La Trobe Uni plans to cut pay to save jobs

La Trobe University is calling on its staff to accept a 10 per cent pay cut for at least 12 months to save jobs.

La Trobe University vice-chancellor Professor John Dewar. Picture: Stuart McEvoy

La Trobe University is calling on its staff to accept a 10 per cent pay cut for at least 12 months as part of a deal to save jobs.

Ahead of key votes on the proposal, the university has released unprecedented detail on its efforts to bridge a budget gap of up to $316m it says it faces over the next three years.

Vice-chancellor John Dewar on Tuesday urged staff to support the proposal, which he said would save about 225 jobs at the university in 2020 and 2021.

“That’s a lot of staff who I hope will be able to stay and contribute to La Trobe’s reshaped strategy and future success,” Professor Dewar said.

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Under the proposal the pay cut would not apply to the first $30,000 of a staff member’s salary, meaning that it would have less impact on low-income earners.

This year’s scheduled pay increase in July would not be delivered but superannuation would continue to be paid at the normal level and redundancy entitlements would be paid as if the agreement were not in force.

Forced redundancies would be limited to cases where there was a genuine reduction in work and the university would undertake not to stand down any staff, reduce the time they work or direct them to take long-service leave.

The agreement the university is proposing is a variant of the pay cuts-for-jobs deal the National Tertiary Education Union negotiated with a group of vice-chancellors, including Professor Dewar, but which many universities have rejected.

In a webinar on Tuesday, La Trobe chief financial officer Mark Smith outlined the university’s efforts to deal with a budget shortfall of between $197m and $316m in the three years from 2020 to 2022.

Staff were told the university had liquidated a $27m investment portfolio on May 15 that was needed to pay for the voluntary redundancy program now under way.

Mr Smith said all five major banks had been approached about debt facilities for the university and, while banks were willing to lend, they had challenges in taking physical security over university assets. University debt is typically unsecured, he told staff, mainly because of the zoning of university land, the government ownership structure, and the expectation that in the event of default, the bank would need to step in to run the university in a highly regulated environment.

Mr Smith said the university would seek additional bank debt even though lending conditions were slightly worse than three months ago.

Mr Smith also said another key La Trobe asset, its $40m investment in IDP Education, was not easily liquidated because it was held through Education Australia Ltd, a company jointly owned by 38 universities, and major restrictions applied to the sale of shares in the company.

He also said the university’s land was not easy to liquidate because it was a long and difficult process to sell university land.

“To sell land at Bundoora (La Trobe’s main campus), we would need to first invest to subdivide and fund the costs of provision of services,” he told staff.