The government has grand hopes for additional higher education participation, on the way to 80% tertiary attainment by 2050. But how they will fund enrolment growth is much less clear.

The government is setting itself a double challenge – not just delivering more domestic student places but simultaneously reducing ‘over-enrolments’, student contribution only places with no public subsidy. In a May provider briefing, ATEC put the number of over-enrolled places in 2026 at about 60,000.

On calculations in my Senate inquiry submission I estimated that, on 2025 numbers, maximum over-enrolment capacity under the government’s restrictions would be about 22,500 – on the unlikely assumption that every university could precisely use its full allowance.

With a low over-enrolment cap the government needs at least 37,500 additional fully-funded places just to maintain 2026 enrolments. That would cost taxpayers around $500 million without creating a single additional place.

The government has delayed this expense with transition arrangements for currently over-enrolled universities, but that is the goal they have set themselves.

How many new places has the government promised?

In his second reading speech for the funding reform bill, Jason Clare said that ‘next year there will be 16,000 more places for more students in the system. The year after that there will be another 16,000. The year after that another 16,000. In 2030, this increases to 19,000 additional fully funded Commonwealth supported places.’

While I would not necessarily take this at face value – the minister’s statements don’t always match reality – ‘more places for more students’ implies places over-and-above the conversion of over-enrolment places, although for the many universities that are already over-enrolled it’s hard to do that without also adjusting up their over-enrolment ‘glidepath’.

In the May provider briefing ATEC says it has 37,000 CSPs to allocate in 2027, of which 7,000 are already committed to the nuclear submarine program, regional study hubs and non-Table A providers. That leaves 30,000 places. In the provider briefing they talk about 15,000 to 20,000 of the 30,000 going to convert over-enrolments to fully-funded places. But to align with the minister’s 16,000 ‘more places for more students’ the over-enrolment conversions should be more like 14,000 places.

What do the Budget papers say?

Under the new funding bill, the Commonwealth Grant Scheme will continue funding the Commonwealth contribution component of Commonwealth supported places. Budget projections on the CGS are currently our best guide to future funding.

The Budget papers operate on financial years while higher education funding works on calendar years. But except for the 2025-26 financial year, to which I will return, the CGS remains on an unchanged trajectory between the 2025-26 and 2026-27 Budgets. It looks like the Job-ready Graduates trajectory of CPI indexation plus growth funding of 3.5% for regional campuses, 2.5% for campuses in high-growth metropolitan areas, and 1% for other campuses. So no obvious funding increase other than what was already budgeted based on Morrison-era policies.

For the 2027-28 financial year I estimate that JRG funding increases are equivalent to approximately 15,000 additional places – maybe close enough to the minister’s 16,000 places but nowhere near ATEC’s 37,000.

Expenditure for 2025-26

For the 2026-27 Budget compared to the 2025-26 forecasts there is a $645.5 million CGS expenditure estimate write-down for the 2025-26 financial year, to a new total of $7.7 billion. This amount is however below the CGS estimates derived from the funding agreements and demand driven Indigenous funding, which are the legal basis for initial CGS payments to universities. These payments, however, are revised based on actual student places delivered.

I cannot fully explain the 2025-26 revision figure. It is at least partly due to moving $218 million of CGS funding to the ‘Higher Education Continuity Guarantee – Equity’ program for 2025 and abolishing the JRG growth policies for 2026, so that many universities received a 0% funding increase for the main CGS grant program and only four universities were granted funding increases beyond indexation.

Apart from the extra $50 million for significantly over-enrolled universities, which is yet to appear in the funding agreements, the government seems to have held back on funding for 2026 to rollover some cash for ATEC to play with for 2027.

But because the government cut 2026 university grants in real terms compared to 2025, while undergraduate demand is on its figures up on 2025, over-enrolment has increased from 45,000 places last year to 60,000 this year.

The government is simultaneously opposed to and reliant on over-enrolments.

More efficient use of available funding

Although the government’s anti-over-enrolment policy is intended to protect less popular universities, to the extent that this fails the government will be more ruthless than its predecessor with weak-demand universities.

The funding bill introduces a system of automatic cuts to ‘core student load’, the year-to-year base allocation of CSPs. For example, a university’s core student load for 2028 will be the lower of their 2027 domestic student profile (core student load + additional growth allocation) or their 2026 actual CSPs. So if a university was under-enrolled in 2026, or on target but below their 2027 allocation, they will be cut back to 2026 levels for 2028.

Within its ‘total allocation pool’ of CSPs from the minister ATEC can top up universities that it knows from projections aren’t really under-enrolled, but this policy will maintain a high level of CSP churn to ensure that as little as possible of the total CSP pool is unused.

In my Senate inquiry submission I estimated that this automatic cuts policy will strip about 13,700 places out of universities that were under-enrolled in 2025 which ATEC can then reallocate in 2027.

Adding things up

So 15,000 additional CSPs funded under Morrison-era funding policy, plus another 13,700 CSPs in more efficient use of that funding, equals 28,700 CSPs – getting close to the 30,000 ATEC claims to have at its discretion, with the rest financed with carried forward 2026 funding.

This is consistent with PM&C’s statement that the managed growth funding policy has, in the short-term, been fully offset by ceasing JRG’s funding growth policy and reducing continuity payments (see the document labelled ‘summary’).

But no new money

All this suggests that the minister has, to date, not been successful in convincing his Cabinet colleagues that CGS funding should be increased beyond previously planned growth.

That may not matter much if demand stabilises and over-enrolments remain in the system.

But that is not the minister’s policy, which is instead to phase down over-enrolments while pressuring universities to enrol more equity students.

The government’s policies for fiscal constraint but against over-enrolment create unnecessary risks for higher education opportunities and the government’s own tertiary attainment goals.