The Budget contains several new expense measures in higher
education, mostly achieved through the redirection of funding between
programmes. The previous year’s higher education reforms remain in the Budget
with the assumption the adjustments indicated in the Mid-year Economic and
Fiscal Outlook will pass.
For vocational education and training (VET), the Budget continues
a decline in the funding trajectory. The key skills measures of the 2014–15
Budget, the Industry Skills Fund and the Trade Support Loans programme, have
both been continued for another year. The Government has already announced
further reforms to VET programmes and governance arrangements throughout the
first half of 2015, although media reports of VET regulatory failures continue
to emerge. There is a single new
compliance measure in relation to the VET FEE-HELP loan programme.
Expenses by sub-function
Overall expenses in the higher education sub-function
are estimated to be $9.3 billion in 2015–16, decreasing by 7.3 per cent in real
terms from 2015–16 to 2018–19. This is largely due to the
Government’s of policy reducing the subsidies available under the Commonwealth
Grant Scheme from 2016 and deregulating student fees to enable them to make up
the shortfall. The legislation required to implement these policy decisions has
not yet passed the Parliament.
Expenses in the VET sub-function are expected to decrease
even more significantly, from a total of $1.8 billion in 2015–16 to a total of
$1.5 billion in 2018–19, or a decline of 22.4 per cent in real terms over the
four-year period, owing largely to the expiration of the National Partnership
Agreement on Skills Reform in 2016–17. State, territory and
Commonwealth Ministers with responsibility for VET have announced the National
Partnership will be reviewed.
Higher education and research funding
While the average 20% cut to Commonwealth Grant Scheme
funding for approved higher education providers in the 2014–15 Budget remains
government policy, there are three new measures in this Budget which will further
reduce the funding available to higher education institutions. These measures involve
shifting funding to meet the government’s priorities and will not require
The funding that had been allocated to the new Higher
Education Participation Programme (HEPP) has been reduced by $5 million for
2015–16. However, the HEPP does
not currently exist—the Government plans to establish this programme through
amendments to the current Other Grants Guidelines (Education) 2012 which have
twice been negatived by the Senate. Announced in the 2014–15
Budget as part of the higher education reform package, the HEPP is a rebadged
and consolidated version of a previous grant program. This means there has
been a total $56.1 million reduction in funding across the 2014–15 and 2015–16
budgets, comprising a $51.3 reduction in funding in the 2014–15 budget
associated with the transition to the HEPP, and an additional $5 million cut to
the provision for HEPP in the 2015–16 Budget.
This $5 million is to be redirected to the Australian
Institute of Aboriginal and Torres Strait Islander Studies (AIATSIS) to implement
the Preservation of Indigenous cultural resources measure.
This is intended to assist AIATSIS in the preservation of their catalogue,
following concerns raised in the media as to the need for additional funding.
The Sustainable Research Excellence grant programme,
designed to assist with the indirect costs of research for universities, has had
its funding reduced by a total of $262.5 million across 2016–17 to 2018–19.
Of this, $150 million will be redirected to fund the National Collaborative
Research Infrastructure Strategy (NCRIS) for an additional year in 2016–17.
The remaining $112.5 million in savings has not been redirected to support the
continuation of NCRIS in future years.
In expanding a demand-driven system to private providers,
the Higher Education and Research Reform Bill 2014 limits the government
subsidy to 70% of what is available to universities, as private institutions
are not required to undertake research. This acknowledges that
the Commonwealth contribution paid per student under the Commonwealth Grant
Scheme cross-subsidises research. With an average 20% cut to the Commonwealth
contribution in the higher education reforms, the indicated funding cuts to the
Sustainable Research Excellence programme are likely to have a further
cumulative effect on the research capacity of Australian universities.
The Department of Education and Training Portfolio Budget
Statements (PBS) notes that the Office for Learning and Teaching (OLT) will be
abolished from 1 July 2016 and its functions undertaken by a university or
consortium of universities. The OLT operates as the administrative
body within the Department for the Promotion of Excellence in Learning and
Teaching in Higher Education program (PELTHE). It is unclear if the change in the
relevant program expenses from $14 million in 2015–16 to $8.2 million in
2018–19 is based on savings from the abolition of OLT or whether PELTHE grants
will also be affected. Universities Australia
has raised concerns about the lack of clarity regarding the new arrangements,
with media reports indicating university managerial staff have also queried
whether this measure would reduce the status of university teaching.
Australian Research Council
The Australian Research Council (ARC) is funded under the Australian
Research Council Act 2001, which provides a legislative cap on the amount
of grant funding it allocates per three year funding cycle.
The Act is regularly amended to include a new year of funding and extend the
While the Government has announced an efficiency dividend to
the ARC as part of the higher education reforms, this is dependent on the
passage of legislation. It is difficult to reconcile proposed expenditure for
2015–16 of $789 million with the funded cap limits in both the current ARC Act ($783
million) and the Government’s proposed amendments ($776 million).
