Needs based funding – the regional campus component

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This post examines the regional campus component of needs based funding, which starts this year. I looked at the low SES and Indigenous component last week.

The regional component funds students at regional campuses rather than regional students. It assumes higher average costs at regional campuses. A longstanding ‘regional loading’ served a similar purpose. Just under $90 million was spent on the regional loading in 2025. Universities have been notified of their needs based funding amounts, but as of 23 February 2026 I cannot find a public record of them.

The research on cost by campus

The Deloitte Access Economics costing work used by the Morrison government to reset funding rates found that regional universities had higher costs per EFTSL after controlling for other factors affecting costs, such as discipline.

Later work by the U of M’s Centre for the Study of Higher Education, using Pilbara Group data, also found that regional campuses had higher average costs per EFTSL (chart below). This partly reflects a general feature of university costs – higher education is an economies of scale enterprise, but regional campuses on average have lower enrolments than major city campuses. However, higher regional costs were found to be still present after controlling for subject size.

Assuming that higher education should, ideally, be taken to where the students are – a proposition I agree with – the basic policy idea behind the regional loading/regional component of needs based funding is sound.

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Needs based funding – the low SES and Indigenous component

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Directing some university funding based on student, rather than just course, characteristics was one good idea coming from the Universities Accord. Students arrive in higher education with varying academic abilities. Other personal attributes and circumstances present potential obstacles to successful study. In a mass higher education system these are routine issues. But some universities enrol more students needing help to succeed than others, a fact only indirectly recognised to date, through equity group funding.

In 2024 I argued that needs based funding should go beyond equity group membership and use more reliable needs indicators, including admissions information. Policy should stop prioritising niche targeted programs over larger-scale initiatives that would benefit many students but higher-needs students the most. Broader changes to pedagogy or student services, for example.

But the needs based funding system as introduced for 2026, for which we now have additional administrative detail, is for the most part not genuine needs based funding. It is an update of old equity programs. In this post I will examine the ‘equity component’ of the new program. A later post will look at the ‘regional component’.

The legal framework

The current legal basis of needs based funding is intended to be temporary. Like previous equity programs it is authorised under section 41-10 (item 1) of the Higher Education Support Act 2003, under which the minister makes ‘grants to promote equality of opportunity in higher education’. It is one of the ‘other grants’ in the Act, that is other than the Commonwealth Grant Scheme (CGS). All ‘other grants’, and the amounts paid under them, are at the discretion of the minister. The plan, however, is to give needs based funding its own statutory basis in the CGS. We are yet to see the necessary legislation.

While current legal arrangements are temporary they are also unusual and unsatisfactory. The funding amounts and formulas, which I will discuss shortly, are not in the needs based funding legislative instrument. This instrument regulates eligibility for and use of needs based funding, but not how it is calculated. Indeed, it does not require that any money be paid at all.

Section 41-30 of HESA 2003 states that the amount of each ‘other grant’ is based on the guidelines, of which there are none for this matter, or ‘the amount determined in writing by the minister’. So needs based funding depends on this ministerial determination.

Instead of specifying the funding rules in a legislative instrument, the Department of Education has issued a document called Needs-based Funding Guidance v1.0 December 2025. This has no formal legal status, but tells universities how the minister intends to calculate funding per institution under section 41-30.

Funding determined this way without formal guidelines is not unprecedented in higher education policy, for example the national institutes grants. But I can’t think of another example where there is an underlying funding formula but the government has chosen not to put it into legal form. I see this as another example of the decline of the rule of law in higher education, in favour of ministerial or potentially ATEC discretion.

I expect that needs based funding will be paid, but to date there is no public evidence that the necessary funding has been authorised.

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A recovery in undergraduate higher education demand

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A media release from Jason Clare today reports that 2026 university applications from tertiary admissions centres, other than in Western Australia, are up 4.6% on 2025. Offers are up 2.5%. This comes after 2025 data was quietly released on the Department’s website last week. I will draw on that 2025 data to outline trends.

