Australia's universities are grappling with a rotten culture which is harming students and staff, according to Labor Senator Tony Sheldon.

Mr Sheldon pushed for a senate inquiry to examine governance of the billion-dollar sector back in January.

Last week, the inquiry's interim report made 12 recommendations including limits on pay for vice chancellors and senior managers, and new powers for regulators to step in when universities fail. 

• Guest: Tony Sheldon, Labor Senator for NSW and former chair of senate inquiry into public universities
• Producer: Brooke Young