UTAS: The need to redefine who are members

 

This was an additional submission made on 19^th December 2022 to the Legislative Council’s Inquiry into the Provisions of the University of Tasmania Act 1992, supplementing submission #93 and evidence given on 12^th December 2022, all of which are available on the committee’s website.

The supplementary submission was prompted by the lack of a coherent discussion as to who are UTAS’ members, to whom should UTAS report and what role should members have in selecting board members (the University Council).

The need for the exact legal status of UTAS to be clarified was highlighted by Premier Rockcliff’s October 2022 assertion that UTAS was a private company and Vice Chancellor Black’s recent contention at the May 4^th 2023 hearing that UTAS is an instrumentality of the State.

Hopefully the Committee will be able to address this crucial issue. Most people are unaware if they're members of UTAS. Being a member does bestow any particular rights or obligations to receive information and very little by way a right to determine who should be elected to Council.

Companies are by virtue of Corporation Law legal entities with perpetual succession.

In the case of UTAS or GBEs or state instrumentalities like TasTAFE and Stadiums Tasmania the corporate nature of the entity is specified in their relevant governing acts.

In the case of UTAS it is specified in Clause 4 of its governing Act.

       4.   Continuance and incorporation of University

(1)  Notwithstanding the repeal by this Act of the Amalgamation Act , the University continues in existence under and subject to the provisions of this Act under the name "University of Tasmania".

(2)  The University –

(a) has perpetual succession and a seal; and

(b) may sue and be sued in its corporate name.

(3)  The seal is to be kept and used only as authorized by the Council.

(4)  All courts and persons acting judicially must take judicial notice of the imprint of the seal on a document and presume that it was duly sealed by the University.

(5)  For the avoidance of doubt, the University is taken to have continued in existence under the name "University of Tasmania" since its establishment in 1890.

With GBEs Clause 6 of the GBE Act is the relevant provision:

      6. Legal entity of Government Business Enterprise

A Government Business Enterprise –

(a) is a body corporate with perpetual succession; and

(b) has a seal; and

(c) may sue and be sued in its corporate name.

TasTAFE and Stadiums Tas have a similar clause in their acts as follows:

          Homes Tasmania (and TasTAFE}

 (a) is a body corporate with perpetual succession; and

(b) may have a seal; and

 (c) may sue and be sued in its corporate name; and

(d) is an instrumentality of the Crown

As can be seen Homes Tasmania and TasTAFE have an additional sub-section specifying they are public instrumentalities unlike GBEs and UTAS.

GBEs and State instrumentalities don’t have members. They are entities owned by the Crown.

UTAS’ members are defined by Section 5:

      5. Constitution of the University

(1)  The University consists of –

(a) the members of the Council; and

(b) the members of the academic staff; and

(c) .  .  .  .  .  .  .  .  

(d) the members of the professional staff; and

(e) the graduates; and

(f) the students.

(2)  Notwithstanding subsection (1) , a person referred to in that subsection may make a statutory declaration that he or she has a conscientious objection to being a member of the University and, on giving the declaration to the Vice-Chancellor, he or she ceases to be a member of the University.

(3)  A person who makes a declaration under subsection (2) does not, by that declaration, prejudice any other position or status which that person holds or enjoys –

(a) by virtue of his or her employment at, or participation in the affairs of, the University; or

(b) as a student or graduate of the University.

Only certain persons are included as members. Were it not for this clause UTAS would likely be included as a State-owned entity and included in the Total State Sector.

UTAS therefore falls into the 4^th tier of government …. public institutions n.f.d. (= not further defined).

The reasons for raising the issue of the structure and who are the members are twofold.

1.     Most people believe UTAS is a public institution that belongs to them. From a strict legal point of view that may not currently be the case. Sec 5 has a much narrower definition of member. UTAS may have grounds to ignore what the public think about them because they don’t have a direct interest as members. Maybe the public have an indirect interest via one of UTAS’ prescribed function in Sec 6 (g)? viz ”to engage in activities which promote the social, cultural and economic welfare of the community and to make available for those purposes the resources of the University.”

2.     To establish a reporting path – who reports to who.

Most current members are either staff, alumni or students. Most of the latter would be unaware of their membership status. In any event reporting to members is more honoured in the breach than in the observance. Parliament is the default receiver of the annual report but that’s a perfunctory exercise.

There is a need to decide whether the broader public have an interest in UTAS that would then require reporting to them as members. If they were the only members, UTAS would probably be seen to be part of the Total State Sector. To mandate that would serve little purpose, quite apart from making accounting for the Total State Sector far more complicated.

This establishes the rationale for a wider definition of member – to codify the public’s interest in UTAS as members alongside other members, the staff, alumni, and students say, who should comprise the ownership group to whom reports from Board/Council would be presented.

A State-Owned Corporation SOC is a company that is majority owned and controlled by the State government. It’s not intended that the government should own or control UTAS, rather the members would via say a separate company which was termed a State Owned Corporation SOC but more correctly is a Publicly Owned Corporation, which like a SOC, is administered under the auspices of the Corporations Law, but is not wholly owned and controlled by the government.

UTAS is a long-standing public institution which is often now described as a business. The Government Business Enterprises Act 1995 was used for a while to provide a statutory framework to run government business. Many of the provisions contained therein are like those in the Corporations Law which lays out the rules for the conduct of companies.

The GBE Act is no longer used. There was no point when a more flexible arrangement could be achieved with an off the shelf corporation together with an accompanying portfolio act, administered under Corporations Law.

It was for this reason that a publicly owned company to help run UTAS was suggested. It could be set up with members as agreed who in turn would elect/appoint board members as laid out in the portfolio Act, from the community, staff, alumni and current students as deemed optimal. These board members would constitute the members of Council, supplemented by the Chancellor and Vice Chancellor who could still be appointed as provided by the current Sections 14 and 16.

A company provides more flexibility than corporate entities whose structure is set out in a government statute, especially when shareholder agreements, which may set out matters not covered in statutes are also part of the landscape.

It is not unusual for unrelated parties to run a business as a Joint Venture through a corporate structure but with a shareholder agreement on the side which covers off on more detailed matters and which can be changed with a revised agreement.

In this instance being able to change governance procedures by agreement between parties, provided there were sufficient safeguards, is preferrable to a system which allows one party to hijack control leaving the tortuous process of changing a governing Act as the only solution to what may be an existential crisis.

The aim is not to engineer a takeover of UTAS by the government, rather to establish a structure with members who better reflect the interests that various parties have in an entity like UTAS, and set up reporting lines where reports with the required information are given at the required time to members, who in turn can provide feedback, or as in the case of companies, exercise a choice as to who is elected to the Board  of Public Co and hence the Council of UTAS.

The above is the rationale for replacing the current Sec 5 with an updated definition of who are the members of UTAS and update Section 8 to specify the Council comprises the Chancellor, the Vice-Chancellor and the directors of Public Co elected as set out in Public Co’s portfolio Act by members as defined by Sec 5.

Updating Sections 5 and 8 are the most important governance changes needed together with revised reporting procedures of who reports to whom, when and what. The latter could be included in the portfolio act and/or a shareholder’s agreement.

Reports should make it clear how each of the functions of the university as detailed in Section 6 were addressed during the reporting period with financial information as well as supporting quantity information.

There has been a notable absence of support for UTAS’ current governance model where the Council itself has such a huge say in future Council member selection. Hence a three-way split between the academic staff, alumni and current students, and the community might be a reasonable starting point for revising Council composition, with elections being the preferred way of choosing members, or in the case of community members, an arm’s length non-partisan arrangement to appoint the best available to fill any missing skill/knowledge gaps.