Overall application trends

If the 2026 TAC data is an accurate guide to application overall trends, it comes on top of a 5.4% increase between 2024 and 2025. In absolute numbers 2025 is still below the 2014 to 2021 period, but with a clear upward trend.

While aggregate applications are up, eight universities had fewer applications in 2025 than 2024. Other universities had major applications increases between these years, nine with double-digit percentage growth. The disconnect between these fluctuations and the proposed ‘managed growth’ enrolment system will be a policy problem of the coming years, presuming the required legislation passes (which of course I hope it doesn’t).

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Total 2026 Commonwealth supported places funding for public universities

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This post looks at estimated 2026 funding for Commonwealth supported students in public universities. Compared to my earlier post on block grants it adds public funding for medical students, demand driven funding for Indigenous students in bachelor degrees, and student contribution revenue. Total expected public university revenue for Commonwealth supported students, as of February 2026, is $15.5 billion. This is 3.4% more than in 2025.

The 2026 figures by university can be downloaded here.

Commonwealth Grant Scheme

Adding medical and Indigenous places to the block grant ‘higher education courses’ figures, which were discussed in the earlier post, significantly increases Commonwealth Grant Scheme (CGS) totals for some universities. But it does not greatly change overall conclusions about trends in the CGS. CGS funding is down in real terms, with an overall increase of 1.5%, compared to the previous CPI increase policy, which would have delivered a 2.4% increase. Only six universities receive a 2026 CGS increase of 2.4% or more on 2025.

From publicly available information I can partly explain the reasons for university-level changes. As noted in the earlier post some ad hoc places programs (e.g. the equity 20,000 places) are being phased out. The government is not indexing higher education courses grants of universities that were not fully using their ‘higher education courses’ allocation. Seven universities expect to earn less in 2026 than in 2025 from the Indigenous bachelor degree demand driven program. Some universities have increased funding for nuclear submarine places, $15.4 million in total.

One university shows a 2026 CGS decline on 2025, but if this happens the Transition Funding Floor Guarantee will return it to a neutral position.

Since I wrote the block grant post I have been informed of two other factors affecting CGS figures that are not yet shown in my data sources, the funding agreements and the funding determinations. First, current allocations do not include the 100 new medical places announced last November. That will add $3.2 million to the ‘designated medical’ category. Second, there is not yet any money converting some over-enrolments (i.e. student contribution only places) to fully funded places. If this turns out to be the $50 million mentioned in briefings to universities, over-enrolment money and the extra medical places will lift the 2026 total CGS increase on 2025 to 2.2%.

Although most universities are, in CPI adjusted terms, facing lower CGS funding for 2026 their total subsidies for Commonwealth supported students may nevertheless go up. One possible reason for CGS stinginess is that the government is increasing expenditure on equity students through needs based funding. In future needs based funding will be a CGS sub-program. As an interim measure, until the necessarily legislation is passed, the government is repurposing the non-CGS statutory basis of pre-2026 equity programs for needs based funding.

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The 2026 funding agreements, Part 3: New rules on closing courses

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In the 2026 university funding agreements the rules on closing courses have changed and now require universities to follow additional processes. These changes are presumably a response to course and subject closures at UTS, at Macquarie, the ANU, the University of Canberra, and other institutions.

Confusingly, however, the agreements differ between universities on the timelines to follow.

Which courses are covered?

The basic threshold for a course being covered by the closure rules is that it must be an undergraduate or postgraduate course in which Commonwealth supported places have been used for at least two years. This includes a major within a course.

A course is not considered closed if it is immediately replaced by another course that leads to the same occupation or provides a similar specialised skill.

A course is considered closed, however, if it suspends intake of students for more than one consecutive academic year.

These criteria are unchanged from last year.

Timing of notification

In 2025 universities had to notify the Commonwealth of potential course closures by 31 July and before information on the closure is made public.

In 2026 the 31 July deadline is gone. Presumably it was unrealistic about university decision making timelines.

