Some perestroika in higher education

On Monday in the AFR I was calling (again) for a more market-driven higher education system. In the Budget tonight the government is taking some very messy first steps in that direction.

Under the current system, each public university (plus a few private institutions) signs a funding agreement (read, ‘agreement’) with the Commonwealth. This sets out the number of Commonwealth-supported student places the university must provide, and in which disciplines. If universities enrol up to 5% more than the target number, they get to keep the student contribution, but get no Commonwealth money. If they enrol more than 5%, for the excess they must pay the student contributions to the Commonwealth. Clearly, this has been a strong disincentive to expand – even if student demand is high. Once all Commonwealth places in a course have been filled, universities are allowed to offer full-fee places up to 35% of domestic enrolments. In a small number of courses, this too has represented an artificial restraint on university expansion.

These restraints are now going to be relaxed. It sounds like the funding agreements will be more genuine negotiations – I infer this from the statement that the Commonwealth will continue to require universities to take Commonwealth-supported places in some fields, such as nursing, teaching and medicine, implying that they will not be forced to accept them in other areas. Universities will now be able to enrol 5% more than their target number and get full Commonwealth (and student, as before) funding for them. Beyond the 5%, they will get the student contribution amount only. This is an incentive to expand, for those universities that want to – a good thing.
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