Category: Corrections and clarifications

What’s in the 2025 funding agreements? – ‘Higher education courses’ block grants

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In February I reported on preliminary university-level 2025 allocations under the Commonwealth Grant Scheme and estimates of student contributions.* These have since been updated to add money for FEE-FREE Uni Ready places and regional university study hubs. The revised funding summary is here.

This post looks at the underlying funding agreements for more detail on the ‘higher education courses’ part of CGS funding. As usual in funding agreements since 2021, the detail reveals a range of legal and policy problems.

A spreadsheet summary of higher education courses funding for 2025 is here.

The role of higher education courses funding

Higher education courses funding is intended, by the Higher Education Support Act 2003, to be a flexible block grant. Within their total funding envelope, expressed as the ‘maximum basic grant amount’ (MBGA), universities can move resources across coursework AQF levels and between fields of education, other than medicine.

Although higher education courses funding is supposed to be flexible, both Coalition and Labor governments have used ad hoc funding agreement conditions to restrict use of higher education courses money to purposes chosen by the government.

This has in turn led to the unlegislated concepts of ‘base MBGA’ and ‘total MBGA’. Total MBGA is actual MBGA under HESA 2003. Base MBGA excludes most ad hoc programs. Its purpose is to reduce expenditure on the higher education continuity guarantee and the current equity plan funding. If universities don’t meet the ad hoc criteria they get $0 for those non-delivered places.

Overall trend in higher education courses funding

To the surprise of universities the first-term Albanese government often treated them harshly. But Labor kept the former government’s promise to index higher education courses funding to CPI. That was 4.1% for 2025. They also kept the Coalition’s region-based funding increases. While there are complex financial flows in and out of higher education courses funding – discussed further in this post – it is up 6.1% between 2024 and 2025 to a total of $7,687,211,975.

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The higher education participation rate at age 19 almost certainly fell in 2023 – but an exact rate cannot be calculated

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Despite significant policy interest in higher education attainment rates, the preceding participation rates are rarely reported. The most readily available time series is in Mapping Australian higher education, at figure 5 of the 2023 edition. It reports the participation rate at age 19 years, the modal university student age. For the first time in decades, the Department of Education recorded a participation rate in their recent 2023 statistics release.

Unfortunately data issues mean participation figures are only estimates. This post discusses these data problems and compares participation rates using two different methodologies. Both point to participation in 2023 being lower than in all recent years.

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The underexplained and insecure Commonwealth Prac Payment

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The planned Commonwealth Prac Payment aims to help students finance mandatory practical training, such as clinical training or teaching rounds. Initially teaching, nursing and midwifery, and social work students in higher education and VET will be eligible.

According to the government, the Prac payment will be means-tested and is ‘intended to support learning outcomes, where the financial impacts of placements may have otherwise influenced students to defer or withdraw from study‘ (emphasis added).

The payment will be matched to the single Austudy rate, $319.50 a week as of today.

The policy is due to start on 1 July 2025, with part of the legal framework in a bill introduced into the House of Representatives last week.

Bureaucratic and intrusive eligibility criteria

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Will the ‘Costello baby boom’ have a weaker demographic effect on higher education than expected?

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Since the late 2010s I have promoted the idea that the so-called ‘Costello baby boom’ cohorts will arrive at university age from the mid-2020s, increasing school leaver demand for higher education. As the chart below shows, annual births go from around 250,000 in the early 2000s to around 300,000 later in the decade.

Demographers are sceptical of how much effect mid-2000s pro-family policies had, but former Treasurer Peter Costello’s line that ‘if you can have children it’s a good thing to do – you should have one for the father, one for the mother and one for the country..’ was sufficiently memorable that this baby boom has his name attached to it.

As these cohorts approach university age this post takes another look at the data.

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Mapping Australian higher education 2023 – semi-release

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Note: Mapping with revised and updated HELP repayments can be downloaded here.

The chart data with updates is available here.

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Future Campus this morning has a story on Mapping Australian higher education 2023. I’m delaying other publicity efforts due to a methodological error I made when updating HELP repayments last year. This is in the process of being corrected in the pdf version.

People not likely to cite Mapping on HELP repayments can download the report here.

I only noticed my mistake when working on another problem, which is that the report dates quickly. Its production was outsourced and so it is not easy to update the text (which we occasionally did for the Grattan Institute editions of Mapping). At a point during production I made a call to only fix errors.

However I can more easily update chart data, and it was when doing this for new HELP repayment data that I noticed a problem with the earlier update. The repayment time series with later data, along with data behind the other charts and some other updates or additions, is available here.

This is the sixth edition of the Mapping Australian higher education series. The first five were published between 2012 and 2018 when I worked for the Grattan Institute.

The series aims to provide an overview of higher education policy and trends. Most information in each Mapping is from publicly available sources, but (I hope) Mapping makes it easier to understand.

