Budget Review 2021–22 Index
Dr Hazel Ferguson
According to Budget
Strategy and Outlook Budget Paper No. 1: 2021–22 (p. 170), higher
education expenditure is expected to decrease by 8.3% in real terms from
2020–21 to 2021–22, and decrease by 9.3% in real terms from 2021–22 to 2024–25.
The initial decrease represents a return to usual funding
levels after the October
2020 Budget added an extra $1.0 billion to university research funding through
Support Program in 2020–21, in response to COVID-19. The decline after 2021–22
is largely a consequence of the Higher Education
Support Amendment (Job-Ready Graduates and Supporting Regional and Remote
Students) Act 2020, which legislated a reduction in average per-student
funding for domestic Commonwealth supported students.
Parliamentary Library analysis (Figure 1 below) shows that
by 2023–24, real higher education funding (in 2021 dollars) is projected to
return to approximately the same level it was in 2009–10—that is, additional
university places provided through the Job-ready Graduates Package from
2021 are being provided with no overall increase in estimated higher education
Australian Government estimated expenditure on higher education, 2005–06 to 2024–25
(e) figures are budget
Note: real funding has been calculated
by the Parliamentary Library by deflating the nominal expenditure figure by the
June quarter CPI and CPI forecasts from the 2021–22 Budget; this methodology
may differ to that presented in the Budget papers.
Sources: Parliamentary Library
based on Australian Government, Budget strategy and outlook: budget paper no. 1:
2021–22; Australian Government, Final
budget outcome, various years.
The most significant question facing higher education in
this Budget relates to the future of international education. International
education is a significant component of most higher education providers’
usual operations, with international students making up 32.4% of all Australian
higher education enrolments in 2019. Uncertainty has characterised the sector
since restrictions were announced for travellers from mainland China on 1
February 2020, then for all foreign nationals (excluding Australian
permanent residents) from 20
According to Budget
Paper No. 1 (p. 36), international student arrivals will continue to be
constrained by quarantine caps until the second half of 2022. Small
numbers of international students are expected to start returning to Australia
from late 2021, with gradual increases from 2022. However, previous plans to
bring international students back to Australia have proven highly subject to
change, with only
one charter flight carrying 63 students having gone ahead so far.
This creates a significant funding challenge for the sector,
with the latest
available data from the Department of Education, Skills and Employment
(DESE), showing revenue from international student fees accounted for approximately
27.3% of university revenue in 2019.
Institute (p. 3) has estimated that by the end of 2021, the sector will
have lost $13.5 billion due to declining international student numbers,
increasing to a total of $19.8 billion if Australia’s borders remain closed
until the end of 2022. As the pandemic continues, students complete their studies
and are not replaced by new arrivals or comparable numbers of online or offshore
students. The latest
data from DESE shows at March 2021, higher education enrolments by
international students reached 316,441, 12.3% lower than in March 2020.
Commencements reached 61,999 in March 2021 compared with 78,575 in March 2020—a
decline of 21.1%, and 34.1% lower than at March 2019. (Due to travel
restrictions, an enrolment does not confirm that the student is currently in
Although some universities reported budget surpluses for
2020, this is against a backdrop of substantial spending cuts, including
an estimated 17,000 job losses.
While funding uncertainty has the potential to affect all
university operations, research has been regarded as particularly at risk. A
substantial portion of general
university revenue is directed towards research, where international
student fees have been estimated
to account for approximately 27% of spending.
However, despite the hopes of key stakeholders, including Universities
Australia (UA), this Budget contains no new commitments to increased
university research funding beyond the $1.0 billion provided in the October
2020 Budget, or any policy announcements to address the university budget
uncertainty created by continued border closures.
Support package for international
Paper No. 1 (pp. 14–15) acknowledges international education is among
the sectors worst hit by the pandemic, but confines its response in this Budget
to English Language Intensive Course for Overseas Students (ELICOS) providers,
as well as non-university higher education providers (NUHEP), which have, on
average, a higher proportion of international students than universities. International
students make up approximately 53.5% of enrolments at NUHEPs, versus 30.6%
of students at universities.
