During the 2020s the government has implemented policy using a broad ministerial power to impose conditions on funding agreements. Universities must sign these agreements to receive Commonwealth Grant Scheme funding. I have criticised this use of funding agreements when the conditions subvert the intent of the Higher Education Support Act 2003 and/or avoid parliamentary scrutiny.
A repeat offence example is allocating Commonwealth supported places to specific courses, such as in the 20,000 equity places policy, when this is not supposed to happen unless the course is first ‘designated’ by the minister.
Another example is starting implementation of the equity plan expenditure of unused CGS grants through funding agreements, when this was actually to be financed under the ‘other grants’ provisions of HESA 2003. (Eventually proper legal processes were followed.)
A third example is the ban on early offers using funding agreements. Admissions-related issues are covered by other sections of HESA 2003 and by the Threshold Standards administered by TEQSA. A substantive policy issue like this should have gone via one of these processes that include parliamentary scrutiny.
The scope of ministerial discretionary power should be constrained. Instead, the funding legislation introduced in late June would lift some existing restrictions. It exposes universities and other higher education providers to worse misuse of power. This post explains the proposed changes and suggests remedies.
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, the Universities Accord (Opening the Doors of Opportunity) Bill 2026.
Current power to add conditions to funding agreements
Under the current HESA 2003, some conditions of funding are built into the legislation, such as which students are eligible for Commonwealth supported places. These will remain.
On top of the legislated conditions, current section 30-25(2) states that ‘the agreement may specify conditions to which the grants are subject, that are additional to the conditions that apply under Division 36’ [such as CSP eligibility]. This is the legal authority for the examples given above.
Section 30-25(2) has restrictions placed on it.
The minister cannot exclude a course from Commonwealth support using a funding agreement. This must be done under current section 36-15(2), which requires a legislative instrument to be used. This legislative instrument is subject to disallowance by either house of parliament: current section 30-25(2A).
Another restriction is that the conditions cannot relate to industrial relations matters: current section 30-25(2B). This was intended to stop Coalition governments using funding agreements to pursue their IR agendas.
Because funding agreements will no longer exist under the new system current sections 30-25, 30-25(2A) and 30-25(2B) are repealed by the amending bill: item 2, part 1, schedule 1.
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Andrew Norton 