Tertiary education

Budget Review 2016–17 Index

James Griffiths and Marilyn Harrington

The 2016–17 Budget marks another step in the ongoing process of attempting to reform Australia’s tertiary education sector.[1] Proposals for reform in the 2014–15 Budget have been extended and modified through successive negotiations and consultation processes, with the savings continuing to be accounted for in the Budget.[2] The 2016–17 Budget is an opportunity to assess which policy proposals remain.

Changing the structure of higher education funding

The main higher education changes in the 2014–15 Budget were a shift to a more user-pays, market-based model, with greater competition from private providers and changes to funding arrangements for universities and students.[3] The most contentious proposals were an average 20 per cent reduction in government subsidies to higher education providers for undergraduate student places under the Commonwealth Grants Scheme (CGS) and deregulating undergraduate student fees.

Many of these changes were to commence on 1 January 2016. However, neither these initial reforms nor later amendments were passed by Parliament.[4] The 2015–16 Budget did not address the 2014–15 reforms.[5]

As one of his first acts as Minister for Education and Training, Senator Birmingham announced in October 2015 that the remaining higher education reforms would be delayed until 2017 at the earliest and consultation would follow.[6] The Mid-year Economic and Fiscal Outlook 2015–16 estimated the cost of this delay would be $331.2 million from 2015–16 to 2016–17.[7]

Budget measures

In the 2016–17 Budget, the Government has announced it will abandon its proposal to deregulate fees, resulting in estimated savings of $2.0 billion over five years from 2015–16. It is unclear how the $2.0 billion savings have been calculated, given the 2014–15 Budget did not account for any specific expenses associated with fee deregulation.[8] The 2016–17 Budget also identifies a cost to this measure of $596.7 million over five years in underlying cash balance terms.[9]

The Government proposes to retain the other features of its higher education reform package, including the reduction in CGS subsidies, the extension of CGS places to non-university providers and sub-bachelor qualifications, and the lowering of the Higher Education Loan Programme (HELP) repayment threshold. It is proposed that these remaining changes will now be implemented from 2018.

Future of the higher education sector

In conjunction with the 2016–17 Budget, the Government released a discussion paper presenting its case for change and setting out proposed reforms for the higher education sector.[10] A number of options are presented, including reductions in government subsidies, changes to HELP and limited fee deregulation for specific ‘flagship courses’. It rules out fee deregulation across the entire higher education sector.

The savings from the 2014–15 higher education budget measures have never been legislated, but they continue to appear in the budget forward estimates. While these original measures are considered in the discussion paper, other policy options that are presented suggest the future shape of higher education reform may change.

Other higher education budget measures

Ensuring informed choice for students

Many of the assumptions in the higher education reforms rely on informed choice. Research suggests that the more students pay, the more they focus on the quality of their education and the more discerning they are about provider choice.[11]

The 2016–17 Budget seeks to enhance informed choice for students by providing an additional $10.1 million over four years for the Tertiary Education Quality and Standards Agency (TEQSA). This funding will enable TEQSA to respond to the growth in provider registrations and course accreditations and build its capacity ‘to investigate and respond to developments in the higher education sector’.[12]

The Quality Indicators for Learning and Teaching website will also be enhanced, with an additional $8.1 million over four years, to provide students with more information about higher education providers.

Quality teaching

Savings through ‘efficiencies’ of $20.9 million over four years have been identified for the Promotion of Excellence in Learning and Teaching in Higher Education program—a program designed to increase the quality of teaching in the higher education sector.[13] This amount is more than half the program’s existing allocation. The higher education sector is concerned about this development because these funds are the sole financial incentive to improve the quality of university education.[14]

Access and equity in higher education

The 2016–17 Budget includes measures which will affect access and equity programs within the higher education sector.

Efficiencies of $152.2 million over four years have been identified for the Higher Education Participation Program.[15] Since the 2014–15 Budget, savings of $208.5 million have been made to this program, which funds higher education providers to better recruit and retain low socioeconomic status (SES) students who might otherwise not participate in undergraduate studies. [16]

There are also budget measures affecting support for Indigenous higher education. The Budget redirects $9.7 million from the Prime Minister and Cabinet Portfolio to the Education and Training Portfolio to consolidate funding for the Bachelor Institute of Indigenous Tertiary Education. Three existing Indigenous programs (the Commonwealth Scholar Program, the Indigenous Support Program, and the Indigenous Tutorial Assistance Scheme—Tertiary Tuition program) will be consolidated into one program. This does not appear to impact on the funding available under these programs—the measure is intended to allow more flexible and responsive support for Indigenous Australians in higher education.