The $53.6 million support package for international
education providers, announced
on 30 April and detailed in Budget
Measures Budget Paper No. 2: 2021–22 (pp. 7–8) chiefly consists of
continuing existing regulatory fee relief for providers, and student loan fee
exemptions. For students, this includes a further extension of the FEE-HELP loan fee
exemption for private higher education providers, although this is reliant on
amendments to the Higher
Education Support Act 2003.
The package also includes a commitment to $26.1 million for
5,000 short-course places through non-university providers, and $9.4 million
for an Innovation Fund, which will allow providers to apply for grants of up to
$150,000 to help them shift to offshore and online delivery.
The short-course funding is intended to encourage local
students to take up places left vacant by declining international student
numbers. It represents a continuation of the Government’s focus on higher
education short courses as a key element of its COVID-19 response.
Short-course funding has also previously been provided for:
These short courses have consisted of newly created Undergraduate
Certificates, as well as Graduate Certificates, which were part of the
qualifications framework prior to the introduction of dedicated short-course
funding. A certificate consists of four subjects, and usually takes around six
months full-time study to complete. It can be used as a stand-alone
qualification, or a pathway to further study.
Places are allocated to institutions through a competitive application
process. The Government’s CourseSeeker
website lists over 500 short courses currently available, predominantly
(but not exclusively) at universities. It
appears from analysis of the university funding agreements that funding
from these earlier announcements has not yet been fully allocated.
Paper No. 2 (p. 8) also includes $1.1 million over two years from 2020–21
to introduce an additional weighting in the Research
Training Program (RTP) funding formula for PhD students who undertake an
industry placement in the first 18 months of their enrolment.
RTP funding is provided as a block grant to universities to
provide tuition fee waivers, stipends for general living costs, and allowances
for other research degree costs for both domestic and international research
students. This additional funding is intended to provide an incentive for
universities to facilitate industry placements for research students.
Budget Statements 2021–22: Budget Related Paper no. 1.4: Education, Skills and
Employment Portfolio (pp. 14, 60) indicate the RTP is funded at
approximately $1.1 billion per year over the forward estimates, and the
additional weighting will be worth approximately $30,000 to the university per
PhD graduate on completion.
Boosting the next generation of women
As part of the Women’s Economic Security Package (Budget
Paper No. 2, pp. 81–82), $42.4 million has been allocated through the Industry,
Science, Energy and Resources Portfolio, to establish the Boosting the Next
Generation of Women in Science, Technology, Engineering and Mathematics (STEM)
Program. The Program will provide 230 scholarships, co-funded with industry,
for women to pursue higher education STEM qualifications.
This measure complements a range of other initiatives being
delivered under the Advancing
Women in STEM strategy. The STEM
Equity Monitor shows women received approximately 38% of STEM degrees in
2019. However, it should be noted that this percentage is much higher in the
natural and physical sciences (58%) and agriculture, environment and related
studies (54%), compared with information technology (18%) and engineering and
related technologies (17%), which poses a challenge for initiatives which
target STEM in its entirety.
Scholarships for health and aged
care higher education courses
Higher education scholarships have also been funded in the Health
Portfolio in response to both the Productivity Commission’s Inquiry
into Mental Health and the National Suicide Prevention Adviser’s Final
Advice, and the Royal
Commission into Aged Care Quality and Safety. These measures, as outlined
in the Health
Portfolio 2021–22 Budget Stakeholder Pack (pp. 134 and 167) are:
- up to 280 scholarships as part of a $27.8 million investment to increase
the number of nurses, psychologists and allied health practitioners working in
mental health settings and
- as part of a $27.2 million investment to increase the number of
nurses and allied health professionals working in aged care, additional places
in the Aged Care Nursing Scholarship Program, with dedicated places for
Aboriginal and Torres Strait Islander people.
through the vocational education and training sector is discussed under skills
training, elsewhere in this Budget Review.
