Category: Australian Tertiary Education Commission

The proposed new funding system, part 5: What has happened to effectively demand driven funding for equity groups?

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In his second reading speech for the Universities Accord (Opening the Doors of Opportunity) Bill 2026 education minister Jason Clare said that it will ‘help more people from poor families and the regions and the bush to get into university. In simple terms, if you get the marks, and you’ve got what it takes you will get a place.’  Later in the speech, he described the new policy as ‘effectively uncapping the system for these students’.

This is the latest iteration of a concept first announced as ‘effectively demand driven’ funding in the Accord final report and then described by the Department of Education as ‘managed demand driven funding’.

Whatever its name, how this policy would be implemented remained unclear. The policy implies eligibility criteria – ‘if you get the marks’ – that do not exist at the system level. It raised questions about the coherence of the government’s position. Does it make sense to impose tougher caps on enrolments generally while claiming to ‘effectively uncap’ a sub-section of students? Isn’t this just a part-solution to an avoidable problem caused by hard caps?

The silence of the bill

Anyone hoping that the funding bill would provide clarity will be disappointed. There is no uncapping of places for any category of student that isn’t already demand driven. But another feature of the system gives ATEC some flexibility to allocate additional places late in the enrolment period.

A recap on the new system

First a recap on how the new system will work. The first step is for the minister to set a total allocation pool of places, which will cover all coursework places other than medicine and the demand driven programs for Indigenous students.

The second step is for ATEC to allocate those places to universities. This will be a combination of ‘core student load’, a historical figure, and an ‘additional growth allocation’. Together these are the ‘domestic student profile’ of each university.

On top of the domestic student profile universities will have an over-enrolment buffer, of 750 places or 5% of the domestic student profile, whichever is lower. As part of transition measures some universities can have total places exceeding these levels but caps on commencing students.

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ATEC’s allocation of international student commencements

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In presentations earlier this year I told audiences that the government will try again to impose provider-level caps on international students. Its 2024 attempt failed due to a surprise Coalition-Green alliance in the Senate. The basis of my statement was ATEC ‘s legislation, which said that it would ‘allocate a maximum number of international student commencements to ESOS registered providers’ (emphasis added).

But for unexplained reasons the government is backing away from tough provider-level international student enrolment limits. The Universities Accord (Opening the Doors of Opportunity) Bill 2026 gives ATEC a role in allocating commencements to higher education providers, but it is something closer to current national planning level allocations for new overseas student commencement (NOSC) than a hard capped system.

The basic process will be that the minister sets a total allocation pool of international student commencements, and ATEC then decides on the distribution between universities and other higher education providers.

As described in detail below, this process has very high levels of ministerial and ATEC discretion, to the point of both being able to reduce allocations after the students have started their courses.

While there should be much better processes than those set in the bill, at least for non-public university providers it is not obviously significantly worse than what we have now.

Legislative references are to the Universities Accord (Australian Tertiary Education Commission) Act 2026 unless otherwise specified, ‘current’ signalling the legislation now in force, ‘new’ signalling the amending bill.

International student allocation pool

As for domestic students in Commonwealth supported places, the minister for education will start by setting a total pool of ‘overseas students that may commence a course of education with ESOS registered higher education providers during a specified period’: new section 46B(1).

What does the minister take into account when setting the international student allocation pool?

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The proposed new funding system, part 3: Capping over-enrolments

Andrew Norton2 Comments

The Universities Accord (Opening the Doors of Opportunity) Bill 2026, in itself, does not do what it says in the cover.

Although the minister’s promotional material focuses on new Commonwealth supported places expected over coming years he could have funded those under the current system – albeit imprecisely, as the current system largely allocates in dollars rather than places. The most we can say in favour of the bill and new places is that it will be more obvious whether or not they have been funded.

Where the bill differs most from the current funding system is in reducing places at the university level. In the previous post I explained how a year of under-enrolment could result in a lower allocation of places two years later. In today’s post I describe proposed new restrictions on over-enrolments, students taken above the allocated level.

All legislative references in the following text are to the Higher Education Support Act 2003 unless otherwise specified, ‘current’ signalling the legislation now in force, ‘new’ signalling the amending bill.

As with the earlier posts, this is one is dealing with complex legislation so I am happy to receive feedback through comments or direct communication.

The current system

Under the current ‘higher education courses’ grant – all CSP categories other than medicine or Indigenous students in demand driven places – there is a maximum basic grant amount. The value of CSPs delivered in this category is calculated as the Commonwealth contribution rate * the number of student places delivered. If the value of these places exceeds the MBGA the university gets the MBGA but no more: current section 33-5(2). In 2024 nine universities delivered student places worth at least 5% more than their MBGA.