In what I will call funding agreement variation A, for 2026 notification of actual or potential course closures should occur at the earlier of (i) as soon as reasonably possible before final decisions to close courses are made or (ii) before any information on the potential course closure is made public.

In what I will call funding agreement variation B, for 2026 notification of potential course closures should occur by the earlier of (i) the finalisation of the provider’s Mission Based Compact for the following year (or where a new Mission Based Compact is not being negotiated, the finalisation of annual allocation of domestic student places for the following year), or (ii) one calendar month before any information on the potential course closure is made public.

Variation B is a bold inclusion, as the ‘annual allocation of domestic student places’ refers to a new funding system that requires legislation. As of early February 2026 it had not been introduced into Parliament, much less passed.

For variation B universities, then, the effective current rule is to notify the Commonwealth at least one month prior to making a course closure public. Variation A universities can wait until closer to the date of public disclosure before telling the government, unless they have made a final decision, as they need to inform the government as soon as possible before that decision.

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The 2026 funding agreements, Part 2: Sorting out the medical student policy mess

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Last year the Parliament passed legislation making Commonwealth supported places demand driven for Indigenous students enrolled in medical courses. It sounded good, we need more Indigenous doctors. But as I pointed out, the policy as legislated risked reducing non-Indigenous medical student enrolments without increasing Indigenous medical students enrolments.

The 2026 funding agreements reveal that the Department of Education has been quite inventive in finding a workaround to prevent this perverse outcome. The price, however, is yet more complexity in higher education policy.

The problem

A demand driven funding policy for Indigenous medical students assumes that fixed total funding holds Indigenous enrolments down. Student places are indeed unusually restricted in medicine. Medicine is the only ‘designated’ course, meaning that the government sets a specific number of student places. While designation does not prohibit over-enrolments (i.e. student contribution only places), medicine also has a completions cap. A standard funding agreement clause specifies that a university must not change its medical enrolments in ways that will change annual completions from the capped level.

While medical student numbers are restricted it is not clear that this prevents increased Indigenous enrolments. As I argued in my original post, universities already try hard to recruit Indigenous medical students, with special entry schemes and quotas in some cases. On the available data (below) these schemes are delivering Indigenous enrolments, a source of pride for the medical deans association. 3% of domestic medical students are Indigenous, compared to 2.3% of the overall domestic student population.

The main obstacle to further enrolment increases is unlikely to be funding. It is finding potential students who are not being set up to fail.

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The 2026 funding agreements, Part 1: Public university block grants

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The 2026 higher education funding agreements, the legal basis of Commonwealth Grant Scheme funding, were published recently. This post examines public university funding for ‘higher education courses’.

‘Higher education courses’ has a specific legal meaning. It includes FEE-FREE Uni Ready (enabling) courses and coursework programs other than medicine, except for Indigenous students in bachelor degree courses, who are funded separately. Each public university receives a maximum basic grant amount (MBGA) for higher education courses. This funding is intended to be a flexible block grant. Universities can move money between qualification levels and disciplines, except for medicine.

Policy change

For 2026 the government has changed its policy on setting university MBGAs, as part of a transition to a new funding system under the proposed Australian Tertiary Education Commission. For 2023-2025 Labor retained the Coalition policy of indexing MBGAs to inflation and adding regional-campus-biased increments for population change. This policy led to many universities not using all their MBGA, known as ‘under-enrolment’. Coalition policies to compensate higher education providers for under-enrolment cost taxpayers $844 million between 2020 and 2023.

The government has, sensibly enough, decided not to keep increasing MBGAs for universities that cannot utilise the funds. The new policy, as summarised in the funding agreements, is:

  • For universities that significantly under-enrolled in 2024, the last year with ‘verified’ data, the provider will receive no increase in higher education courses MBGA between 2025 and 2026. Section 30-27(3) of the Higher Education Support Act 2003 prevents the government from lowering a MBGA between years.
  • Universities with enrolments valued at or near their MBGA will receive inflation indexation.
  • Universities with significant over-enrolment ‘may’ also receive a share of an over-enrolment fund.