The policy agenda
In some respects, the lack of major higher education
announcements in the Budget could have been welcomed as providing policy
stability after the long-running
funding policy deadlock was resolved in 2020 through the Job-ready Graduates Package.
However, in the context of COVID-19, the lack of action may
represent a significant missed opportunity. According
to Andrew Norton, Professor in the practice of higher education policy at
the Australian National University, another temporary boost of research funding
could have created a ‘smoother path to a smaller research system’ in the
context of declining revenue from international student fees, and minimised
premature termination of research projects. Norton also argues that ‘Tudge’s handout
of $26 million worth of short courses for a domestic market many providers
do not serve in courses they do not teach, is not going to keep them in
With policy work currently underway on university research commercialisation
and a new
international education strategy, further announcements could be
forthcoming by the end of 2021 to address these issues. However, in the
meantime, emphasis seems to have been placed largely on short courses, which the
Government has described as part of a pivot towards microcredentials.
In addition to short-course funding, the Government has
invested in microcredentials through a ‘marketplace’ for online
in June 2020. The call
for applications for the grant to build the marketplace was released in March
2021. The Government has also prioritised
‘embedding micro-credentials in the training system by funding a reasonable mix
of short courses and full qualifications’.
lack of agreed definition, microcredentials are widely cited as a way to
support rapid skills development, including by the OECD—they
are often seen as cheaper, and more responsive to employers’ needs. New
Zealand introduced short industry-aligned microcredentials to its regulated
education and training system in 2018, while in Canada, Ontario
has introduced a number of initiatives since 2019 to develop and implement
microcredentials to help people ‘rapidly upskill and reskill for in-demand jobs’.
However, some education researchers are less convinced. Leesa
Wheelahan and Gavin Moodie have criticised the narrow instrumentalist focus
of microcredentials, raising concerns about the possible impacts for students
of removing skills development from broader contexts and frameworks of
knowledge development in higher education.
Ultimately, the success of any investment in shorter form
credentials in Australia will depend on what is funded, and how it is
accredited. Investments so far have been short term, but may signal an
intention to direct more higher education investment towards rapid upskilling
and reskilling. Much may depend on the Government’s willingness to act on its
acceptance of the recommendations of the Australian
Qualifications Framework Review Final Report (2019, p. 12), which
included revisions to the Australian
Qualifications Framework (AQF) to define and recognise shorter form
credentials such as microcredentials. The Australian Technology Network of
Universities (ATN), in collaboration with The University of Newcastle, has
welcomed short-course funding but pointed to the need for action on the AQF in
submission (p. 3).
This year’s higher education budget is notable largely for
the absence of new expenditure. The
Australian Academy of the Humanities has called this ‘a moment of missed
opportunity for a nation built on ingenuity and education’, stating that the
university sector has been ‘almost totally overlooked’ and ‘we cannot have a
strong workforce and a strong economy without a strong university sector’.
Although the Government appears committed to higher
education delivering job-ready graduates, including through short courses and
innovative delivery, UA
has also pointed out that this Budget confirms the cessation of funding for
the Australian Awards
for University Teaching and the Learning and Teaching Repository, which
reward good university teaching and share better practice (DESE
Portfolio Budget Statements 2021–22, p. 67). The ATN
and the University of Newcastle have also expressed disappointment at the
choice in this Budget not to build on existing short-course funding for
However, larger structural uncertainties confronting
universities and NUHEPs are likely to overshadow these issues. UA
has stated that keeping Australia’s border closed until mid-2022 poses
‘serious challenges for the nation’s universities’ and called for governments
to come together to develop a plan for the safe return of international
students. It expects ‘the picture for universities will get worse. There will
be significant flow-on effects for the nation’s research capacity and jobs
inside and outside universities’. The
Australian Academy of Science agrees with this view. While welcoming some
science investments in the Budget, it expresses concern that it ‘contains no
significant new funding for fundamental discovery science and no initiatives to
stem the loss of university science jobs’.