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In this report, the author critically examines Australia’s experiment in uncapping undergraduate university enrolments. After just 18 months of operation, the new system is under threat. According to its critics it admits academically under-prepared students and consumes higher education funding that could be better used elsewhere. The author argues that the new system is achieving its goals. It is lifting the supply of graduates to Australia’s economy, increasing student choice, and improving access to higher education for disadvantaged groups. The report argues against recapping university places, proposing that it would make Australia’s higher education system less fair, less efficient, and less productive. Show less

Since 1989 domestic students in Australian public universities have been charged student contributions, originally called [Higher Education Contribution Scheme] HECS. Three subsequent redesigns of the student contribution system commenced in 1997, 2005 and 2021. With each change the then government advanced different rationales or mixes of rationales for their price decisions. The five rationales are course costs, private benefits, public benefits, increasing resources per student place, and incentivising course choices. This paper documents and evaluates these rationales.

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In 2012, Australia removed student number controls or, in the local terminology, introduced a 'demand driven system' based on student choice. In 2015, England followed suit. In both places, entry to higher education was opened up but non-completion rates rose. In Australia, the demand driven system ended in 2017, despite a coming demographic bulge. England remains at an earlier point in the policy cycle, but there are growing fears that student number controls could also be on the way back despite the coming increase in school leavers. This paper looks closely at the debate in Australia to find general lessons arising from the current drift towards greater political control over how many people make it to higher education.

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This report aims to provide information on trends, policy and performance in Australian higher education. Chapter one explains how higher education is defined in Australia, the different types of higher education providers, and what makes universities distinctive among higher education providers. Chapter two reports on student trends including enrolment numbers, courses chosen, and the mix of students on campus. Chapter three looks at researchers in Australian universities, what subjects they research, and how much they publish. Chapter four provides information on how higher education is funded, including overall levels of funding, the income-contingent [Higher Education Loan Program] HELP student loan scheme, and the organisation of research funding. Chapter five outlines how per student funding levels are determined, and how student places are distributed between higher education providers. Chapter six describes the expanding scope of the Commonwealth Government in higher education, the key government departments, and the higher education interest groups. Chapter seven covers academic standards, student engagement and satisfaction, and graduate employment and earnings. Chapter eight examines shortages of graduates, the quality of university research, the broader public benefits of higher education, and public satisfaction with Australian universities. This edition contains the following sections, which are entirely new or have content that is significantly changed from the 2012 edition: section 1.4 on the non-academic workforce; sections 5.2 and 8.1, which offer a preliminary assessment of how the demand-driven undergraduate funding system is going; section 6.3 on higher education interest groups; section 7.3.1 on graduate employment; section 7.3.2 on graduate income; and section 8.3 on the additional tax paid by graduates and other public benefits.

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This report examines the use of public funding in the form of higher education (HE) tuition subsidies. It proposes a new model for HE expenditure, arguing that tuition subsidies only be paid when they create public benefits that would not otherwise be created. The proposal is based on evidence that most graduates do well out of higher education, enjoying good jobs and high social status. Since most subsidies are for courses that students would take anyway, tuition subsidies therefore redistribute income to students and graduates, at the expense of the general public, particularly those who do not go to university. This report is supported by two analytical reports: Detailed financial analysis: analysis supporting the Graduate Winners report / Ben Weidmann and Andrew Norton; Non-financial benefits of higher education: analysis supporting the Graduate Winners report / James Savage and Andrew Norton. Show less

Tertiary education students have three main sources of financial support - their families, the labour market, and government payments. This paper explores how [Coronavirus Disease 2019] COVID-19 affected these sources of student finance. Only limited information is available on family finances, but multiple datasets provide insight into the student labour market and government payments. Initial hardship caused by job loss and reduced hours was followed by an exceptionally good period for domestic student finances, driven by government payments and increased labour market income. For international students, the lack of government support in 2020 meant that the hardship phase lasted longer. International students remaining in Australia, however, shared in the labour market recovery and, from mid-2021, government assistance.

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The Universities Accord review aims to better align university places with skills needs, but this objective may be hindered by overly prescriptive control of university enrolments. Under current policies, the government determines how much teaching subsidy each university receives, but how student places are distributed between courses is largely decided by universities, which tend to follow student demand. In this paper, the author warns that a proposed new regulator, the Tertiary Education Commission (TEC), could replace this decentralised system with much greater central control.

TEC allocations of funding to courses would be informed by labour market analysis, but the author argues that this process carries risks. Labour market predictions are often wrong and student abilities and interests constrain their course choices. Public funding would end up locked into courses without sufficient students, while other needs go unmet. Norton argues that decentralised systems, such as those used historically in Australia, can respond quickly to emerging labour market trends. There is no need for a regulator to perform this role.

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At the end of 2013, the UK government announced the end of student number caps. In future, higher education institutions will be free to recruit as many students as they want. But it remains unclear how the change will be implemented, how it will be paid for and what it will mean in practice. This report considers how the same policy worked when it was rolled out in Australia.

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Higher education tuition subsidies will cost the Australian Commonwealth Government about $6 billion in 2012-13. Given that higher education's private benefits are likely to attract students with lower or no tuition subsidies, it is not clear that this level of spending is justifiable. The restriction of tuition subsidies to public universities also has the effect of distorting the higher education market in their favour. A phasing-down of tuition subsidies would be a better way of removing or reducing market distortions than extending tuition subsidies to private higher education providers. As well as lowering, rather than increasing the cost to taxpayers, it would avoid exposing private higher education providers to unnecessary regulation and regulatory risk. In the period 2012-13, Australia will spend about $6 billion subsidising higher education coursework. Policy changes will help push this to nearly $7 billion by 2015-16. In particular, from 2012 public universities have few limits on the number of domestic undergraduates they can enrol with Commonwealth subsidies. However, private universities and non-university higher education providers can access subsidies only through special deals with the Commonwealth Government. Unsurprisingly, their representative organisations have called for subsidies to be distributed on a non-discriminatory basis. The recent Grattan Institute paper, 'Graduate winners: assessing the public and private benefits of higher education', suggested, however, that these tuition subsidies were often difficult to justify. A phase-down of tuition subsidies to public universities is an alternative way of creating a more equal higher education market.

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This report provides an overview of higher education policy and trends. It is the sixth edition of a series previously published by the Grattan Institute. Since the last edition in 2018, all chapters have been updated and new or expanded sections added on work-integrated learning, student finances, student mental health and international student migration.

The contents are as follows: Chapter 1 explains how higher education is defined in Australia, the different types of higher education provider, the various types of qualification, and what makes universities distinctive among higher education providers; Chapter 2 reports on student trends, including enrolment numbers, courses chosen, and the social background of students. It also discusses how students enter the higher education system; Chapter 3 examines the student experience, including subject pass rates, attrition, satisfaction with teaching, working while studying and mental health; Chapter 4 looks at the university workforce, including why people become academics and their employment arrangements; Chapter 5 looks at research in Australian universities, including what topics are researched and research outputs; Chapter 6 provides information on how higher education is funded, including total revenue, the [Higher Education Loan Program] HELP student loan scheme, government grants for teaching and research, and international student fees; Chapter 7 outlines how per student funding levels are determined, and how student places are distributed among higher education providers; Chapter 8 describes how the Australian Government came to dominate higher education policy, the key government departments and the higher education interest groups; Chapter 9 examines higher education's benefits to the public and employers, including whether higher education graduates meet skills needs, the quality of university research, and public satisfaction with Australian universities; and Chapter 10 reports on higher education's private benefits including graduate employment and income and, for international students, migration to Australia.

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