Wednesday, 28 February 2024


The Final Report of the Universities Accord is finally here. To help unpack it, here’s a quick summary and our analysis of what it may mean to universities.  

The Accord in brief 

The Accord Final Report creates a blueprint for higher education planning out to 2050. Its core proposition, from which almost all else follows, is that the sector must double in size by 2050 if the nation is to meet the forecast need for graduates in the workforce. 

Several proposals flow from that starting point: 

  • More students from equity groups – especially low SES, regional and Indigenous – will need to be recruited and retained if this target is to be achieved. The Report proposes a tertiary education attainment target (in vocational and higher education) of 80% for the working age population by 2050. The sector will need to double in size by 2050. 

  • There will need to be changes to the way government funds teaching and student support, to reduce unfairness to students and to lower barriers to participation (such as assisting with the cost of work-based placements and improved income support for students). 

  • The real cost of teaching equity students will need to be recognised in how universities are funded. The current fixed funding system would be replaced by one that takes account of the needs of different categories of student and the cost of teaching and supporting them. 

  • The growth in the system will need to be managed by an overarching Tertiary Education Commission (ATEC). ATEC would have a mandate to drive greater diversity of provider types and over time to facilitate the integration of the VET and higher education sectors. 

  • New qualifications, such as micro credentials and degree apprenticeships, will need to be developed to meet the skills needs of a more diverse range of learners and to ensure graduates are equipped with the skills employers need. 

  • There are significant proposals relating to research, most notably that 50% of the indirect costs of research funded under nationally competitive grant schemes be supported (an increase from the current 20%). 

These are the headlines. There is much more in the detail. 

This is what we think it means for universities. 

No immediate financial relief 

Since the onset of COVID, universities have been on a revenue rollercoaster as domestic and international student demand has waxed and waned in response to the pandemic itself and government policy, especially on student migration. 

If universities hoped the Accord would be the answer to their financial problems, they are likely to be disappointed, for many reasons. 

First, the Accord proposals are just proposals. Much will depend on the capacity and willingness of this and successive governments to fund them. In the education portfolio alone, there are competing claims from early childhood and school education. 

Second, much of the detail of revised funding arrangements will be delegated to ATEC, which is unlikely to be up and running much before 2025. 

Third, many of the proposed funding changes address issues of unfairness to students rather than perceived under funding of universities for their core activities of teaching and research. A needs-based student funding model may create some winners, such as regional universities, but there is unlikely to be a significant overall increase in the unit of resource coming in to universities. Indeed, resources are likely to be stretched further if the overall number of students in the system increases. 

The proposal to increase the support for indirect costs of research could be significant, because it could remove some of the current incentives to continually increase in size and scale. However, it could also lead to a narrowing of the range of research that will be funded and a concentration of research support into fewer institutions. 

In short, universities who continue to face financial challenges from weak domestic demand and high visa refusal rates will need to face up to them now, rather than hoping that government will come to their aid. 

Strategic choices open up 

On a more positive note, we believe the Accord will unlock strategic choices for universities. This stems from a number of factors; 

  • The proposed growth in the system overall. 

  • ATEC would have a specific mandate to promote diversity within the system. This could include encouraging new types of higher education provider, greater collaboration between VET and higher education and an increased focus on skills relative to knowledge. 

  • The promotion of new types of qualification. 

  • A new needs-based funding model, and 

  • New funding arrangements for research and incentives to greater collaboration with end users of research. 

As a result, universities will have more choices about their future strategies – should they expand, specialise, or contract? Should they collaborate with VET providers or seek to enter new partnerships, or create altogether new kinds of provider? Should they expand into new qualification types, and if so, how? Should they specialise in their research programs, or aim to become more teaching focused? 

These are all questions universities will need to answer over time. The strategic choices made over the next five years will be critical and the financial consequences of each choice will need to be well understood in advance. 

To do this, universities will need to think differently and draw on industry-specific management skills. Responding to these challenges will require the ability to transform and make some tough decisions.