News & Views item - February 2006
Stop Your Whinging, Go Set Up a Lemonade Stand. (February 9, 2006)
Not all that long ago that was the sort of advice you might have gotten from one or the other of your parents when you were hectoring for an increase in your allowance.
These days under the paternal dictates of the Federal Government it's essentially what the universities are told to do to meet their deficits current or in the offing.
The Australian's intrepid Dorothy Illing has been nosing around the traps to see what the unis have been up to in the entrepreneurial stakes and it makes you wonder if it's just a matter of time before the tail will be wagging the dog.
In the 1990s Steven Schwartz, the newly appointed vice-chancellor of Macquarie University, was V-C of Murdoch University; he set about building a retirement village on university owned land. No not specifically for academics being put out to pasture, but as a money spinning venture. Clearly Schwartz was a visionary.
Ms Illing tells us, "It now has 165 units but aims to expand that to 348 units, plus 80 beds in a high-care facility. Vice-Chancellor John Yovich expects the retirement village to contribute $25 million to the Murdoch endowment over the next 10 years." Time will tell -- the cost of proper care for the aged is often substantially underestimated.
Professor Schwartz was straight forward in telling illing, "The main reason universities are doing these things is because they're not getting enough from their traditional sources. Those universities that are fortunate enough to have those assets, and exploit them ... would want to ... get as much value out of those assets as they can. And if they can do it and still develop research and teaching [associated with those developments], all the better."
And John Yovich said, "We will use these developments to build an endowment so we can start to produce a dividend to the university. It's not as if at this point in time we are taking income from them to supplement teaching or government-based income into the university," while former chairman of the Australian Research Council , Peter Wells and currently chairman of property services group CRI Australia says, "Now that the sector is facing a different paradigm in how it goes about its business ... they have got to look at all sorts of other ways to feed their core business."
So far CRI has advised 12 universities on asset development.
James Cook University has large tracts of vacant land and has hired CRI to draw up a master plan for a "university village". Possible ventures are "a hotel, conference centre, cinemas, retail outlets, student accommodation and recreational facilities to draw people from outside the campus into the area."
Vice-Chancellor Bernard Moulden told Ms Illing, "These are developments which must be viable commercially; it's not our core business, so we are not going to put capital into them. We want to attract developers to put money into them."
But Steven Schwartz admits there are risks. Apart from the usual commercial considerations, the biggest risk to a university is that it will overcommit land it finds it needs later for academic purposes. He made no mention of the possibility of university administrators taking their eye off the ball in regard to a university's primary functions.
And to bring home that concern Peter Wills cautions that universities will need a high level of expertise to manage risk: people with industry and management experience, not just those who have risen through the academic ranks. "They are running very big businesses, so the executive team needs to have the resources to think of it as a business."
Professor Schwartz waxes sanguine about the prospects of what he sees as the inevitable entrepreneurship being thrust upon Australian universities. It's interesting in comparing that viewpoint to an email he sent around the Macquarie campus last month in which he told the troops that although it has become fashionable, even customary, to compare universities with corporations, that was wrong, "A better analogy would be a football team. If the team recruits the best players, gives them ample opportunity to develop their skills and then rewards them for performance, the team excels (even if the management is pretty average)."
Oh boy -- where's that lemonade stand, or perhaps more to the point...