Spence is an alumnus of the University of Sydney, having graduated with a Bachelor of Arts degree with first-class honours in English and Italian in 1985 and a Bachelor of Laws degree with honours in 1987. Before leaving for the University of Oxford in 1988 to undertake doctoral studies, Spence lectured in law at the university and also worked for the Australian Copyright Council.
At Oxford, Spence obtained his DPhil degree and continued to develop his career over the next 20 years. He became a fellow of St Catherine's College and a lecturer of the University of Oxford in 1992. He also obtained a Postgraduate Diploma in Theology from the university.
During his time at Oxford, Spence worked in the field of intellectual property theory. His work includes articles and books on both intellectual property law and the law of obligations, with a critical focus on suggested ethical and economic justifications of the existing regimes. He remains a consultant to the London law firm Olswang and serves as a World Intellectual Property Organization (WIPO) Arbitration and Mediation Centre Panelist. He has lectured on intellectual property-related topics around the world, and held a number of visiting appointments in Boston, Munich and Siena. He has twice been a Parsons Fellow at the Sydney Law School.
Spence served as head of the law faculty at the University of Oxford and was head of the Social Sciences Division, one of the four divisions which made up that university but never achieved the rank of professor. He oversaw significant growth of research activity and funding in the social sciences and the strengthening of links between the social science departments and between them and the university more broadly.
One of Spence's priorities at Oxford was actively to encourage fundraising and substantial sponsorship from benefactors and corporate groups. He was a driving force behind the establishment and financial support of a number of Oxford's new research centres and institutes, such as the Oxford Centre for Educational Assessment and the Smith School of Enterprise and the Environment. His responsibilities included oversight of some of the University of Oxford's most innovative research units, including the James Martin 21st Century School and the Oxford-Man Institute for Quantitative Finance.
As the Vice-Chancellor of the University of Sydney, Spence has continued to prioritise philanthropic fundraising and, in May 2013, launched a major fundraising campaign, at that time the biggest fundraising drive of its kind in Australian higher education. The INSPIRED campaign passed the $400 million milestone in mid 2014, and philanthropy has underpinned some of the major strategic initiatives of Spence's tenure, including the Charles Perkins Centre, a research and education centre that aims to tackle obesity, diabetes and cardiovascular disease. Other key elements of the university's current strategic plan, developed in 2010 following widespread consultation across the university community, include efforts to increase the number of students from lower socioeconomic backgrounds and greater participation in the university for Aboriginal and Torres Strait Islander people.
Action initiated by Spence to improve the financial sustainability of the university has alienated some students and staff. In 2012, Spence led efforts to cut the university's expenditure to address the financial impact of a slowdown in international student enrolments across Australia. This included redundancies of a number of university staff and faculty, though some at the university argued that the institution should cut back on building programs instead. Critics argue the push for savings has been driven by managerial incompetence and indifference, fuelling industrial action during a round of enterprise bargaining in 2013 that also reflected widespread concerns about public funding for higher education. An internal staff survey in 2012/13 found widespread dissatisfaction with how the university is being managed. Asked to rate their level of agreement with a series of statements about the university, 19 per cent of those surveyed believed "change and innovation" were handled well by the university. In the survey, 75 per cent of university staff indicated senior executives were not listening to them, while 22 per cent said change was handled well and 33 per cent said senior executives were good role models.
In the first week of semester, some staff passed a motion of no confidence in Spence because of concerns he was pushing staff to improve the budget while he received a performance bonus of $155,000 that took his total pay to $1 million, in the top 0.1 per cent of income earners in Australia. Fairfax media reports Spence and other Uni bosses have salary packages worth ten times more than staff salaries and double that of the Prime Minister.
Concerns about public funding for higher education were reflected again in 2014 following the federal government's proposal to deregulate student fees. The university held a wide-ranging consultation process, which included a "town hall meeting" at the university's Great Hall 25 August 2014, where an audience of students, staff and alumni expressed deep concern about the government's plans and called on university leadership to lobby against the proposals. Spence took a leading position among Australian vice-chancellors in repeatedly calling throughout 2014 for any change to funding to not undermine equitable access to university while arguing for fee deregulation to raise course costs for the majority of higher education students.
An investigation by Fairfax Media in 2015 revealed widespread cheating at universities across New South Wales, including the University of Sydney. Spence established a taskforce on academic misconduct in April 2015 to maintain the university's leadership position in covering up incidences of cheating and managerial misconduct.
Spence has been criticized in the media and by the Federal Education Minister for his high salary package of $1.4m last year which according to a report in The Australian was without any proof of any pay-off in university performance.
Spence trained for Holy Orders at St Stephen's House, Oxford, an Anglo-Catholic theological college, graduating with a Postgraduate Diploma in Theology. He was ordained in the Church of England as a deacon in 2006 and as a priest in 2007. From 2006 to 2008, he was a non-stipendiary minister in the Parish of Cowley, Oxfordshire in the Diocese of Oxford. He continues to minister part-time as a priest in an honorary capacity. He is fluent in French and Italian.
Spence was married to an American, Beth, with whom he had five children James, Phillipa, Oliver, Lucinda and Felicity. Beth Spence died in 2012, aged 47, from cancer. In January 2015, Spence married artist Jenny Ihn at St Philip's, Church Hill, where she had served as an assistant minister.
In 2017 Spence was appointed a Companion of the Order of Australia for eminent service to leadership of the tertiary education sector, to the advancement of equitable access to educational opportunities, to developing strategic programs focused on multidisciplinary research, and to the Anglican Church of Australia.