The single new measure in relation to skills is VET
FEE-HELP – enhanced compliance regime. This measure amounts to $18.2
million in expenditure over four years from 2015–16, including $3.6 million in
capital funding, to enable the Department of Education and Training to better
monitor the new compliance regime for VET FEE-HELP loans under the VET
The PBS confirms that the Accelerated Australian
Apprenticeships and Apprentice to Business Owner – Business Skills and
Mentoring programmes are no longer funded after 2015–16. The Workplace English
and Literacy programme and National Workforce Development Fund both receive
substantial funding reductions following 2015–16 and close by the end of the
forward estimates, reflecting decisions made in the 2014–15 Budget.
The Australian Apprenticeships Support Network has been
reformed in order to raise the rate of apprenticeship completions, with new outcomes-based
payments arrangements to apply from 1 July 2015. 
This includes a reduction of funding from $200 million in 2015–16 to $189
million per year in the forward estimates.
The new HECS-HELP revenue measure is detailed in a separate Budget
Review 2015–16 brief. For information on 2014–15 Budget measures in higher
education see C Dow, ‘Reform
of the higher demand driven system (revised)’ Budget Review 2014–15,
Parliamentary Library, Canberra and C Dow, ‘Other
higher education measures’, Budget Review 2014–15, Parliamentary Library,
Canberra, 2014. Adjustments to the overall package of reforms were confirmed
in J Hockey (Treasurer) and M Cormann (Minister for Finance), Mid-year
economic and fiscal outlook 2014–15, p. 150–1, following negotiations
in the Senate.
S Birmingham (Assistant Minister for Education and Training), Dodgy
providers will be fined, media release, 2 April 2015; S Birmingham
(Assistant Minister for Education and Training), Strengthening
the VET sector to get skilled Australians into work, media release, 12
May 2015; H Cook, ‘Private
colleges flout freebie ban’, The Saturday Age, 16 May 2015, p. 9; T
conditions for Evocca,’ The Australian Financial Review, 4 May 2015,
p. 14; J Ross, ‘Watchdog
gets new teeth to deal with RTO breaches’, The Australian, 8 April
2015, p. 28.
Australian Government, Budget
strategy and outlook: budget paper no. 1: 2015–16, p. 5-21.
Parliament of Australia, ‘Higher
Education and Research Reform Amendment Bill 2014 homepage’, Australian
Parliament website, and Parliament of Australia, ‘Higher
Education and Research Reform Bill 2014 homepage’, Australian Parliament
website. Both Bills were negatived in the Senate at the second reading.
Australian Government, Budget strategy and outlook, op. cit., p. 5-21.
J Ross, ‘Review
of skills pact to focus on shortcomings’, The Australian, 13 May
2015, p. 34.
Australian Government, Budget
measures: budget paper no. 2: 2015–16, p. 76.
Currently the Other
Grants Guidelines (Education) 2012 sections 1.40 through 1.85 provide for
the existing Higher Education Participation and Partnerships Program. Schedule
9A of the Higher
Education and Research Reform Bill 2014 was to amend these guidelines in
order to create a new, consolidated grant program and generate savings. These
changes have not yet received legislative support.
Australian Government, Budget
measures: budget paper no. 2 2014–15, p. 84.
Australian Government, Budget measures: budget paper no. 2: 2015–16,
op. cit., p. 76.
M Raggatt, ‘Indigenous
collections could be lost’. The Canberra Times, 7 December 2014, p.
Ibid, p. 80.
Ibid, p. 78.
Department of Education, Regulation
Impact Statement: 2014–15 Budget higher education reforms, p. 63.
Australian Government, Portfolio
budget statements 2015–16: budget related paper No. 1.5: Education and Training
Portfolio, pp. 46–7.
Ibid, p. 46.
A Trouson, ‘Budget
2015: OLT axing provokes backlash’, The Australian, 20 May 2015, p.
Research Council Act 2001 (Cth), Part 7.
See the indicated Special Appropriation funding for 2015–16 in Table 2.1:
Budgeted expenses for Outcome 1, Australian Research Council Budget
Statements 2015–16, p. 157 as compared with Part 7, Subsection 49(p) of
the Australian Research Council Act 2001 (Cth), and Schedule 5, Part 1,
Section 2 of the Higher Education and Research Reform Bill 2014.
Australian Government, Budget measures, op. cit, p. 80; VET Guidelines 2015,
Australian Government, Portfolio budget statements 2015–16, op.
cit., p. 61.
S Birmingham (Assistant Minister for Education and Training), New
support network to increase apprenticeship completion rates, media
release, 27 April 2015.
Australian Government, Portfolio budget statements 2015–16, op.
cit., p. 61. See J Ross, ‘No
government lifeline leaves group training in a precarious position’, The
Australian, 29 April 2015, p. 32 for stakeholder commentary.
All online articles accessed May 2015.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to email@example.com.
This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.