In a document distributed to universities in 2025, significant over-enrolment was defined as delivering places valued at 5% or more above their MBGA.

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Higher education participation rates at age 19 – a migration data update

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For many years I have published estimates of the domestic higher education participation rate at age 19. That age was chosen as it is the modal age of domestic higher education students.

To calculate a participation rate we need a count of domestic higher education students (Australian or NZ citizen, permanent resident) and a count of the ‘domestic’ population, that is all Australian or NZ citizens and permanent residents. There are significant issues with calculating both numbers – explained in this post from last year.

One of these issues is that the ABS population figures are inflated by temporary migrants. They need to be removed from the count to get a ‘domestic’ population figure. The ABS does not provide a temporary visa/domestic breakdown. As a workaround, my participation time series deducts international 19 year old higher education students from the ABS 19 year old population estimate.

A new methodology

This onshore higher education international students aged 19 correction, however, has several problems: a) the higher education enrolment data does not cover all higher education providers; b) vocational education students are not included; and c) other temporary visa holders in Australia are not included.

These omissions should lead to an under-estimate of the temporary visa population and, after their deduction, an over-estimate of the ‘domestic’ population.

To get a more accurate temporary population figure, I asked the Department of Home Affairs for data on 19 year old temporary visa holders in Australia on 30/06/2024, the date of the ABS population estimate. Some of these visa holders may not satisfy the population count rule – that the person is or will be in Australia for at least 12 months in a 16 month period. However, people with temporary visas who satisfy the 12/16 rule but who were temporarily absent from Australia on 30/06/2024 are omitted from the count.

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My ATEC Senate inquiry submission/legislation analysis

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Submissions for the ATEC bills Senate inquiry are appearing on the inquiry’s website.

My submission turned into a detailed analysis of the two bills, the main one setting up ATEC and another with consequential amendments to the Higher Education Support Act 2003 and the TEQSA Act 2011.

It draws from my seven posts to date on the ATEC bills: on its objectives, on mission based compacts, on student contributions and funding rates, on ATEC’s independence from the government, on the setting of the Threshold Standards, on international student caps, and on ATEC commissioners and their qualifications.

The bills should be rejected

The short version of my view is that neither bill should pass.

Although the full scope of ATEC’s powers won’t be seen without further legislation, the mission based compacts alone, as drafted, give the government/ATEC unprecedented power over universities.

This power is inconsistent with university autonomy and with proper parliamentary control over government officials.

On the available evidence, this power would be used to pursue a narrow instrumentalist view of higher education. Even modest acknowledgements that education has purposes other than economic or equity goals, such as the references to ‘cultural and intellectual life’ in HESA 2003, are conspicuously absent from these bills.

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The Australian Tertiary Education Commission legislation, Part 7, The number of ATEC commissioners and their qualifications

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Under the bill to create the Australian Tertiary Education Commission there will be three ATEC commissioners: a Chief Commissioner, a First Nations Commissioner, and a Commissioner.

The commissioners will have significant administrative and advisory functions requiring expertise on a wide range of topics. I have covered two of these topics in detail in this series on the ATEC legislation, ATEC’s advice on the Threshold Standards that govern all higher education providers and on per student funding rates. Other subjects on which expertise will be needed include the equity groups, education demand, higher education administration, and research.

It’s not clear, however, that the three commissioners envisaged under the ATEC legislation will have expertise across the full range of fields.

Mapping ATEC functions and advisory roles against statutory selection criteria

In the Universities Accord (Australian Tertiary Education Commission) Bill 2025 sections 56 to 59 set out the qualifications for being a commissioner. All three commissioner roles have a general requirement for appropriate skills, knowledge and experience. Section 59 sets out specific required domains of knowledge and experience that they must collectively have. The table below maps these against the responsibilities of ATEC, as indicated across section 3 of the bill (Objects), section 11 (Functions) and section 41 (Advice and recommendations). 

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