Vocational education and training

There is no new money for vocational education and training (VET) in the 2016–17 Budget. As TAFE Directors Australia has noted, ‘investment in skills education is largely ignored or deferred indefinitely’.[17]

VET expenses under the Education function are estimated to decline from $1.9 billion in 2016–17 to $1.5 billion in 2019–20—a decrease in real terms of 27.6 per cent.[18] This decline is mostly the result of the cessation of the National Partnership (NP) on Skills Reform.[19] The NP has been reviewed, but a new agreement has not been concluded.[20]

Funding for VET also appears under the ‘Other economic affairs’ sub-function. These expenses are expected to decline by 4.8 per cent in real terms from 2016–17 to 2019–20. This is largely the result of the redirection of $247.2 million over five years from the Industry Skills Fund, which supports the training needs of small and medium enterprises.[21]

The future of VET FEE-HELP, one of five loans available under the broader HELP scheme, is under consideration. Prior to the Budget, the Government released a discussion paper to guide its redesign.[22] The higher education discussion paper released with the Budget also considers VET FEE-HELP as part of its broader review of HELP.


[1].          Information and figures in this brief have been taken from the following document unless otherwise sourced:  Australian Government, Budget measures: budget paper no. 2: 2016–17.

[2].          Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, p. 5-19. For more detailed figures, see: Australian Government, Portfolio budget statements 2016–17: budget related paper no. 1.5: Education and Training Portfolio, p. 46.

[3].          For more detailed analysis of the higher education reforms in the 2014–15 Budget, see: C Dow, ‘Reform of the higher education demand-driven system (revised)’, Budget Review 2014–15, Research paper series, 2013–14, Parliamentary Library, Canberra, 2014.

[4].          See: Parliament of Australia, ‘Higher Education and Research Reform Amendment Bill 2014 homepage’, Australian Parliament website; J Griffiths, Higher Education and Research Reform Bill 2014, Bills digest, 69, 2014–15, Parliamentary Library, Canberra, 2014; Parliament of Australia, ‘Higher Education and Research Reform Bill 2014 homepage’, Australian Parliament website. Both Bills were negatived on the second reading.

[5].          J Griffiths, ‘Sustainability of HECS–HELP’, Budget Review 2015–16, Research paper series, 2014–15, Parliamentary Library, Canberra, 2015.

[6].           S Birmingham (Minister for Education and Training), The challenge of world-class higher education: opening keynote address: Times Higher Education (THE) World Academic Summit, University of Melbourne, speech, 1 October 2015.

[7].          Department of Education and Training- funding only. See: ‘Higher Education Reform –delay’, in Expense measures: Appendix A: policy decisions taken since the 2015–16 Budget, S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2015–16.

[8].          Of interest in this context is the Parliamentary Budget Office (PBO) estimate that fee deregulation accounts for $1.2 billion in projected Higher Education Loan Programme (HELP) costs from 2015–16 to 2025–26: .PBO, Higher Education Loan Programme – supplementary analysis, supplement to report no. 02/2016, PBO, 2016, p. 2.

[9].          The savings and costs associated with this measure are expressed in fiscal balance and cash balance terms. For an explanation of these concepts, see: R Webb, The Commonwealth budget: process and presentation (updated April 2010), Research paper, 16, 2009–10, Parliamentary Library, Canberra, 2010.

[11].       R de la Bedoyere, ‘2014 Student Lifestyle Survey shows how increased debt is changing student attitudes’, Complete University Guide website.

[12].       Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 80.

[13].       For further information about the program, see: Other Grants guidelines (Education) 2012, made under the Higher Education Support Act 2003.

[14].       See M Gardner, ‘Australia's declining investment in quality university teaching’, The Conversation, 23 June 2015; C Nicoll, ‘Canberra hasn’t learned its lesson’, The Australian, 27 April 2016, p. 32.

[15].       For further information about the program, see: Department of Education and Training (DET), ‘Higher Education Participation and Partnerships Program (HEPPP)’, DET website.

[16].       Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 76; Australian Government, Budget measures: budget paper no. 2: 2014–15, p. 84.

[17].       TAFE Directors Australia, Budget 2016 commentary, media release, 4 May 2016.

[18].       Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, pp. 5–19.

[19].       Ibid. For more information about the National Partnership, see: Australian Government, Federal financial relations: budget paper no. 3 2016–17, p. 36.

[20].       ACIL Allen Consulting, Review of the National Partnership Agreement on Skills Reform: final report, 21 December 2015; Australian Government, Federal financial relations: budget paper no. 3 2016–17, p. 36.

[21].       For further information about the Industry Skills Fund, see: Australian Government, ‘Industry Skills Fund’, business.gov.au website.

[22].       See Australian Government, Redesigning VET FEE-HELP: discussion paper, 27 April 2016. See also: K Loussikian, ‘Full extent of debt disaster will not be known for years’, The Australian, 7 April 2016, p. 2; J Sloan, ‘Vetting of landscape is recommended policy lesson’, The Australian, 3 May 2016, p. 12; K Carr (Shadow Minister for Higher Education, Research, Innovation and Industry) and S Bird (Shadow Minister for Vocational Education), Here’s a three word slogan Minister: fix VET mess, media release, 10 April 2016.


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