OPINION: As Charles Darwin University launches a duplicated medical program amid mounting losses and large debt, and in the wake of a widening training scandal involving the carpentry apprenticeship which saw the vice-chancellor resign and could lead to a class action, there are serious concerns that both the executive leadership and the university council have failed in their oversight of the institution, writes Dr Don Fuller.
The Charles Darwin University medical school started operations this month, and as I previously pointed out, CDU will have two medical training programs on its Casuarina campus.
This is regarded by some, as bordering on the ridiculous.
Importantly, it will result in a large waste and misdirection of taxpayer funding from other desperately required health services and facilities in the Northern Territory.
In the latest available annual report, for the year ended December 2024, CDU disclosed a comprehensive loss from continuing operations of $11.2 million, down from $31.3 million in the previous year.
In the year ended December 2024, borrowings were at a very high $126.5 million, up from $118.3 million from the previous year.
From the latest annual report year ended December 2024, it has not been made clear how interest on borrowings has been reported in the consolidated income statement. While an amount of interest paid does appear as an expense in the income statement, there is also an indication in notes to the income statement that interest amounts have been capitalised, or added to the cost of an asset, to be depreciated over time.
This requires immediate clarification within the financial statements for the benefit of stakeholders and taxpayers, as increasing interest payments can have a major impact on core business delivery.
Capitalising interest payments on borrowing, rather than expensing it, creates several significant challenges for financial accountability and transparency. While intended to match costs with future revenues, the practice often leads to distorted financial amounts and difficulties in calculating actual income earned by the entity.
With respect to borrowings, the university signed a loan facility agreement with the NT Government on September 24, 2020, for the development of the so-called CDU city campus and upgrades to infrastructure at the Casuarina campus.
The loan facility amount is $151.5 million. The university has drawn down $126.5 million as of December 31, 2024.
READ: Why are there two medical schools in Darwin and why do taxpayers have to pay for both?
READ: Should the CDU city campus be built?
READ: Opinion: The vice-chancellor needs re-focus to make CDU a high quality university
A substantial amount of this loan was directed toward the establishment of the city campus. This infrastructure development has also been criticised for duplicating an already excellent campus facility at Casuarina.
Under the loan agreement, established with the Northern Australia Infrastructure Facility, the university is set to make monthly repayments as part of the scheduled drawdown amount.
The interest rate for each repayment period comprises a base rate and a variable margin that begins at an extremely low 0.20 per cent per annum for the initial decade, incrementally increasing to a meagre 0.50 per cent per annum after 21 years.
It is also not clear from the relevant notes to the financial reports whether borrowings are actually with the NT Government or the NAIF.
This is an important difference which should also be clarified as a matter of priority.
If the borrowings are from the NT Government for example, it indicates the government supports the diversion of resources and expenditure away from the medical facilities of other regional centres and desperately needed Aboriginal communities toward the university even though it appears to be duplicating existing programs.
Very low interest rates also suggest the government is further providing additional government assistance to the university, in the form of a subsidy to interest payable on borrowings.
The annual report for 2024 showed the federal and NT governments’ financial assistance to CDU totalled nearly $200 million.
This amounted to nearly 46 per cent of all revenue and income earned by the university.
Scott Bowman became vice-chancellor of CDU in May 2021, and left this week, following serious problems with TAFE accreditation failures becoming public.
Since 2021, the figures for total comprehensive income/loss from operations have been: a positive income figure of $78.4 million for year ended December 2021; a sharply reduced positive income of $47 million for 2022; a loss of $31.3 million for 2023; and a further loss of $11.2 million for 2024.
Over the last two years of available financial information, Mr Bowman oversaw a cumulative loss of over $40 million.
This occurred despite the very large government subsidies and the loan and low interest facilities provided.
CDU’s financial performance may be usefully compared with the tropical northern Queensland’s James Cook University.
Both universities are members of the Northern Australia Universities Alliance. Both claim to be committed to educational and research outcomes, focussed on the north of Australia.
The total comprehensive income shown for year ended December 2024 attributable to staff employed by James Cook was a positive high figure of $152.7 million, and in 2023 the comparable figure was $74.4 million.
Compared with the losses incurred by CDU, it is clear that James Cook University operates at a far heightened level of efficiency and effectiveness.
It has one medical school – not two.
It has also avoided the duplication of campuses involving unnecessary capital infrastructure and operating costs.
Such basic decisions are likely to be important factors allowing James Cook University to avoid losses and perform at a far higher financial level than CDU.
Earlier this month, it was reported that 40 carpentry apprentices studying a Certificate III in Carpentry would be forced back to uni after being declared by CDU qualified to work on construction projects without completing the required units of study.
Then the number of students affected quickly grew to 130.
Following this, Mr Bowman confirmed in a statement that “it is possible an additional 250 people may be identified as impacted, including students who participated in other programs that were not direct trades qualifications”.
The NT Independent reported that sources with knowledge of the program indicated the total number of students affected could number in the thousands.
