Other higher education measures

Budget Review 2014–15 Index

Dr Coral Dow

The higher education budget is focussed on the major reforms to deregulate undergraduate education and the changes to the Higher Education Loan Programme (HELP).[1] A number of other measures, mostly involving savings, will also affect the sector.

University funding

The combined effect of two measures—indexation changes and the application of an efficiency dividend—will reduce funding.

From 1 January 2016, the Government will replace the Higher Education Grants Index (HEGI) with the Consumer Price Index (CPI) to index all grants and regulated student contribution amounts for current students, including research grants and Australian Postgraduate Awards. The change is expected to save $202.8 million over three years from 2015–16.[2]

The Higher Education Grants Index (HEGI) was introduced in 2012 with the uncapped student demand driven system. It was welcomed by the sector which had lobbied for a number of years for indexation that took into account wages growth. Whilst CPI is a better rate than that used prior to 2012, it is unlikely to be as generous as the HEGI and it will probably diminish real growth.

The efficiency dividend of 2.0 per cent in 2014 and 1.25 per cent in 2015 was a Labor Government 2013‑14 budget measure, but legislation was not introduced during the 43rd Parliament. The Coalition accepted the policy and took it to the 2013 election.[3] Legislation to implement the efficiency dividend was introduced in November 2013 and is currently before the Senate.[4] The efficiency dividend will provide estimated savings of $902.7 million over the forward estimates.[5]

Universities Australia’s 2014 pre-budget submission noted:

The improved indexation arrangements for all programs funded under the Higher Education Support Act 2003 from 2012 have improved the real rate of growth in university funding; however, disappointingly real growth in university funding has fallen after the introduction of a 2 per cent and 1.25 per cent efficiency dividend for university funding in 2014 and 2015 respectively.[6]


The Coalition Government announced in 2013 that it would abandon the previous Labor Government’s higher education targets to increase participation by those from low socio-economic status (SES) backgrounds to 20 per cent by 2020, and to have 40 per cent of those aged 25 to 34 years holding a bachelor degree or higher by 2025. The Minister for Education, Christopher Pyne, has said that he does not believe in ‘targets for targets' sake’.[7]

Some funding granted to universities to improve participation of students from disadvantaged backgrounds has been cut. The Higher Education Reward Funding will cease from 2014 with savings of $121.1 million over five years. Savings of $51.3 million will also be made in the Higher Education Participation and Partnerships Programme. However, the Access and Participation Fund will retain $582.7 million to support low SES students.

A new Commonwealth Scholarship scheme to support student access, participation and success will be established. All higher education providers with enrolments of 500 or more domestic Commonwealth supported places will be required to set up a fund into which they pay $1 in every $5 of additional revenue raised from higher student fees. Despite the title, higher education providers, not the Commonwealth, will establish and administer their fund.[8] Although this is an equity measure, it might be expected that the elite universities with greater capacity to increase fees will build greater scholarship accounts. Academic, Gavin Moodie believes:

The higher-status institutions will be dominated by students from high and upper-middle socioeconomic status backgrounds and have few students from a low socioeconomic background. The 20% of additional fee revenue the government will require universities to allocate to scholarships will make it easier for the few disadvantaged students who are accepted by the elite universities, but will not markedly increase their proportion.[9]

Another criticism is that the scholarships ‘will be concentrated in the prestigious Group of Eight universities, drawing disadvantaged students away from outer metropolitan and regional areas. That would leave those universities with fewer resources to support their traditional student base’.[10]

Quality issues

In reviewing the demand driven funding system, authors David Kemp and Andrew Norton stated ‘expanding higher education systems usually raise quality concerns, and the demand driven system has been no exception’.[11] The same might be said for the proposed deregulated system especially with the proposal to open Commonwealth supported places to the non-university providers.

Many quality issues will be handled by the Tertiary Education Quality Standards Agency (TEQSA), which was established in 2011 to provide quality assurance to the higher education sector. However, TEQSA will have its funding reduced by $31.1 million over four years and be expected ‘to focus on its core activities as a regulator’. A Bill currently before the Senate proposes to remove TEQSA’s quality assessment functions and improve the efficiency of its operations.[12]


Although universities will welcome ongoing funding for the Future Fellowships Scheme and an additional year's funding for the National Collaborative Research Infrastructure Strategy, the Government proposes to cut the Research Training Scheme (RTS) by 10 per cent for a saving of $173.7 million. The RTS funds the provision of research higher degrees (PhDs and Masters). Similar to undergraduate measures, the Government will expect the shortfall to be met by students. Universities will be permitted to charge a student contribution of up to $3,900 per year which students can borrow under the HELP scheme.

Infrastructure funding

The Education Investment Fund, with assets of $3.5 billion, will be rolled into the new Asset Recycling Fund.[13]

[1].           For further information on these changes, see: C Dow, ‘Reform of the higher education demand driven system’, Budget review 2014–15, Research paper, 2014–15, Parliamentary Library, Canberra, 2014.

[2].           The budget figures in this article have been taken from the following document unless otherwise sourced: Australian Government, Budget measures: budget paper no. 2: 2014–15, 2014, pp. 78–91, accessed 15 May 2014.

[3].           Liberal Party of Australia and the Nationals, Fiscal budget impact of federal Coalition policies, September 2013, accessed 22 May 2014.

[4].           For background, see: C Ey and C Dow, Higher Education Support Amendment (Savings and Other Measures) Bill 2013, Bills digest, 23, 2013–14, Parliamentary Library, Canberra, 2013, accessed 22 May 2014.

[5].           Ibid., p. 5.

[6].           Universities Australia (UA), Universities Australia pre-budget submission 2014-15, UA, Canberra, January 2014, p. 8, accessed 21 May 2015. For background to 2012 changes, see: C Dow, Higher Education Support Amendment (Indexation) Bill 2010, Bills digest, 162, 2009–10, Parliamentary Library, Canberra, 2010, accessed 22 May 2014.

[7].           D Hurst and J Tovey, ‘Christopher Pyne reveals university shake-up’, The Sydney Morning Herald, 25 September 2013, accessed 21 May 2014.

[8].           Department of Education (DoE), ‘Public universities: frequently asked questions’, DoE website, accessed 16 May 2014.

[9].           G Moodie, ‘More expensive, more elite: higher education in five years’, The Conversation, 14 May 2014, accessed 21 May 2014.

[10].         A Trounson, ‘Regionals push for pool’, The Australian, 21 May 2014, accessed 21 May 2104.

[11].         D Kemp and A Norton, Review of the demand driven funding system: report, 2014, p.8, accessed 20 May 2014.

[12].         For further details, see: C Ey, Tertiary Education Quality and Standards Agency Amendment Bill 2014, Bills digest, 60, 2013‑14, Parliamentary Library, Canberra, 2014, accessed 22 May 2014.

[13].         Australian Government, Budget 2014–15: overview, p. 16, accessed 22 May 2014.


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