For student contributions, however, there is no cap. The provisions on upfront student contributions and HECS-HELP loans give the Commonwealth no power to intervene on these payments: current sections 93-15 and 96-1 respectively.

The proposed system – capped student contributions

There will be a transitional scheme for currently over-enrolled universities, which I cover below. First I will focus on the long-run system under which universities will get an over-enrolment buffer, for which student contributions are paid, but then be penalised student contribution revenue for places in excess of the buffer.

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The proposed new funding system, part 2: ATEC allocations of Commonwealth supported places to public universities

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In the previous post, I outlined how the minister would set total numbers of Commonwealth supported student places if the Universities Accord (Opening the Doors of Opportunity) Bill 2026 is passed. This post looks at how the Australian Tertiary Education Commission (ATEC) will allocate CSPs to public universities. ATEC will also allocate places to other higher education providers, discussed in a later post.

To recap on the previous post, ATEC will allocate places from a ‘total allocation pool’ (TAP) determined by the minister. ATEC will not allocate medical places, which the minister will do. ATEC will also not allocate demand driven places, currently Indigenous students in bachelor degrees or medicine.

All legislative references in the following text are to the Higher Education Support Act 2003 unless otherwise specified, ‘current’ signalling the legislation now in force, ‘new’ signalling the amending bill.

Feedback is welcome via the comments or direct communication. This is complex legislation and I may misunderstand things. Three revisions to my first post so far.

Total number of Commonwealth supported places per university

The total number of CSPs allocated to a university will be known as their ‘domestic student profile’: new section 30-15(2).

The domestic student profile will have up to two components, the ‘core student load’ and an ‘additional growth allocation’: new section 30-25.

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The proposed new funding system, part 1: Setting the number of fully-funded Commonwealth supported places

Andrew Norton1 Comment

This post is the first in a series of explainers on how the new Commonwealth supported student funding system will operate if the Universities Accord (Opening the Doors of Opportunity) Bill 2026 is passed.

The series is primarily aimed at policy advisers and people working in university planning offices. I covered the most important issue for the general public and prospective university students in this Conversation article.

This post looks at how the total number of fully-funded Commonwealth supported places will be determined. A fully-funded place is one for which both a Commonwealth and a student contribution is paid. Student contribution only places will be discussed in a later post.

The current system

As a refresher, the current CSP allocation system has three components:

  • Designated courses, where the minister allocates, via university funding agreements, specific number of CSPs. Currently only medicine for non-Indigenous students is designated. The funding formula is the Commonwealth contribution rate * the number of student places delivered or the allocated number of places, whichever is the lower.
  • Demand driven courses, currently only Indigenous students in bachelor degrees or medical courses. The funding formula is the Commonwealth contribution rate * the number of student places delivered. Effectively, universities and students decide on the allocation.
  • A ‘higher education courses’ grant in which each university gets a maximum basic grant amount (MBGA) to cover CSPs not in the previous two categories. The value of CSPs delivered in this category is calculated as the Commonwealth contribution rate * the number of student places delivered. If the value of these places exceeds the MBGA the university gets the MBGA. If the value is below the MBGA in theory the university receives that amount. In practice, in recent years, universities have received the full value of their MBGA via other programs despite not delivering CSPs of the required value.

The proposed reforms

All three of these components will change if the bill passes.

The overall higher education courses category will be allocated in CSPs instead of dollars, with no maximum basic grant amount. Total places will be determined by the minister, allocations to specific providers will be determined by ATEC.

Designated places will become a sub-category of higher education courses, used to allocate/restrict places in specific kinds of courses. While the minister decides which courses are designated, ATEC allocates designated places to providers.

Medicine will move into a new, separate category, still functionally equivalent to designation but allocated by the minister (as now) instead of ATEC.

The existing demand driven categories will be maintained and include a ministerial discretion to add new categories of courses. There will be a new mechanism to cap demand driven places if needed.

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Job-ready Graduates – its effects on university Commonwealth supported places decisions

Andrew Norton2 Comments

The student contribution increases of Job-ready Graduates get regular media coverage, focusing on the plight of debt-laden arts graduates. Far less attention is given to how JRG affected university decision-making.

For universities JRG had multiple elements. Total overall Commonwealth supported student funding rates by discipline were changed, some increasing but most decreasing. The changes to student contributions altered incentives for over-enrolments. Previous separate allocations of sub-bachelor and postgraduate Commonwealth supported places (CSPs)were ended, merged into a single fund with bachelor degrees.

