Since 2012 successive Australian governments have encouraged Australia’s universities to find alternative sources of income other than direct government support. There has been some increase in funding attributable to increased domestic enrolments, however the inflation adjusted value of Commonwealth support per student has declined.

The number of domestic student enrolments by field of study has been controlled as have student fees. Prestigious universities could not charge higher fees for domestic students than other universities. These arrangements were like a straight-jacket, especially for elite universities. They wanted to escape these constraints. They have been able to do so by increasing their enrolment of overseas students. The Commonwealth left it to the universities to decide how many of these students to enrol and the fees charged. The only stipulation imposed by government has been that such enrolments were not to be at the expense of domestic enrolments.

This report argues that universities should be required to deliver educational and research activity relevant to Australian domestic students and to Australian industry needs.