Michael Spence describes the University of Sydney as ¡°an enormous institution more difficult to turn quickly than the Titanic¡±.

As head of the University of Oxford¡¯s Social Sciences Division, he could justifiably claim to have been part of one of the world¡¯s best and richest higher education institutions. On moving to Sydney to take up the post of vice-chancellor nine years ago, Dr Spence found a campus that was ¡°convinced¡± that it held a comparable status in Australia even though, in reality, it fell short.

In the country¡¯s first research assessment exercise, a third of Sydney academics did not submit returns ¡°because they didn¡¯t think their research was any business of the university¡±, Dr Spence said; when the results were released, the institution failed to meet expectations. Sydney faced a A$321 million (?198 million) backlog of repairs, and it struggled to pay the salary bill one month.

¡°The university wasn¡¯t in any meaningful sense a university: it was 16 faculties of the university constantly eating each other in internal disputes over resources,¡± Dr Spence told Times Higher Education. ¡°Six of the faculties were making all the money, and 10 were spending it hand over fist with little accountability.¡±

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Much has changed at Sydney during Dr Spence¡¯s tenure. The number of faculties has been reduced from 16 to six; about A$2 billion has been invested in the campus, and 122 undergraduate degrees have been condensed into 25 core programmes, with new, four-year courses being introduced to develop graduates with the broad skill set needed to succeed in the era of artificial intelligence.

Achieving this change has been challenging but, for Dr Spence, key to the turnaround has been providing faculties and academics with transparent data on resource and cost allocation ¨C and appropriate incentives to improve.

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At Sydney, faculties are allowed to retain all their income after a series of ¡°taxes¡± have been levied. The taxes fund central services, maintenance and investment in infrastructure, the cross-subsidy of research from teaching income, and also support subjects that are ¡°systematically underfunded¡±, such as medicine and music.

Information, argued Dr Spence, was a ¡°great disinfectant¡±.

¡°We decided that we would make explicit the internal cross-subsidies between parts of the university so as to force conversations about whether or not the bits of the university that were losing money were losing money because of choices they were making that represented a certain kind of profligacy, or because of choices they were making that were important on academic grounds and were good for all of us,¡± Dr Spence said.

¡°What everybody said was that academics ¡®are never going to be capable of having this conversation, it will just become endlessly political¡¯. What we found was that academics were incredibly supportive of one another¡¯s activities and that nobody wanted to close the conservatorium: they wanted to know that the conservatorium wasn¡¯t living high on the hog at their expense, but they understood that you have to teach the violin one-on-one.¡±

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The other key enabler of change, Dr Spence said, was staying true to core institutional values. In Sydney¡¯s case, this meant maintaining the breadth of subject coverage ¨C as the vice-chancellor put it, ¡°there¡¯s almost nothing we don¡¯t teach in one way or another¡±. Rather than closing large loss-making departments, Dr Spence?was convinced that the comprehensive nature of the university ¡°could be a strength¡±, in a context in which research was increasingly interdisciplinary, and incentives have been introduced in the institution¡¯s resource allocation system to encourage this.

¡°To bring together the university institutionally, we had to bring it together academically, to remind people why they were in a university, not a research institute,¡± Dr Spence said. ¡°A part of that is being in a community that has the capacity to answer the questions that our society is asking and not merely the questions that we are asking one another, which are inherently multidisciplinary.¡±

There have been difficulties along the way: Dr Spence acknowledged that a redundancy programme that saw about 100 staff leave in 2012 ¡°really knocked around the institution¡±.

But, after nearly a decade of rapid change at Sydney, many of the threats that Dr Spence perceives now are external. An advocate of the now-scrapped plan to uncap student tuition fees, because the move would have bankrolled bursaries for poorer students and shrunk Australian universities¡¯ reliance on international student revenue, he regards what he sees as the government¡¯s failure to fund the sector ¨C and research in particular ¨C as ¡°barking¡±.

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Meanwhile, Dr Spence said that he was concerned by the government¡¯s plan to make 7.5 per cent of sector funding dependent on performance measures, without consulting on what these will look like.

¡°This government has now twice attempted to do major higher education policy as a part of the budget process on the fly and in the fine print,¡± he said. ¡°That¡¯s simply a dumb way to lay foundations for the intellectual capacity of your country in a century in which we know that intellectual capital is going to become more rather than less important economically.¡±?

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chris.havergal@timeshighereducation.com