Since it came to office, Labor has deferred dealing with Job-ready Graduates student contributions. First it added student contributions to the Universities Accord list of issues. In February 2024 the Accord Final Report suggested basing student contributions on lifetime earnings. Subsequently the minister said the new Australian Tertiary Education Commission would provide advice. Now we have ATEC’s legislation, but how student contributions will be handled is less clear than I expected.

All legislative references, unless otherwise specified, are to the Universities Accord (Australian Tertiary Education Commission) Bill 2025.

The ATEC bill and per student funding

The ATEC bill does not mention student contributions at all. One of ATEC’s functions, however, will be to advise the minister on:

“The efficient cost of higher education across disciplines and student cohorts and in relation to the Commonwealth contribution amounts for places in funding clusters.”: section 11(d)(ii), section labelled “Functions of the ATEC”.

In different words, in a later section on “Advice and recommendations”, a topic of advice is:

“The costs of teaching and learning in higher education and overall higher education funding amounts, including on a per student basis.”: section 41(1)(b).

Student contributions as a residual item

On these formulations, ATEC can only indirectly and impliedly advise on student contributions. It will suggest an efficient per student cost, which if adopted by the government will be the total funding rate. ATEC will then suggest, on some unspecified basis, a Commonwealth contribution. Total funding per student minus the Commonwealth contribution = the student contribution, as what is left.

This is not how ATEC would proceed if the government accepted the Accord recommendation on linking student contributions to lifetime earnings. (I can’t find evidence that the government has endorsed this principle.)

If accepting the Accord’s recommendation was how the government planned to proceed the student contribution would have a rationale – lifetime earnings associated with a discipline – and the Commonwealth contribution would be the residual item. Total funding per student minus the student contribution = the Commonwealth contribution. This was essentially the system we had 2005-2020.

Unfortunately the bill’s explanatory memorandum does not explain the thinking behind a focus on the Commonwealth rather than the student contribution. The only EM mention of student contributions is this, in relation to the definition of “funding clusters” (p. 16):

“The funding cluster for a unit of study determines the amount of the Commonwealth contribution amount, and the student contribution amount (i.e. how much the student pays) that applies to that unit.”

But this is not a good description of how student contribution amounts are allocated to disciplines. In section 93-10 of the Higher Education Support Act 2003, which sets maximum student contributions, funding clusters are mentioned, but the same student contributions appear across several funding clusters.

ATEC cannot advise on student contributions without a government request

However we interpret statutory references to funding rates, ATEC will not have any independent authority to advise on a new funding system. Advice under section 11(d)(ii) and section 41(1)(b) can only be given if requested by the minister.

If the minister does seek advice on funding matters ATEC cannot release it without permission from the minister: section 69.

While ATEC will have some independence in allocating places and setting performance targets at the institutional level, it will generally be under tight ministerial control.

Setting total funding rates

While unhelpful on student contributions, the wording of sections 11(d)(ii) and 41(1)(b) provides some guide to the government’s direction on funding.

The reference in section 11(d)(ii) to student cohorts captures the idea behind needs-based funding, that costs vary by student as well as course characteristics. As conceptualised to date needs-based funding is more an equity student program than genuinely based on student needs, but the legislation leaves space for improvement in later iterations.

Section 11(d)(ii) also refers to disciplines, the basis of the current funding system, rather than potential other bases such as delivery methods.

Sections 11(d)(ii) and 41(1)(b) have differences in wording of uncertain significance. Is there a difference between “cost of higher education across disciplines and student cohorts” and the “costs of teaching and learning in higher education”?

These different formulations allude to important issues in the funding system. The “cost of higher education” potentially includes some research funding, while “teaching and learning” does not.

What does “learning” add to “teaching”? Perhaps this can cover student support costs that enable successful study without being part of academic teaching. One key issue created by the current government’s policies is that it has significantly increased non-academic support costs in the support for students policy, the gender-based violence policy, and the National Student Ombudsman, while diverting amenities fee funding to student-led organisations.

The reference in section 11(d)(ii) to “efficient” costs is perhaps more sophisticated than the average costs used for the Job-ready Graduates rates, but the implications will be similar – universities that cannot achieve economies of scale will continue to close subjects and courses with low enrolments.

Conclusion

At one level I can see a rationale for ATEC not making recommendations about student contributions. While student contributions probably have minor effects on course and subject choices they are primarily political judgments, driven by the overall state of the budget and the likely political reactions of winners and losers in any change to student contribution levels. But we had been led to believe that ATEC would do something about excessively high student contributions. That now seems less likely.