Announcement date
25 June 2026
Link to announcement
Problem being addressed
In 2023, the Australian Universities Accord panel conducted a systematic review of the higher education system (the Accord Review). The Accord found that significant changes to the system are needed to produce the skills, knowledge and intellectual ambition to meet Australia’s current and emerging social, economic and environmental challenges.
This Impact Analysis (IA) addresses three critical funding system issues identified by the Accord Review that may prevent the higher education sector from achieving attainment and equity participation targets:
- it does not provide sufficient funding to fully fund growth in enrolments to meet the nation’s skills needs with growth provided in unplanned and unmanaged ways
- it is overly complex, fragmented and difficult to comprehend; and
- allows universities to enrol students over the funding cap and receive only marginal funding for these additional students, which creates adverse flow-on impacts for the whole system.
Proposal
The IA considers three options to address the identified problem.
Option 1: (Status quo): Commonwealth Grant Scheme (CGS) funding for higher education courses (HEC) at Table A universities is capped at the Maximum Basic Grant Amount (MBGA).
Option 2: Managed Growth Targets with catchments and hard caps. Ensure students from equity backgrounds would be guaranteed a fully funded place, though not necessarily at their chosen university.
Option 3: Domestic Student Profiles with an over-enrolment buffer and student contribution glide-path. Similar to Option 2 but removes the catchment area requirement for the demand-driven equity places and includes additional transitional arrangements to moderate the operational impact on providers.
The preferred option is Option 3 - A new Managed Growth Funding System stewarded by the Australian Tertiary Education Commission (ATEC), with a transition year in 2026 and full rollout in. The ATEC will allocate each eligible provider a Domestic Student Profile for Commonwealth supported places, capping fully funded places, eased by an over-enrolment buffer and glidepath. Equity places are effectively uncapped system-wide, allowing for participation to grow for low-SES, and regional/remote non-medical bachelor students. A temporary funding floor will protect Table A providers during the transition until the end of 2031.
Assessed Impact Analysis outcome
Good Practice
Assessment comments
The IA addresses the seven IA questions and follows an appropriate policy development process commensurate with the significance of the problem and magnitude of the proposed intervention. In particular, the IA includes a fit for purpose implementation and evaluation plan.
To achieve ‘Exemplary’ the IA needed to further quantify the expected benefits of the policy options.
Regulatory burden
The Department of Education estimates the preferred option will increase average regulatory costs by $1.8 million per year, over ten years.