Places on high-cost courses and in regional higher education are likely to be squeezed especially hard by the Australian freeze on teaching funding, which in effect ends the country¡¯s system of demand-driven enrolment, experts have warned.

The Canberra government¡¯s mid-year budget update, published on 18 December, said that funding from the Commonwealth Grant Scheme for bachelor¡¯s degrees would be kept at 2017 levels for 2018 and 2019, and that increases beyond that would be linked to performance and demographic data.

Although university admissions will not be capped, and student loans will still be available to students who win a place, sector leaders have highlighted that the fact that government funding makes up 58 per cent of funding per place on average means that institutions looking to expand or even maintain their undergraduate numbers faced a real-terms cut in funding.

Conor King, executive director of the Innovative Research Universities mission group, said that Australia¡¯s system of variable fees and variable government contributions by discipline meant that places in some fields would come under more pressure than others.

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¡°Since universities will get the student contributions for all enrolled students, the discipline incentives switch back to the high-charge, low government grant disciplines of law and business,¡± he said. ¡°The demand-driven success story of growth in engineering and science will come to a halt. The growth in health professionals will come under pressure, cutting off career options.¡±

Analysis by the Grattan Institute thinktank has shown that the level of government subsidy in law, business and economics is as low as 16 per cent per place, but nears 70 per cent in science, engineering and medicine courses.

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Mr King added that there was ¡°still much catch-up¡± required in university enrolment rates in regional parts of Australia and that this will ¡°now be harder for universities to continue¡±.

¡°Growth has been strongest in universities targeting outer urban and regional areas,¡± he said. ¡°This growth is now at great risk that it will slow or halt.¡±

Peter Noonan, professor of tertiary education policy at Victoria University in Melbourne, agreed that future higher education funding needed to take account of regional population trends, highlighting that post-2019 increases would need to be in the government¡¯s forward estimates next year if they were to materialise.

¡°The population is growing very strongly but unevenly, so some universities in areas of little or no population growth may miss out or, if they get growth funding, those in areas of high population growth, particularly in the outer metro areas, will face growing demand that they can¡¯t meet,¡± Professor Noonan said.

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¡°The whole process then becomes driven by government rather than student decisions. In many ways, this is back to the future ¨C government oversight of the resource allocation system.¡±

The Australian government opted to freeze undergraduate funding after failing to win senators¡¯ support for reforms that would have cut funding by A$2.8 billion (?1.7 billion) over four years and increased tuition fees by 7.5 per cent.

Its new proposals, which do not require parliamentary backing, will leave universities with A$2.2 billion less than expected over the next four years. The new measures also include a reduction in the income threshold at which students start to repay their loans, from A$52,000 to A$45,000, and the introduction of a lifetime limit on student loan borrowing (A$150,000 for students studying medicine, dentistry and veterinary science courses, and A$104,440 for other learners).

Mr King and Professor Noonan agreed that the latest reforms were likely to heighten demand for a more comprehensive review of post-secondary education in Australia, also covering vocational training.

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Simon Birmingham, the education minister, has indicated that the sort of performance measures that will be used to allocate teaching funding in future are likely to include data on student retention and satisfaction, and graduate employment ¨C suggesting a model similar to England¡¯s teaching excellence framework.

But observers agreed that, despite the new funding restraints, universities were unlikely to revive calls for caps on tuition fees to be lifted.

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¡°°Â¾±³Ù³ó New Zealand going fee-free and the pushback about increases to student charges in Australia and elsewhere, I don¡¯t think there will be much support for releasing controls on charges,¡± Mr King said. ¡°But the usual people will argue for it.¡±

chris.havergal@timeshighereducation.com