Category: Equity and access

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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The proposed new funding system, part 4: Needs based funding

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The idea behind needs based funding is that universities should be paid according to student characteristics, not just the disciplines of the subjects students take. While agreeing with the broad concept behind needs based funding, I have criticised the government’s approach for its limited use of direct measures of need.

Needs based funding as implemented modifies existing programs rather than making a major conceptual change to the funding system. It converts equity group funding and a regional campus loading to a per student basis, rather than the previous formula-driven shares of a fixed maximum fund.

I won’t re-prosecute my criticisms of the government’s policies in detail here. My focus will be on the how these policies have been translated into legislation through the Universities Accord (Opening the Doors of Opportunity) Bill 2026, introduced into Parliament in late June.

I have two main concerns about the bill compared to expectations. Low SES status will be defined by the time of enrolment in a unit of study, rather than the first address on enrolment with the provider, and so numbers will be under-stated. Also the minister can easily vary down the loadings for various student characteristics and regional campus payments for continuing students.

As with my previous explainer posts on this bill, I am happy to receive feedback via comments or direct communication.

Interim needs based funding

Needs based funding exists this year under interim legal measures. This post describes 2026 funding rules for low SES and Indigenous students. This post explains 2026 funding rules for regional campus students.

In those posts I was critical of their poor-practice legal basis, which allowed the minister to pay needs-based funding grants (or not) entirely at his discretion, with the substantive rules for allocation in a Department of Education document with no legal standing.

The bill will give the needs based funding programs a much stronger legal basis while still leaving significant ministerial discretion.

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.

Which higher education providers are eligible?

A provider is eligible if it has been allocated Commonwealth supported places for the year: new section 39-10. This applies to both the equity and regional parts of needs-based funding.

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Self-reported status by educational attainment, an update

Andrew Norton1 Comment

It’s common to hear concern about the ‘status’ of vocational education. An article yesterday in The Conversation reported a ‘stigma’ associated with school leavers choosing vocational education. ATEC’s recent discussion paper on a more joined-up tertiary system noted ‘a lack of parity of esteem’ between vocational and higher education. There was a parliamentary inquiry on status of vocational education a few years ago.

For the university-educated academics and bureaucrats who devise measures of status, such as the index of education and occupation used to determine higher education low SES, it seems self-evident that higher education ‘ranks’ above vocational education. In higher education policy the problem is not that educational hierarchy exists, but that access to its upper echelons correlates with family background.

But in a late 2010s blog post I argued that, outside this top-of-the-AQF bubble, educational status is present but seems less significant. The post reported on young people rating the ‘prestige’ of different qualifications and general social survey results of self-reported status by educational level. Although status-focused individuals seek the top educational brands, this does not fully transfer through to general status.

Self-reported status by education

The self-reported status measure asks survey respondents to rate themselves on a 1 (labelled ‘bottom’) to 10 (labelled ‘top’) scale. The chart below reports average results, comparing 2015 from the original post to the 2023 Australian Survey of Social Attitudes.

While survey sample problems may affect the results – with 1010 responses to this question in 2015 and 883 in 2023 – self-reported status declined across all broad qualification groups. Perhaps falling living standards are perceived as a loss of status.

Self-reported status fell by the most for people with a bachelor degree or above. A consequence of this is that the average degree holder status was in 2023 only 0.4 points higher than the average upper vocational qualification holder, down from 0.7 in 2015.

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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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Needs based funding winners and losers

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Last month I wrote about the new equity and regional needs based funding programs. Back then I had the funding formulas but not total funding amounts. The Department’s funding determinations now show that $425.7 million has been allocated for equity needs based funding and $118.6 million for regional needs based funding. There is also $43.7 million for outreach programs. The total is $588.1 million, including $1.3 million in equity needs based funding going to NUHEPs and private universities.

These new programs were principally funded from abolishing the old HEPPP equity program, the old regional loading, and the NPILF program, which supported internships and other engagement with industry. The predecessor programs were allocated $515.9 million, so the increase is more than indexation. Real cuts to the Commonwealth Grant Scheme may have funded the gap.

Funding by university

The chart below shows funding by university. Charles Sturt University and the University of Tasmania get the most money while the two Canberra universities get the least funding. They suffer from a lack of official ‘low SES’ areas in the ACT; as I noted earlier this month the low SES definition is not fit for funding purposes.

A spreadsheet of public university funding levels is available here.

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What is going on with low SES higher education numbers?

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In his speech to the Universities Australia conference last month Jason Clare complained that the low SES share of enrolments ‘hasn’t changed that much in the last 30 years.’ He is overly pessimistic about long run trends in low SES higher education participation. But after 2017 key indicators went backwards, until a recent stabilisation with signs of partial recovery. This post explores trends and speculates on causes.

School leaver participation

One issue with measuring trends in low SES enrolments is correctly identifying low SES students. In higher education statistics a person is low SES if from an area in the lowest 25% by the ABS Index of Education and Occupation. As charts below will show, this IEO geographic proxy shows a distinctive lowest 10% for higher education participation. Above that, however, we see modest participation and attainment increments between deciles 2-6, with differences then speeding up to a distinctive top 20%.

The participation rate similarity between deciles 2-6 makes the current low SES definition unsuitable for funding purposes, but a reasonable rough guide to overall trends. Because deciles 2-6 are sociologically similar, they probably respond in similar ways to economic, educational and policy trends affecting higher education enrolments.

In his speech, the minister referred to an enrolment share metric, low SES students/all domestic students. That’s administratively convenient but analytically weak, as low SES results depend as much on movements in middle and high SES as low SES enrolments. Participation rates are better measures, low SES higher education students/low SES population.

The chart below uses census longitudinal data for school leavers, taking as their SES the IEO ranking of where they lived when they were 15 years old, to better capture the social context of their secondary school years. The orange bars show that in 2016 all deciles had increased their participation rates since 2011, facilitated by the demand driven funding system. But in 2021, shown in grey bars, the participation rate in most deciles was lower than in 2016. There may be some statistical noise. This dataset takes a 5% sample of the census and my results omit unlinked census records – meaning the ABS could not track the same person from census to census or the necessary data was missing. But other data reported in this post confirms that the overall trend is real, even if some decile results are not 100% accurate.

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Needs based funding – the regional campus component

Andrew Norton1 Comment

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

Andrew NortonLeave a comment

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

Andrew NortonLeave a comment

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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Demand driven funding for Indigenous medical students – is it a good idea?

Andrew Norton3 Comments

In line with a 2025-26 Budget commitment, the government has introduced legislation for demand driven funding of Indigenous medical students from 2026.

While well-intentioned, this policy is unlikely to make any significant difference to Indigenous medical student numbers and could accidentally reduce the number of non-Indigenous medical students.

Is there a problem that demand driven funding can solve?

In his second reading speech, the minister noted the current low number of Indigenous doctors and the benefits for Indigenous patients of Indigenous health care workers.

As with the earlier demand driven system for Indigenous bachelor degree students, however, it’s not clear that a shortfall in Indigenous doctor numbers is a problem that demand driven funding will solve.

Universities already try hard to recruit Indigenous medical students, with special entry schemes and quotas in some cases. On the available data (below) they are having some success, 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 rather than the difficulties in finding potential students who meet the entry requirements and are not being set up to fail.

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