Wed May 15

Funding might change, but Job-ready Graduates stays for now. What does the budget fine print say about higher education?

Written by Gwilym Croucher, Associate Professor, Melbourne Centre for the Study of Higher Education, The University of Melbourne

On one level, the 2024 federal budget brought few big surprises for universities.

The two key measures were already announced leading up to May 14: the changes to HELP indexation ^[1] and payments ^[2] for nursing, teaching and social work students during work placements.

But what we did see on budget night were some significant indications of where the government is going on higher education reform. In February the government released a wide-ranging report ^[3] outlining a blueprint for higher education over the decades to come.

In the budget papers, we saw the government’s first major response to the Universities Accord final report ^[4].

This shows how the Albanese government intends to proceed with reform for the remainder of this parliamentary term and the next, should it be re-elected.

The changes to indexation and prac payments will naturally be of most concern to students now. But what comes next may shape Australian higher education for decades.

First, what else was in the budget?

The budget did have some other funding announcements. It set aside $350.3 million over four years to fund new fee-free courses at universities to help students prepare for study once they have been accepted.

It also contained measures to enhance student safety and wellbeing. This includes $19.4 million over two years to establish a national student ombudsman to “provide a single, national mechanism for higher education students to escalate complaints regarding the administrative actions of [their institution]”.

It also includes $18.7 million over four years to help establish a national higher education code to prevent and respond to gender-based violence.

Treasurer Jim Chalmers holds his copy of the budget papers during the budget lock up on Tuesday. Lukas Coch/AAP

A new commission

The government announced the long-anticipated Australian Tertiary Education Commission (or ATEC), which had been recommended by Universities Accord final report. It will start work on July 1, 2025.

We are still waiting for precise detail on the key functions of the commission. But we know it will have significant responsibilities, such as stewardship of Australia’s tertiary education system. It will also manage “delivery of funding arrangements for higher education”.

Many higher education stakeholders are nervous ATEC will have extensive powers to direct government funding to particular institutions. This would be a big change from the current system, which is based on legislation and established formulas to allocate funding to universities.

There is a fear this could lead to fewer choices for students because ATEC may concentrate resources in some areas and other universities might be asked to do more with less.

At the moment, Australian universities enjoy a great degree of autonomy over what and how they teach and what research they support. This is not always the case in other countries, where the government can be more prescriptive about university operations.

But we also know current policy arrangements haven’t worked on a number of other levels. They have not been able to encourage enough students from underrepresented ^[5] backgrounds to enter higher education or develop sustainable education in regional areas ^[6].

Transparency will be key

There are some hard choices and trade-offs ahead. How can the number of places for underrepresented students be expanded and regional higher education provisions be sustained if resources are limited? How can the government shape the system as a whole, while maintaining autonomy for individual universities?

Transparency will be key to this. We need to make sure any ATEC advice on policy or funding allocations are clear for all to see and scrutinise.

Education Minister Jason Clare and Professor Mary O'Kane sit at a conference table.

Mary O'Kane (right) led the Universities Accord review. The final report was made public in February, Dean Lewins/AAP

New approach to funding

Following the Universities Accord final report, the government has also indicated it wants to see to greater higher education participation. The aspiration is for 80% of the working age population to have a tertiary qualification by 2050.

This means we will likely need new institutions or TAFEs to teach growing numbers of bachelor’s degree students and a new funding system will be required to do this.

The current system for funding education has evolved over decades, most recently changing through the former government’s Job-ready Graduates scheme ^[7]. These policies raised the fees for many students, particularly in the liberal arts. But they failed to address the additional costs of regionally based education or offer courses to many students from underrepresented backgrounds.

To address this, the Albanese government has indicated it will develop a “needs-based” funding system from January 2026. This is aimed at better supporting First Nations students, students from lower socio-economic backgrounds, students with disability and students in regional and remote areas.

While this extra support will be welcomed, the silence about student contributions will come as cold comfort to current students, many of whom are faced with mounting debts. The changes to the way student debts are indexed will go some way to addressing the affordability of higher education, but unless the underlying student contribution is lowered, debts will continue to grow.

This is no small task. A reversal of the Job-ready Graduates scheme will likely cost close to a billion dollars a year.

More to come

Education Minister Jason Clare has repeatedly said the govenrment’s response to the Universities Accord will take more than one budget. So this is unlikely to be the final word on changes to universities.

The government has also set up an advisory committee ^[8] to oversee the implementation of the new ATEC and needs-based funding. It will headed by Tony Cook, the Department of Education secretary.

As part of the process, the committee will consult with students, universities and states and territories about their role in shaping post-secondary education in Australia. They have a big job ahead of them.

Until more of the details are worked out, it is hard to know what the future will hold for higher education students.