Sun Feb 25

‘Gonski-style’ funding is on the table for higher education. This will see some unis gain more than others

Written by: Peter Hurley, Director, Mitchell Institute, Victoria University

The federal government has released the final report on a Universities Accord. Taking more than a year to prepare, it is billed as a “blueprint” for reform for the next decade and beyond. It contains 47 recommendations across student fees, wellbeing, funding, teaching, research and university governance. You can find the rest of our accord coverage here ^[1].

Australian universities could get more federal government funding, in changes recommended by the Universities Accord final report. But there is little detail so far on how it will be paid for.

The accord wants to set a target to more than double the number of government-funded students by 2050. This would see the number of students grow from 860,000 to 1.8 million.

On an individual student level, the accord proposes Australia adopt a “needs-based” funding model. This means universities would receive a base amount per student. Then there would be further loadings for equity students – those from low socioeconomic backgrounds, First Nations students and students with a disability. Regional universities would also receive extra funding.

But the report is quiet on how to fund the extra places and the loadings. An international student levy ^[2], which was widely anticipated to be included as a recommendation ^[3], is not mentioned in the final report.

The detail on funding is left to a proposed Tertiary Education Commission to implement within a “funding envelope set by government”.

This sets the scene for the difficult task of designing a new funding system that will inevitably involve losers as well as winners.

Some universities are set to gain more than others

The accord has recommended that per student funding is changed so universities receive more money for students from equity backgrounds.

This is a similar approach to funding in Australia’s schools, introduced as part of the “Gonski ^[5]” reforms a decade ago.

The Mitchell Institute modelled ^[6] what a Gonski-style funding model might look like, using the categories identified by the accord and based on funding rates in the school sector.

We found the overall funding per student would increase by about 11%, or A$1.3 billion per year.

Regional universities and universities in outer-suburban areas would receive the biggest share of funding increases, as they tend to enrol more students from under-represented backgrounds. The more prestigious universities, the so-called Group of Eight ^[7], would gain the least.

Why have a new approach to funding?

The accord has proposed a needs-based funding model because, it says,

people from groups under-represented in higher education on average require greater support to succeed, often due to experiencing educational disadvantage.

The aim is to help universities improve outcomes for students from disadvantaged backgrounds. These students are less likely to go to university, and less likely to finish their studies if they do, than students from more advantaged backgrounds.

Managing funding across the system

The accord is proposing a government funding cap for each university based on the number of students. The Tertiary Education Commission would manage allocations and adjust funding every year to ensure there is “sustained and system-wide growth”.

Built into the model are other provisions intended to remove barriers to higher education access, including:

new funding rates for courses that cover the full cost of teaching them
fee-free preparation programs for anyone who has qualified for a government-supported university place. This is to help get students ready for their course
freedom for universities to make more choices about their enrolments and finances, including using government-supported places for postgraduate courses. This means some expensive postgraduate qualifications could become more affordable
extending government supported places to non-universities such as TAFEs, so they can offer higher education courses without having to charge full-fees.

International student levy not mentioned

One of the most controversial ideas from the accord’s interim report ^[8] in July was an international student levy. It suggested income from international students would be used to pay for the extra funding required to support the growth in equity students.

But the international student levy is not mentioned in the final report. Instead, the accord recommends the establishment of two funds.

The first is a “Higher Education Future Fund” which would be used to support infrastructure for the sector, including student housing. The recommendation is for a fund of $10 billion, with half coming from universities and the other half from the federal government. Universities with higher non-government revenue, such as high international student income, would be expected to contribute more.

The accord also recommends a new “Solving Australia’s Challenges Fund” to reward universities that use their research expertise and capability to solve national problems. The size of this fund is unclear.

An levy on international student fees is not mentioned in the report, but there are two new funds for unis. Priscilla du Preez/ Unsplash, CC BY ^[9]^[10]

What is next?

The proposals outlined in the accord report will likely result in a redistribution of federal government financial support in the sector.

But the report has not outlined how this will be done. Instead, the Tertiary Education Commission will be required to determine funding rates and funding caps with universities.

This is understandable because determining final funding models can be very technical work. But it does mean we lack a lot of crucial detail.

It also means a new Tertiary Education Commission (if one is set up) has a very difficult job to do in a constrained funding environment.