Submission to the Review of the Demand Driven Funding System

The introduction of the demand driven system and the removal of almost all caps on undergraduate places appears, on balance, to have been a positive reform for both students and the nation. All indicators suggest that maintaining the demand driven funding system will bring profound benefits for national productivity, social equity, institutional quality and students. There has been much speculation around the claim that increased enrolment numbers is leading to a decline in graduate quality. In the absence of any evidence to support such a claim the relationship, whether positive or negative, between the demand driven system and educational quality in the short term is difficult to establish. In the longer term, however, the establishment of a more competitive market and increased student numbers is likely, perhaps paradoxically, to lead to more innovation and higher quality offerings as universities are forced to compete in a fee-capped system on features other than price. The full demand driven system has only been in existence for two years, and a deeper review of the system should be planned for a later date once the evidence on its impact becomes clearer.

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