particularly with consultants like the Nous group which is one that we'll come to in quite a bit in detail, the advice is centralise all of your functions and to the degree possible handicap what it is the faculties and the academic staff are able to do and the say they have over the future of this institution. Which would make it a lot more like a corporation and a lot less like a university.

DANIEL:

Now, there are a number of consultancy groups involved in all of this, but you did mention Nous Group, which is a global consulting firm, and they do a lot of work with the Australian National University. So what did you find out about the role they are playing there?

RICK:

Nous is fascinating. I particularly zeroed in on them because I think they've had the most astounding growth off the back of their participation in higher education advisory services. Of course, this story was first being told through the Australian Financial Review. A former colleague of mine, Julie Herr, who's a fantastic reporter, was looking at misgivings, I guess is one way of saying it, early on within the tenure of the new vice chancellor there, Professor Genevieve Bell and her chancellor, Julie Bishop. Now, Genevieve Bell had announced this kind of $250 million dollar restructure. At the ANU because they said that they were running out of money structurally. And there were gonna be 600 something job losses. But what they didn't do is that they didn't tell anyone that they were using the Nous Group's advice or paying them for that advice. In fact, they were incredibly tricky with how they disclosed any mention at all that they were using external consultants to advise on this enormous restructure.

DANIEL:

How widespread is the use of consultants across the Australian University sector?

RICK:

I mean, they're everywhere. They are literally everywhere. I mean...KPMG was paid $8.5 million for business advisory, which is consulting at University of Melbourne. Deloitte was another 1.5. Griffith University is paid now, I think it was almost 2.5 over the last 16 months. And then lots of kind of boutique ones that are even like a tier below now. So they're absolutely everywhere. And the irony is that universities themselves often have their own consulting output. Won't use them because they're worried about pushback from staff and letting their plans kind of leak out into the public. The way the system has been built up there's so much money sloshing around that to the extent that a firm wants to give you the tough advice they're only prepared to do so if they think they can still keep getting work. I mean that's just the sad reality, is that you're not necessarily going to be told anything you don't want to hear.

DANIEL:

Coming up after the break - David Pocock takes on the uni bosses.

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DANIEL:

Rick, late last year the ANU were brought in front of senate estimates to ask about the restructure you mentioned earlier. And David Pocock was trying to get to the bottom of just how much the uni had paid Nous group for the restructure.

Audio excerpt – David Pocock:

“Thank you, Chair. Just finally, is it correct that you've engaged Nous group? And what work are they doing? Is it related to finding savings? Or what's the scope of that work?”

RICK:

There was one example where the Chief Operating Officer Jonathan Churchill was asked, how much is this contract worth?

Audio excerpt – Speaker 1:

“Thank you, Senator. We have paid now circa $50,000 so far this year.”

Audio excerpt – David Pocock:

“$750,000?”

Audio excerpt – Speaker 2:

“$50. $50? Circa. Yeah, sorry. You're not…”

RICK:

With nows that's the question very easy to understand how much was his contract worth and what he said was we have paid to date 50 000 to nows that wasn't the question and it also wasn't correct as a standalone answer on if he had been asked how much he'd been paid because the invoices at that point were about $450 000 to nous.

Now we now know when he asked this question on November 7 last year, that a contract for Nous had been signed and set in motion a month before, and that that contract was with $837,000.

Now, Genevieve Bell was also asked, have you used Nous to advise on the restructure? And the answer she gave was, I would argue, deliberately obtuse.

Audio excerpt – Speaker 3:

“I initially engaged the NAOS group a number of months ago, Senator, to help think about how to look at the role and the changing role of universities in a global landscape. I was interested in what were the ways that universities thought strategically and what was a global survey, really.”

RICK:

What she said was, oh, I brought them in early on in my tenure when I got the VC job to advise the university's position in relation to other universities. And how we're tracking. Now that makes it sound like that's not involved in the restructure.

That's not true. And of course we now know, subsequent to that fact, that within 17 days of the vice chancellor getting or starting the job, she had authorised the pursuit of these consulting firms for an enormous restructure at the ANU.

