Australian mini-budget bankrolls funding reforms and a new commission

Australia’s government has pledged a net A$2.5 billion (£1.2 billion) over the coming decade to roll out the next tranche of Universities Accord reforms, including funding system changes and a tertiary education commission.

However, just how much new money will materialise over the four-year forward estimates of budget commitments is unclear, with the government planning to cover the bulk of its costs through “efficiencies” and “repurposing existing funding”, according to a Treasury document.

The 18 December mini-budget includes plans to establish an Australian Tertiary Education Commission (Atec) from mid-2025, introduce needs-based support for underprivileged students and launch a “managed growth” funding system for teaching.

Education minister Jason Clare said “big structural reform” was required to achieve the accord’s “nation changing” goal of a more qualified workforce. “We need to break down that invisible barrier that stops a lot of Australians from disadvantaged backgrounds, from the regions and the outer suburbs from getting a crack at uni and succeeding when they get there.”

Universities Australia said the proposals represented a “positive step” towards a fairer and more sustainable higher education system. “These investments will strengthen our universities across cities and regions, benefiting the entire nation,” said chief executive Luke Sheehy.

While details and implementation arrangements are still to be developed, the new funding system will start with a “transition year” in 2026 ahead of full commencement the following January. The government predicts that the approach will deliver an extra 82,000 fully subsidised university places by 2035.

Each year, the government will set a “total allocation pool” of commonwealth-supported places (CSPs), with Atec divvying it up among universities and other approved providers. The commission will negotiate “mission-based compacts” and award each institution a “domestic student profile”, including base enrolments and a growth allocation.

The plans include a A$50 million structural adjustment fund for universities experiencing “unforeseen financial difficulties”, according to a summary document from the Education Department. A “transition loading” will ensure that universities’ teaching grants do not decline between 2025 and 2026, while a “temporary funding floor guarantee” will limit annual declines to 2.5 per cent over the following five years.

Universities will also be given an “over-enrolment buffer” allowing them to pocket fees from “a small proportion” of additional students if they exceed their domestic quotas. Some A$25 million will also be spent over the forward estimates to bankroll an extra 1,000 university places in “critical skill areas”.

Meanwhile a new “demand-driven needs-based” approach to equity funding will “grow with each additional student, instead of having to stretch…across more students”, according to the summary document.

The scheme will start in January 2026, supporting around 140,000 disadvantaged and indigenous students in its first year. It will finance scholarships, bursaries and services like mentoring, peer learning, first-year transition programmes and inclusive course design.

The scheme will help cover the additional costs of teaching in regional and remote areas. The government will also quadruple the Higher Education Disability Support Fund and allocate around A$44 million to universities’ outreach activities in schools and communities.

Innovative Research Universities executive director Paul Harris noted that many of the proposals, including the new equity funding system and proposed cuts to student debt, were contingent on the passage of legislation.

“It’s positive that the government is recognising that additional funding is needed if we’re going to meet these goals,” he said. “But we’re just going to have to work through the detail of how that’s all going to play out.”

The summary document says Atec will be “fully operational” by January 2026 so long as the underpinning legislation passes parliament. The new body will be led by three “expert” commissioners who “operate as a collective to make decisions” and “aim to reach consensus wherever possible”.

Atec’s independence from both the government and the sector will be safeguarded through “clearly legislated objectives and functions, conflict of interest provisions and reporting lines to ministers”, it says.

john.ross@timeshighereducation.com