Higher education reform post-Accord – key legal and regulatory changes

The Albanese Government has taken decisive steps to implement significant and far-reaching legal and regulatory reforms to Australia's higher education sector. These reforms derive from the Australian Universities Accord, a comprehensive review of Australia's higher education system that took place between November 2022 and February 2024.

The Accord Review was undertaken by a panel of experts appointed by the Hon Jason Clare MP, Federal Minister for Education. The Panel consulted widely with higher education providers, government agencies, First Nations people, students, business, unions and other organisations. It received over 785 public submissions and presented a Discussion Paper (22 February 2023), an Interim Report (19 July 2023) and a Final Report (25 February 2024).

Grow the System

A central theme of the Accord Review was the need to lift participation levels in higher education to meet Australia's future skills needs.

The Interim Accord Report made five recommendations for priority action, the first three of which were aimed at growing student numbers through increased participation from under-represented cohorts including Indigenous and regional Australians and Australians from low socio-economic backgrounds. The five recommendations were:

1. Create Regional University Centres to extend local access to tertiary education;
2. Given its poor equity impacts, cease the 50% pass rule (which required students to pass 50% of the units they study to remain eligible for Commonwealth financial assistance) and increase student progress reporting requirements;
3. Extend funding for metropolitan Indigenous students;
4. Extend the Government's "Higher Education Continuity Guarantee" in place for the 2021-2023 grant years throughout 2024/2025 (guaranteeing the amount of "Commonwealth Grant Scheme" payments to public universities); and
5. Through National Cabinet, engage with state and territory governments and universities to improve university governance focusing on universities being good employers, student and staff safety and membership of governing bodies (including ensuring additional involvement of people with expertise in the business of universities).

The Government has committed to acting on all five recommendations for priority action.

Priority actions (2) and (3) required amendments to be made to the Higher Education Support Act 2003 (Cth). The Higher Education Support Amendment (Response to the Australian Universities Accord Interim Report) Act 2023 (Cth), which came into effect from 1 January 2024, covered two subject matters:

• Part 1: Indigenous students – extended the demand-driven funding previously provided to Indigenous students from regional and remote areas to cover all Indigenous students.
• Part 2: Supporting students to succeed – required higher education providers to have a policy that supports students to successfully complete the units of study in which they are enrolled.

Final Accord Report

The Final Accord Report contained 47 recommendations designed to transform higher education over the next decade and beyond. Key reforms included:

• Higher education and vocational education and training (VET) working together to deliver skills;
• A new Commission to provide stewardship of the tertiary education system;
• A new higher education funding system designed to deliver growth and equity;
• Needs-Based Funding to support students to succeed in higher education;
• Changes to the Higher Education Loan Program (HELP) to make it fairer; and
• Increasing the impact and competitiveness of university research.

The Government swiftly responded by committing, in the May 2024 Budget, to provide $3.8 billion over the next 11 years to implement an initial suite of initial reforms recommended in the Accord Final Report. These initial reforms are designed to:

• boost equity and access to higher education – to encourage and enable historically under-represented groups to access higher education;
• progress tertiary harmonisation (between higher education and VET sectors); and
• support a target of 80% of the working age population holding a tertiary qualification (Certificate III and above) by 2050 (compared with the current proportion of 60%).

Australian Tertiary Education Commission

Perhaps the most significant regulatory change will be the establishment, by 1 July 2025, of an Australian Tertiary Education Commission – an independent statutory authority which will be responsible for overall stewardship of the tertiary education system, the delivery of new funding arrangements (to include both managed growth funding and needs-based funding from 1 January 2026), ongoing tertiary harmonisation between the VET and higher education sectors, and data collection and reporting.

The Accord Final Report proposed that both the Tertiary Education Quality and Standards Agency (TEQSA) and the Australian Research Council (ARC) should form part of the Commission to ensure the Commission has a comprehensive view of the whole tertiary education system. It was also suggested that the Australian Skills Quality Authority (ASQA) might form part of the Commission to reduce regulatory duplication and that the Commission would be responsible for stewardship of the Australian Qualifications Framework (AQF).

National Student Ombudsman

A second major reform announced in this year's Budget is the establishment of a new National Student Ombudsman from 1 February 2025 to provide an independent and impartial mechanism for higher education students to escalate complaints regarding the administrative actions of their education provider, including complaints relating to gender-based violence. The National Student Ombudsman will be an ongoing function of the Commonwealth Ombudsman.

The Accord Final Report envisaged that the National Student Ombudsman would provide a restorative engagement process between students and providers and that it would share information with relevant regulators to identify and respond to systemic risks identified in the sector.

International Student Cap

One Accord reform which is creating particular disquiet within the higher education sector is the proposed new cap on international student numbers, to apply from 1 January 2025.

The Accord Final Report recognised that international education was now Australia’s fourth largest export with 28.9% (around 450,000) of Australia's higher education students being international fee-paying students in 2022. Of these 450,000 students, 120,000 studied Australian higher education courses from outside Australia. The Report noted that international student fees contributed to more than a fifth of overall university funding.

However, the Final Report also referenced serious integrity and quality challenges in the international education sector, largely derived from unmanaged growth in international education, which have the potential to hinder the good reputation and long-term sustainability of the sector.

The Final Report recommended that Australia's international education system should be strengthened by supporting the growth of international education in regional and remote areas and supporting the diversification of international student markets to enhance Australia's soft diplomacy and international linkages.

In response to this recommendation and with the aim of providing the highest quality experience for all students and maintaining Australia's world class reputation and ranking as a study destination, the Government has:

• developed a package of targeted reforms to the Education Services for Overseas Students Act 2000 (Cth) (ESOS Act); and
• on 11 May 2024, released a draft consultation paper titled "Australia's International Education and Skills Strategic Framework".

On 16 May 2024, the Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024 was introduced to Federal Parliament, including amendments "to effectively control the number of overseas students enrolled by registered providers to ensure that these enrolments align with Government objectives to support a managed system to deliver sustainable growth and a high-quality international education sector".

The Minister for Education will have power to limit the number of overseas students that may be enrolled with a provider (or class of providers) or in a course (or class of courses) at a provider in a particular year. The Minister can do this by making a legislative instrument specifying a total enrolment limit that will apply to a class of providers or by giving notice to a provider specifying their enrolment limit.

Providers who exceed their enrolment limit will have their registration automatically suspended in relation to the courses covered by the enrolment limit. If a provider exceeds their course enrolment limit, they will be suspended for the courses that are covered by their course enrolment limit.

This proposed reform is presently meeting resistance from providers who generate a large proportion of their revenue from international student fees. Related to the international student cap, the FY24 Budget includes provision for $4.8m over the next 11 years for the Department of Education to develop and implement regulation announced to require universities to establish new supply of purpose-built student accommodation to support any increase in international student enrolments over an initial international student allocation (to be set in consultation with the sector). This new accommodation is to be available to both domestic and international students.