Unlike with the later Grattan editions, this one has no special chapter covering one topic in more detail with new research. However it has new sections on work-integrated learning, student finances, student mental health, and international student migration.

Did COVID-19 reduce female domestic enrolments?

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After the annual release of the ABS Education and Work data last November articles appeared suggesting that female university enrolments might have been hit particularly hard by COVID-19.

I could think of a couple of plausible mechanisms. With children sent home from school and childcare restricted women might have given up study, at least temporarily, to look after their kids. The difficulty of doing required clinical placements and teaching rounds during COVID-19 workplace disruptions might have triggered deferrals, which would probably affect women more than men due to their their large majorities in health and education courses.

On the other hand, the quoted fall in female enrolments – 86,000 – was struggling to pass my ‘does it look right?’ test. And the source, Education and Work, which is conducted each May, has a history of rogue results. It is a sample survey of Australian residents rather than being derived directly from enrolment data. The further users drill down into Education and Work sub-categories – gender, type of enrolment, age group etc – the less reliable it gets (the ABS is upfront about this, and publishes relative standard errors).

Last November I used the TableBuilder version of Education and Work (expensive paywall; university staff can use it) to exclude international students. That caused the female decline in enrolments to go way and became a small increase, although with a narrowing of the gender gap. In 2019 Education and Work reported 1.5 female students for every 1 male student, which declined to 1.42 to 1 in 2020.

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Job-ready Graduates: My Senate inquiry submission

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My submission to the Job-ready Graduates Senate inquiry is now on the Education and Employment Committee website, but the published version has an error in Table 5, so use this version instead if interested (update 16/9: correct version now on the Senate website).*

The submission does not have a lot in it that people who have read this blog since June will not have seen before. But the submission overview summarises what I see as the three key policy errors that make Job-ready Graduates not well designed to achieve its own objectives. I have copied it in below.

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Correction post – true average costs, whether average costs are true, and that chart

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In a post last week, I suggested that a chart on average teaching costs compared to funding rates in the Tehan reform discussion paper, which was causing concern and confusion, and was later amended by the Department of Education, might make things look worse than was the case.

This turned on what kind of ‘average’ we were looking at. There are multiple versions of average 2018 estimated costs by field of education floating around – an average of averages (all institution average costs by field added up/number of institutions), a median of averages (institutional average cost in the middle of the range for each field), and a true average (total costs for field/EFTSL in field). I thought the chart might use an average of averages, which would over-weight low-EFTSL, high-average cost institutions.

But, having realised that I had the true average numbers when I thought I did not (in a file with a name that did not reveal this aspect of its contents), I now think the Department’s chart is based on true average figures.

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Reality testing teaching and research cost results

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My recent blog post on the cost of the teaching-research academic employment model prompted various Twitter comments on its analytical assumptions.

Friday’s post and the comments made on them also link back to other recent posts that try to understand how universities finance themselves. The posts have consistently acknowledged data issues, and that precise dollar figures cannot be attached to most of the conclusions. At best, we can get to a credible range.

The most important criticism is that my analysis assumes that the two main sources of university expenditure data, the Deloitte Access Economics study for teaching, and the ABS for research, can adequately distinguish between and separately cost scholarship and research.

According to the ABS, which uses international definitions, research is ‘creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge’. Scholarship, by contrast, I take as activity leading to or maintaining in-depth understanding of existing knowledge.

It is hard to have research without scholarship. How can academics claim to have increased knowledge if they are unaware of the current state of their topic or field? The literature reviews that appear in many ‘research’ articles in academic journals are scholarship.

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Loan fees and the expert panel

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As I expected, there has been comment (here, here, or here) about my release of a report on HELP student loan fees at the same time as I am on a government higher education policy advisory panel.

Due to the panel consuming my time for the last couple of months, the loan fee report has appeared later than originally intended. But other than that the report’s release follows a plan developed a year ago to complete reports on two weaknesses in HELP’s finances, the thresholds for repayment and interest costs. They are companion reports for our report on doubtful debt and recovery of HELP debt from deceased estates in 2014.

Loan fees are not new, and nor is my support for them something I suddenly arrived at after being appointed to the panel. I said in response to the proposed Pyne reforms that rather than abolishing loan fees we should extend them. What this week’s report does is work through in more depth whether interest subsidies are necessary to income contingent loan schemes (no); the relative merits of real interest, hybrid real interest and CPI indexation, and loan fees (loan fees better); and arrive at a method for setting a loan fee rate (likely interest costs over the life of HELP loans). It’s the detail that is appearing now, not the broad recommendation to use loan fees.

When the government asked me to be on the advisory panel I said I could only do it if I could also meet my existing Grattan commitments. They agreed to this. The panel is providing private advice to the minister and the department. It is a different situation from a review with a final report I need to agree with my panel colleagues and which the government will publicly accept or reject. So while the timing is not ideal, the loan fee report does not pre-empt other people’s decisions.