To explore these effects, Ren-Hao Xu from UWA and I interviewed 15 leaders and officials from five universities in 2024 and 2025. We chose universities with various sizes, locations, missions and rankings to find out how they interpreted the JRG incentives and how these affected decision making. An academic article reporting our methodology and findings was recently published in the Australian Educational Researcher journal.

Over-enrolment

One thing I was especially curious about was to what extent over-enrolment – taking students on the student contribution only – was deliberate and to what extent accidental, reflecting the inherent difficulties in hitting precise full-time equivalent enrolment targets.

For the over-enrolled universities in our study the answer was mostly deliberate.

Two universities in our study had mission-related reasons for over-enrolling. The vice-chancellor of an equity-focused university told us that ‘we’ve also felt that we should over-enrol based on demand due to the university’s mission to serve students from disadvantaged backgrounds.’ The vice-chancellor of a regional university was willing to over-enrol as there was no other local university students could attend.

Other universities took a more strategic approach. One noted the likely Accord system re-set, knowing that during past policy shifts enrolments as of a recent year were used at the basis of the new funding system. This was a chance to lock in a larger base funding amount (an approach that has so far only partly worked, with just $50 million allocated to convert over-enrolments to fully-funded places).

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Rule by email in higher education policy – over-enrolment and governance

Andrew Norton2 Comments

This post is about unlegislated higher education policies. The story starts last year with reports that the government was imposing caps on commencing Commonwealth supported places, which reached the media in November 2025. This sparked my interest, as the current funding legislation does not specifically authorise it.

By the end of the Universities Australia conference in February 2026 I was also hearing that governance conditions were being imposed on universities getting additional funds to reduce over-enrolment (taking students on the student contribution only). The policies were implemented via emails to vice-chancellors.

I decided to file a Freedom of Information request on the emails. I paid a $150 processing charge. This week the request was granted.

The minister’s letter

The FoI release shows that this process started with a letter from Jason Clare to the ‘interim ATEC’ dated 28 August 2025.

The letter reiterates the minister’s views on the impact of over-enrolments for the universities left with too few students. Its solution is to get over-enrolled universities to do three things:

  • ‘Agree’ to a plan to reduce or not further grow commencing Commonwealth supported students
  • Report on plans to support staff and students during this transition period (an implicit acknowledgement that fewer CSPs = fewer staff)
  • Early adoption of agreed actions from the Education Ministers’ consideration of recommendations from the Expert Council on University Governance

To do these things, universities were to be given two incentives and one threat.

  • A share of a $50 million over-enrolment fund for 2026, which would convert some over-enrolled places to fully-funded places (i.e. Commonwealth + student contribution)
  • A more attractive transition phase to a capped system, under which they could keep student contributions for over-enrolments while trending down to the caps (the ‘glidepath’)
  • And the threat that ‘actions they take now will be considered by ATEC when allocating growth places through mission based compacts for 2027’.

Emails to vice-chancellors of over-enrolled universities, dated 11 December 2025, mentioned that they had already agreed to ‘pursue a more modest growth strategy in 2026’ and told them that they had until 14 January 2026 to confirm student and staff support plans and agreement to governance actions.

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ATEC’s interim statement of strategic priorities

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Yesterday the Australian Tertiary Education Commission issued an interim statement of strategic priorities. This statement will guide university mission based compacts for 2027. This post covers the legal status of the statement, its apparent approach to management of the sector via compacts, and what it proposes in the areas of skills, First Nations, equity, teaching quality, VET-higher education relations, and research.

Decision-making under the ATEC system

When fully operational the ATEC decision-making process will operate in the sequence shown in the chart below.

Despite the ATEC Act 2026 officially coming into force on 29 April 2026, ATEC’s interim statement seems to be operating in the legal limbo the organisation has been in since being established as the ‘interim ATEC’ in July 2025.

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ATEC legislation amended in the Senate

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The ATEC legislation passed the Senate yesterday, after the government accepted amendments from the Greens and David Pocock. It now needs to be rubber-stamped by the House of Representatives [update 9pm 31/3 – done] and the Governor-General [update 3/4 -done]. Once that is done, it will become law after 28 days [update – 29 April].

The amendments improve the legislation while still in my view leaving major flaws.

This previous post of mine links to my ATEC Senate inquiry submission and earlier posts on aspects of the legislation.

Objects of the Act

One of my criticisms was the entirely utilitarian and philistine set of ‘objects’ in the Act. While arguably no government since the 1970s has genuinely cared much about the broader functions of universities, they at least nodded to them in legislative objects. Not this government.

But the Senate amendment improves things:

Research

The ATEC bill read like a rushed committee job with nobody in enough control to ensure internal coherence. One example of this was research appearing in the objects of the bill but then disappearing from ATEC’s functions and matters on which it can give advice.

This is now fixed.

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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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