Budget Resources 

Matthew Crowe, Emma Vines and Carol Ey

The 2024–25 Budget contains a package of measures that are the government’s first major response to selected recommendations in the Australian Universities Accord final report (Accord Report), released in 25 February 2024.

The Accord involved a 12-month review of the higher education sector aimed at setting a reform agenda for the future. During its inception Minister for Education Jason Clare flagged that it would cover:

… everything from funding and access, to affordability, transparency, regulation, employment conditions and also how universities and TAFEs and other higher education and vocational education providers and training institutions work together.

The Accord Report makes 47 recommendations, many with a suite of sub-recommendations. Their scope includes qualification attainment targets, greater equity support, governance and funding reform, drawing higher education and vocational education and training (VET) into closer alignment, and strategic planning on international education.

Most of the higher education budget measures relate to Accord recommendations and the government claims to be responding to 29 recommendations in full or in part (p. 7). However, many recommendations remain outstanding, including some that stakeholders advocated for early introduction, such as changes to the contribution model of the Job-ready Graduates (JRG) Package. The JRG package was introduced under the Morrison Government and included a substantial increase in the cost of humanities and society and culture degrees, alongside a reduction in the cost of other courses in the hope of increasing enrolment in areas considered a national priority. The Accord Report includes a review of the JRG package, finding that it ‘needs urgent remediation’ and that ‘its intended purpose of influencing students’ choice of courses through price signals has failed’ (p. 155).

Unless otherwise noted, page numbers below refer to Budget measures: budget paper no. 2: 2024–25.

Budget initiatives

The measure ‘Australian Universities Accord – tertiary education systems reforms’ commits $1.1 billion over 5 years from 2023–24 towards increased equity and access, closer alignment of the higher education and VET sectors, and a tertiary qualification attainment target of 80% of the working age population by 2050 (p. 62).

Student loan indexation and payment for placements

Billed as cost-of-living measures, over half of the $1.1 billion measure was announced pre-budget:

• $427.4 million over 4 years for a new Commonwealth Prac Payment of $319.5 per week for nursing, midwifery, teaching and social work students undertaking mandatory placements, including for courses in the VET sector (p. 62)
• $239.7 million over 5 years from 2023–24 to limit the indexation of the Higher Education Loan Program (HELP) to the lower of the Consumer Price Index or the Wage Price Index. Subject to the passage of legislation, it will apply retrospectively to 1 June 2023 (p. 63).

The Prac Payment responds to recommendation 14 in the Accord Report (p. 23) that calls for ‘financial support for unpaid work placements’ that ‘should include funding by governments for the nursing, care and teaching professions, and funding by employers generally (public and private) for other fields’.

The payment will be means tested and benchmarked to the single Austudy per-week rate and available from July 2025. As a response to ‘placement poverty’, some stakeholders have criticised the rate of payment, the delay in its introduction and the exclusion of other fields of study, such as pharmacy and veterinary science.

The change to HELP indexation responds to recommendation 16d of the Accord Report (p. 25). The government has not yet addressed other parts of recommendation 16, such as:

• reducing the student contribution rates introduced through the JRG package (mentioned above)
• delaying the timing of the annual indexation of HELP debts from 1 June to, for example, 30 November, so that the indexed debt takes into account the compulsory repayments made over the financial year.

For most, the response does not deliver immediate financial benefit. Only those who cleared their debt last year will receive a refund, while others will receive credit against their outstanding debt, meaning they will potentially pay it off more quickly.

While the change to indexation has generally been welcomed, independent Senator Tammy Tyrrell, among others, considers that changing the timing of debt indexation would have more impact. Concerns over the efficacy of the policy have also been raised given that in the last 25 years the Wage Price Index has been lower than the Consumer Price Index only 4 times.

Both measures will require legislation.

International students

Prior to the Budget, the government announced legislation that would provide more regulatory powers over the international education sector, including the power to cap international student numbers. This legislation was introduced on 16 May 2024. The related budget measures include:

• $2.1 million over 4 years from 2024–25 for the Department of Education to develop and implement regulation that will require providers to build new student accommodation to support any increase in their international student allocation
• $2.6 million in 2024–25 to implement changes to the Department of Education’s Provider Registration and International Student Management System (p. 63).

While the Accord Report suggests changes to housing provision in relation to international students (recommendation 23), it notes that ‘heavy regulation of international student numbers may also lead to unintended consequences’, such as restrictions disproportionately benefiting the higher-ranked Group of 8 universities which better attract international students (Accord Report, pp. 183–184). Presumably in part to overcome this concern, provisions in the legislation would allow the Minister for Education to determine caps for international students for an institution, location or course (Part 7 of Schedule 1).

With international student fees accounting for over a fifth of total university funding (Accord Report, p. 8), any cap is likely to affect university finances, and the proposal has been criticised by some in the sector. In terms of mitigating any financial impact, the Draft international education and skills strategic framework, released on 11 May 2024, states that the ‘Government will work closely with the sector to implement this policy and establish transitional arrangements that support the sector to manage this change effectively’ (p. 16).

The cost of the Accord measures will be met in part through savings of $57.2 million over 4 years from 2024–25 by ceasing funding for new scholarships under the Destination Australia program which encouraged domestic and international students to study in regional Australia. The cessation of the program has been criticised by the Regional Universities Network and appears to be counter to recommendation 22b of the Accord Report for government and education providers ‘to support the growth of international education in regional and remote areas’ (p. 27).

