Public funding for tertiary education

Funding for tertiary education is forecast to increase by 7.1% in 2024-25 to reach $46.5 billion. In February 2024, the Australian Universities Accord released its final report, highlighting initiatives and priorities for higher education. The 2024-25 budget addresses the Federal Government's response to the report. This includes the Federal Government providing $1.1 billion in funding for a five-year period starting from 2023-24. The Government is under increasing pressure to hike funding, given impending legislation that could impose a cap on enrolments of new international students in higher education and vocational programs from the start of 2025.

Overall, government funding for university education has risen over the past five years, driven predominantly by enrolment growth. The Federal Government removed university enrolment caps in 2012, enabling universities to set entry requirements for Commonwealth Supported Places (CSPs). Some universities have chosen to accept more students, leading to higher offer rates for CSPs. Additionally, the number of students undertaking postgraduate courses, attracting higher course fees and being eligible for government funding, has grown over the past five years. Furthermore, the number and size of research grants made available to universities by the Federal and State Governments have lifted over the period.

In January 2017, the Federal Government replaced the VET FEE-HELP scheme with VET Student Loans. The requirements set for providers to obtain and maintain accreditation have been considerably tightened and the number of courses eligible for public funding under VET Student Loans compared with VET FEE-HELP is significantly lower. However, the National Skills Agreement, a commitment by the National Cabinet to provide $12.6 billion over five years from January 2024, is expected to support public funding for vocational education providers. In 2020-21, the Federal Government provided additional funding to maintain universities' research during the COVID-19 pandemic. In addition, the Federal Government announced the Job-ready Graduate Package, providing $20 billion in government university funding by 2024 to support domestic student enrolments. This package faced criticism by restructuring government subsidies for courses that weren't deemed a 'national priority', ultimately slowing university enrolment numbers. Overall, IBISWorld forecasts that government funding for tertiary education will increase at a compound annual rate of 2.3% over the five years through 2024-25.