Australia¡¯s relaxation of funding rules for non-bachelor places is sensible policy, analysts say, but it will not go far in a university system confronting demographic growth.

The government has confirmed plans to give universities more flexibility in how they use their funding for places in postgraduate, diploma and enabling courses. Under arrangements expected to apply from next year, institutions that have not used their full quotas will be able to shift leftover subsidies into the other course categories.

Universities would be able to apply their unused funding for sub-bachelor places, for example, to support extra postgraduate students. The new rules would also allow unused subsidies to be traded between institutions, although spare funding for postgraduate or diploma places could not be swapped for another institution¡¯s allowance of enabling places.

The government said that the new approach was expected to free up more than 1,500 places without costing taxpayers a cent. ¡°[This] will enable universities to better meet the needs of a changing workforce,¡± said education minister Dan Tehan.

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¡°Our government is cutting red tape to make universities more productive. We want universities to work together to meet student demand while also encouraging greater flexibility within the system.¡±

The approach effectively reverses a departmental crackdown several years ago, when universities were warned off moving their subsidies around. Sources said?that the new arrangement would suit universities, because they had a good feel for student demand and could use their funding for maximum benefit.

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But while analysts backed relaxation of constraints within institutions, they were cautious about institutions trading their places. ¡°If universities give part of their load to someone else, when do they get it back?¡± one asked. ¡°We need more detail around those sorts of things.¡±

Another said that Mr Tehan deserved credit for his willingness to ¡°try things out¡±, but expressed concern about unintended consequences. ¡°What exactly will the receiving university give to the institution offering places? This is interesting new territory, but let¡¯s see what happens.¡±

The increased flexibility appears to be the government¡¯s response to a circulated late last year, proposing a more systematic approach to the distribution of subsidies for non-bachelor places. The current allocation is based on little more than historical quirk, with each institution¡¯s quota reflecting ad hoc decisions often reached years ago.

The paper proposed the removal of 5 per cent of each university¡¯s current allocation, presumably to be reallocated to the universities with highest demand. Times Higher Education understands that this idea has now been deferred until 2021.

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Fairfax Media reported that the new arrangement was Mr Tehan¡¯s way of ensuring that current higher education funding was being used optimally, ahead of difficult conversations with sceptical cabinet colleagues about increasing the sector¡¯s overall budget.

Mr Tehan has been the first education minister to publicly acknowledge that universities face an imminent surge in demand because of a spurt in Australia¡¯s birth rate early this century.

But consultant Claire Field said that the newfound flexibility would enable universities to enrol just 40 extra students each, on average, and they would need to implement new systems to identify and choose between the beneficiaries. ¡°It seems like an awful lot of administration [for] about a high school classroom worth of students.

¡°It¡¯s a good thing that the universities have flexibility but I¡¯m amazed that the numbers are so small.¡±

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john.ross@timeshighereducation.com