When it was subsequently emerged that David Pocock had been misled, he was furious. And he put out a statement in April this year, essentially saying that it was appalling and that he takes this incredibly seriously. And the conclusion he reached was that he had been misled by these officials because they didn't want to answer the question.

And of course, after that, there were also a bunch of questions on notice. Which through the Parliamentary Estimate System, you can take a question on notice, you can just take it away, you can use all your resources at your institution, your department, whatever it is, and answer the question properly and come back and tell the Senate the truth. And it is an offence to mislead the Senate.

There were several questions on notice that printed outright mistruths. About the use of Nous consulting and about the value of those contracts. They had to be recalled and corrected. The question that remains is how did that happen? Who signed off on those questions on notice responses?

The fact that there has been a pattern of behaviour here now has led people to ask even more questions that they might have otherwise been happy to accept the answers to, which is, what are your motives behind this restructure? Why are you paying now? And what are you doing with the advice that you're refusing to tell us about.

DANIEL:

So a lot of secrecy and uncertainty around all this, but what we do know is that universities are spending a lot on consultants, which begs the question, shouldn't university management, people like the vice chancellor and the people on the university council have a sense of how to make savings or where to spend money or how to structure their business? I mean, isn't that their job?

RICK:

Yeah, that is their job and they should do it. We have a fundamental structural problem with universities, and to some extent, they won't be financially sustainable while the government that funds and regulates them doesn't seem to care about their role in society. But VCs are paid, you know, something around a million dollars on average in Australia to do these jobs because we're told they demand an incredibly astute and sensitive skill set, which is to manage the academic output and the rankings and the quality of the institution with the business of running such a large organisation. But university councils have even fewer oversight mechanisms than a corporate board. There are no shareholders to whom they're accountable. There is no publicly listed ASX meeting for these council members. The VC, particularly at the Australian National University, the VC can only lose their job if they resign, or if the council rescinds it.

DANIEL:

So, Rick, what impact do you think all this will have on the university sector, the reliance on consultancy firms, the lack of funding from federal government to universities? What does the future of the university look like at the moment?

RICK:

Pretty grim. And you know, staff are already overworked and overburdened, particularly academic and professional staff trying to just keep the wheels turning on these places that have been gutted. And, you know they tend to get gutted every other four years. There's always a restructure happening at a university at any given point in time. And of course, university VCs didn't want to make these decisions on their own because there's so much political blowback. Within the organisation so they'd get these consultants in, but of course now everyone's very cranky that they're using these consultants. So then you've got Griffith University now just hiring the consultants as full-time employees. I've, you know, someone told me to look at the vice chancellor's office at Griffith and there's two employees there who were hired directly from Nous, who were principal consultants, who are now directing transformation within the vice-chancellor's office. So it's pretty grim. I mean, what does it look like in the future? We just keep cutting. And Nouse themselves are quite explicit in their report where they interviewed the chief operating officers. They literally said that the academy's up for grabs. That's how they phrased it, it's up the grabs. Which tells you everything you need to know, I think, about the way they see this.

DANIEL:

Rick, thank you so much for your time.

RICK:

Thanks, mate, I appreciate it.

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DANIEL:

Also in the news today…
Prime Minister Anthony Albanese has confirmed he’ll meet face-to-face with Donald Trump this week, in a high-stakes diplomatic encounter on the sidelines of the G7 summit in Canada. The meeting comes amid escalating tensions in the Middle East and growing uncertainty over the Aukus submarine deal, which the Pentagon is now reviewing. Albanese says he’ll use the meeting to press Australia’s case for a tariff exemption and to highlight the strategic benefits of Aukus for the US.

And

Israel has launched a series of strikes on Iran’s energy infrastructure, targeting a major oil refinery in Tehran and a gas facility linked to the country’s largest production field. The attacks have sent crude oil prices sharply higher and raised fears of a sustained spike in fuel costs. Analysts warn that any further escalation — particularly in the Strait of Hormuz — could destabilise global energy markets.

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