Reimagining tertiary education: From binary system to ecosystem

Reimagining Tertiary Education

The scale of likely change in our economy and society is such that we must contemplate major reforms to our tertiary education system. We outline 10 ambitious recommendations to better equip Australia for the economic and social change that is coming our way.

Morgan McCullough

Lead Partner, Education

KPMG Australia


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With a range of new technologies now bearing down upon us, huge shifts in the global order under way, longer lives – and potentially longer working lives – it is vital that Australia has a flexible, adaptable tertiary education and training system which gives us the best chance of thriving. This paper is primarily about how we might best achieve that.

Beyond tweaking

From our interviews and our own observations we know there is innovation and experimentation amongst public and private providers, and educational services companies. Australia needs to nurture this innovation, as we seek to do in our recommendations.

There is also a need for what is really structural change. As one well-placed industry observer put to us, the system is “beyond tweaking, beyond tinkering”.

We need a new mindset.

Time to reimagine

Our nation needs to move beyond an unstable and outmoded distinction between higher education and VET, and set the conditions whereby post-secondary providers can innovate more simply whilst ensuring that stakeholders’ interests are protected.

We need to move from binary system to ecosystem, with more diversity of providers, organised around the backbone of a revised Australian Qualifications Framework (AQF) and legislative requirements which treat like providers alike.

We could imagine the tertiary ecosystem not as a stratified, hierarchical one, but as flipped on its side, with different types of providers each aiming to be best of their type: best in class.

This ecosystem must be supported by public funds: experience shows that private markets alone will fail to deliver the education and training outcomes we seek as a whole.

But the criteria on which public funds and income-contingent loans are granted need to be explicit, and those principles then applied equally to fit and proper public and private providers offering similar programs at similar levels of quality.

The ecosystem for sharing knowledge and imparting skills needs to be shaped by the four principles of advancing innovation, fairness, efficiency and civil society.

Summary of recommendations

We make 10 broad recommendations, to be implemented in stages, based on the premise that no one really knows what the future holds, and therefore the conditions must be created for institutional innovation, to maximise our prospects.

Subject matter Recommendation
1. A national tertiary education and training system A national tertiary education and training system should be introduced progressively through negotiation between the Australian Government, states and territories on the basis that the Australian Government takes primary responsibility for a single tertiary education funding framework for qualifications from Certificate level (AQF level 1) through to PhD (currently AQF level 10).
2. A tertiary education system with the Australian Qualifications Framework at its centre Australia’s tertiary education system should be structured, funded and regulated around a refreshed Australian Qualifications Framework, and not around a division between ‘higher education’ and ‘vocational education and training’.
3. A unified funding framework The Australian Government should restore the demand-driven funding model for higher education and extend it progressively to other tertiary qualifications.
4. Greater funding transparency and accountability

The Australian Government should ensure that the purposes for which grants are made to providers of tertiary education and student contributions are levied are clearly identified, particularly in relation to teaching and research. There should be clear accountability for the outcomes under each funding stream.

5. Independent tertiary education pricing authority

The Australian Government should establish an independent tertiary education pricing authority. Working within overarching financial parameters set by the government, the authority would:

  • determine the appropriate price for the teaching of various disciplines at different tertiary qualification levels; and
  • set the maximum amount of that price to be paid through student contributions, having regard to the expected private benefit at different tertiary qualification levels.
6. A unified tertiary education loan scheme Students should have access to a single income-contingent loan scheme that allows them to borrow in respect of student contributions across the full range of tertiary qualifications.
7. Regulatory arrangements The Australian Government should tighten regulation in the VET sector,
ensuring that regulation is responsive to the circumstances of tertiary
providers, and integrate the regulatory activities of ASQA and TEQSA over time.
8. Valuing teaching excellence The Australian Government should develop an instrument to appraise and
recognise excellence in teaching, as a companion to the Excellence in Research
for Australia instrument that recognises excellence in research. A component of
funding allocated to providers to support teaching should be contingent on
teaching outcomes.
9. Improving information on tertiary education outcomes The Australian Government should improve information available to support the operation of the tertiary education ‘marketplace’ and assist students to make good educational choices.
10. Removing higher education provider categories The use of the term university should continue to be restricted by law but not be based on a TEQSA classification of different types of higher education providers. Universities should no longer be compelled to undertake research that leads to the creation of new knowledge and original creative endeavour in at least three broad fields of study.


We recognise some cannot be implemented immediately and others will require trade-offs and co-operation. Pursued in the right spirit, no institution needs to be a loser in terms of its status or future development. Not pursued at all, we all risk being on the losing end, as the weaknesses of current arrangements become increasingly manifest.

Read the report

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