The government is yet to provide information on the extent of the proposed caps. Universities Australia has stated that universities need ‘certainty, stability and growth in a sector that serves the nation in so many ways.’ The International Education Association of Australia has expressed concern that ‘we’re going to have policy overreach where too much, too quick is going to damage Australia’s reputation as a welcoming, safe, world-class study destination’. Some have also questioned the assumptions about the impact of international students on the rental market.

Equity and access

To further equity and access, and achieve greater tertiary attainment levels, the Budget includes $350.3 million over 4 years from 2024–25 to expand access to enabling courses through a new FEE-FREE Uni Ready Courses program to help more students prepare for university (p. 63). This responds to recommendations 12b and 12c of the Accord.

The Budget flags other reforms awaiting consultations and intended for implementation from 1 January 2026, including:

• a needs-based funding system to better support Aboriginal and Torres Strait Islander students and students who are from low socio-economic status backgrounds, have a disability or are studying in regional and remote areas (p. 64). This reform relates to addressing elements of recommendations 13, 39, 40 and 41 of the Accord Report.
• managed growth funding for universities, to assist in the planned increase of Commonwealth supported places (CSPs) in a way that will consider student demand and the tertiary attainment target. This reform relates to addressing elements of recommendations 40, 41 and 46 of the Accord Report.

Governance

In relation to governance of the tertiary education sector, the Budget includes:

• $27.7 million over 4 years from 2024–25 to develop initiatives that break down artificial barriers and harmonise regulatory, governance and qualification arrangements between the higher education and VET sectors
• $3.0 million for the Department of Education to develop a business case for an information technology system to support reforms to higher education funding and governance (p. 63).

The government has also announced the establishment of an Australian Tertiary Education Commission (ATEC), expected to operate from 1 July 2025 (p. 64). Recommendation 30 of the Accord Report calls for such a commission, proposes its key functions, and says it should include the Tertiary Education Quality and Standards Agency and the Australian Research Council as independent agencies (pp. 234–235). This initiative will require legislation.

Gender-based violence and student wellbeing

In relation to gender-based violence and student wellbeing, the Budget includes:

• $19.4 million over 2 years from 2024–25 to establish a National Student Ombudsman from 1 February 2025. This measure will require legislation.
• $18.7 million over 4 years from 2024–25 to introduce a National Higher Education Code to Prevent and Respond to Gender-based Violence from 1 January 2025 (for further details see the Budget review 2024–25 article ‘Gender-based violence’) (p. 63).

These measures respond to elements of recommendation 18 of the Accord Report and follow on from the Action plan addressing gender-based violence in higher education, agreed to by education ministers in February 2024.

The government has also committed to an inquiry into antisemitism, Islamophobia and racism to assess the prevalence and impact of racism in tertiary education (Portfolio budget statements 2024–25: budget related paper no. 1.5: Education portfolio, p. 15). Further detail has been announced, with the inquiry to be led by the Race Discrimination Commissioner, Giridharan Sivaraman, with support from the Australian Human Rights Commission. The study will also examine the experience of Aboriginal and Torres Strait Islander people in the university sector. An interim report is due by 31 December 2024 and a final report by 30 June 2025. This commitment responds to recommendation 33 of the Accord and comes amidst growing concern about student protests and safety on campus. The Opposition and members of the crossbench had made calls for an inquiry prior to the Budget.

Student Services and Amenities Fee

Subject to amendments to the Higher Education Support Act 2003 (HESA), from 1 January 2025, universities will be required to direct at least 40% of their Student Services and Amenities Fee (SSAF) revenue to student-led organisations (p. 64). Higher education providers are permitted to charge a SSAF fee to be spent on services and amenities of a non-academic nature. Currently, subsection 19-38 (4) of HESA prescribes the purposes for which the SSAF can be used but does not include any specification regarding allocation to student-led organisations.

This measure responds to recommendation 19 of the Accord Report which calls for a (undetermined) set proportion of SSAF funding to be allocated to student-led organisations. While it acknowledges the importance of student unions and their reliance on the SSAF, the Accord Report also suggests the government should ‘set appropriate mechanisms’ so that mandating the allocation for student-led organisations does not impede universities from delivering ‘other services including professional wellbeing and mental health support for students, career development advice, and sport and recreation’ (Accord Report, p. 170).

Medical places

Recommendation 39 of the Accord Report addresses regional providers and communities, with recommendation 39b calling for a significant increase in the number of CSPs allocated to universities delivering regionally based medical education (p. 37). The Budget includes $24.6 million over 4 years from 2024–25 for the establishment of a new medical school at Charles Darwin University with 40 CSPs per year, available from 1 January 2026. Funding has been placed in the Contingency Reserve subject to the completion of exploratory work (p. 63).

Currently, only Flinders University provides medical training in the Northern Territory through the Northern Territory Medical Program which offers students full funding for tuition under a Return of Service agreement with the Northern Territory Government (see Doctor of Medicine (MD) domestic application guide 2025, p. 13).

All online articles accessed May 2024

For copyright reasons some linked items are only available to members of Parliament.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Enquiry Point for referral.