This is completely unacceptable for the NT.
To make matters worse, if possible, the NT Education and Training Minister Jo Hersey was not informed of these problems as they became evident during December 2025.
This suggests that the senior management of the university were attempting to conceal the facts, for as long as they thought they could get away with it.
And as a result, Mr Bowman has been forced to resign.
The now former vice-chancellor had previously stated that CDU will compensate the many students affected by paying for their additional studies as well as travel and accommodation costs.
This is likely to have a further, major negative impact on the already tenuous position of the CDU budget.
It is likely as well, given such apparent incompetence, that the university will face legal challenges involving substantial compensation to affected students who have had their income earning capacity and careers severely impacted.
Class actions against other Australian universities over accreditation scandals are being actively defended by those institutions, including on the grounds that no legal contract exists between a university and a student, and that Australian consumer law does not apply to those relationships because they do not fall within the meaning of “trade or commerce”.
Eric Withnall, a local solicitor and former president of the CDU students association, has been approached by aggrieved parties regarding a class action against CDU based on promissory estoppel: an equitable cause of action that allows a plaintiff to recover for losses suffered due to unconscionable departure by another party from an assumption induced by that party’s conduct which has been reasonably relied upon by a plaintiff to their detriment.
While courses and training quality, as well as students, have obviously suffered badly under the management and governance regime, many are also not holding their breath for the impact of ill thought out, major infrastructure projects at CDU and their likely future impact on the financial and ongoing well-being of the university.
As many are only too aware, high cost development projects have a habit of going south badly in the Territory, particularly when funded by taxpayers. In the Territory, these debacles are often the result of badly planned and investigated ‘thought bubbles’ by inadequately trained senior management and politicians.
The governance structures at CDU including the university council are also clearly responsible for much that is going wrong with the university.
The university council is the governing body of the institution.
Led by the chancellor, the council governs the affairs of the university under the Charles Darwin University Act 2003.
The council should operate in a similar manner to a board of directors of a large corporation.
Its main functions include a requirement to monitor the performance of the vice-chancellor, approve the mission and strategic direction of the university, approve the budget and business plan of the university, oversee the management of the university, and review management practices and performance of the university.
A well-functioning board of directors, that understands clearly the financial operations and management and core business requirements of a complex organisation such as a university, is essential for effective governance.
The question that needs to be asked is whether such people are members of the university council or whether they have been appointed for other reasons?
It appears clear that there has been far too much concern and concentration by the university council and senior management of the university on unnecessary and duplicated campuses, infrastructure and important and expensive courses, such as the duplicated medical program.
And who could forget Mr Bowman’s attempt to start a university post-graduate program in London, which was wisely ended on Friday.
The current disasters appear as a result of very high cost empire building, gone drastically wrong.
This smacks of a lack of interest and involvement by the university council and senior management in the core responsibilities of the university such as high quality student training, high quality teaching and important industry based project work.
While senior management has taken the fall for the current observable problems of CDU, it is important to also recognise the governance failures of the university council.
Why this has occurred is to be the subject of a further article.
While efforts will be made to recruit a new vice-chancellor of CDU, it will be a brave person who would wish to attempt to sort out the extensive problems that now exist at the university, given such long-standing inadequate management and governance of the organisation.
Dr Don Fuller holds a first class Honours degree and PhD in economics from the University of Adelaide and has worked as a senior public servant in the Territory and as Professor of Governance and Head of the Schools of Law and Business at Charles Darwin University. He grew up in Darwin and attended Darwin High School.
He was also involved with the establishment of the first NT medical school under the leadership of Flinders University vice-chancellor Professor Ian Chubb.
Dr Fuller was also an adviser to the former CLP MLA Maralampuwi Francis Xavier, was briefly the senior private secretary to Chief Minister Paul Everingham, and is a former member of the CLP and the ALP.
Can the CDU Board, stop hiring dropkicks….
-A particular VC was a mate of a previous well known VC and had just started a long year long vacation when he was coerced to work for a perpetually broke, unnamed University, located in Brinkin.
-That particular well known VC was juggling his wife and a very very good friend, however methinks did a good job of the finances (albeit sold off CDU assets to pay for the losses).
-One particular VC was a absolute psychopath hired from a non University organisation. I bet the executive turn over rate matched Mcdonalds turnover rate during their reign of terror.
So if you have to beg someone to take a $700,000 role, there must be many many other issues, the board has to resolve !
At this stage, anyone who is good with finance should be running for the university’s top job. Do not hire anymore Gift Of The Gab, Waffle Waffle, Word Salad Academics who have never managed anything substantial in their lives. This last VC is a perfect example of a Academic totally and utterly dependent on a Chief Financial Officer!
I hope the next VC is a no-nonsense, non-academic non-woke Accountant who seriously looks at the student feedback regarding CDU’s embaressing DEI hires and the policies that hired them! (ie introduce a comprehension test)