Other higher education and skills measures

Budget Review 2015–16 Index

James Griffiths

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.[1]

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.[2] 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.[3] 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.[4]

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.[5] State, territory and Commonwealth Ministers with responsibility for VET have announced the National Partnership will be reviewed.[6]

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 legislative change.

The funding that had been allocated to the new Higher Education Participation Programme (HEPP) has been reduced by $5 million for 2015–16.[7] 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.[8] 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.[9]

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.[10] 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.[11]

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.[12] Of this, $150 million will be redirected to fund the National Collaborative Research Infrastructure Strategy (NCRIS) for an additional year in 2016–17.[13] 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.[14] 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.[15] 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.[16] 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.[17]

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.[18] The Act is regularly amended to include a new year of funding and extend the cycle.

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).[19]

Skills funding

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 Guidelines 2015.[20]

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.[21]

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. [22] This includes a reduction of funding from $200 million in 2015–16 to $189 million per year in the forward estimates.[23]

[1].          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.

[2].          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 Dodd, ‘Strict 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.

[3].          Australian Government, Budget strategy and outlook: budget paper no. 1: 2015–16, p. 5-21.

[4].          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.

[5].          Australian Government, Budget strategy and outlook, op. cit., p. 5-21.

[6].          J Ross, ‘Review of skills pact to focus on shortcomings’, The Australian, 13 May 2015, p. 34.

[7].          Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 76.

[8].          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.

[9].          Australian Government, Budget measures: budget paper no. 2 2014–15, p. 84.

[10].       Australian Government, Budget measures: budget paper no. 2: 2015–16, op. cit., p. 76.

[11].       M Raggatt, ‘Indigenous collections could be lost’. The Canberra Times, 7 December 2014, p. 3.

[12].       Ibid, p. 80.

[13].       Ibid, p. 78.

[14].       Department of Education, Regulation Impact Statement: 2014–15 Budget higher education reforms, p. 63.

[15].       Australian Government, Portfolio budget statements 2015–16: budget related paper No. 1.5: Education and Training Portfolio, pp. 46–7.

[16].       Ibid, p. 46.

[17].       A Trouson, ‘Budget 2015: OLT axing provokes backlash’, The Australian, 20 May 2015, p. 31.

[18].       Australian Research Council Act 2001 (Cth), Part 7.

[19].       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.

[20].       Australian Government, Budget measures, op. cit, p. 80; VET Guidelines 2015, Chapter 4.

[21].       Australian Government, Portfolio budget statements 2015–16, op. cit., p. 61.

[22].       S Birmingham (Assistant Minister for Education and Training), New support network to increase apprenticeship completion rates, media release, 27 April 2015.

[23].       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.


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