Stalled growth good for Treasury, not so good for degree aspirations

THE federal government's open chequebook policy to fund uni places for every would-be student should find financial relief.

THE federal government's open chequebook policy to fund university places for every would-be student should find financial relief, with demand plateauing after three years of rampant expansion.

But while Treasury may welcome it, the stalled growth could threaten the government's target for 40 per cent of young people to have degrees.

Only 2000 more undergraduate university places have been offered so far through Australia's five tertiary admission centres than at the same stage last year. This compares with rises of 10,000 last year, 7000 in 2011 and a whopping 17,000 in 2010.

The uncapped system, which funds universities for every student they admit, began in earnest last year. However, many universities started expanding aggressively in 2010, after the government allowed them to enrol up to 10 per cent above their quotas without financial penalty.

The number of early and main round offers ballooned from 178,000 in 2009 to 212,000 last year. With core university spending rising by about $3.6 billion a year under the Gillard government, commentators worried that the uncapped system - unique in the Western world - would become unaffordable.

But with offers up just 1 per cent this year those fears have been allayed. "What's going on now is a natural settling," said Richard James, who heads the Centre for the Study of Higher Education at the University of Melbourne.

"Universities that grew quickly might have reached the point where they don't want to get any bigger. The ones that tried to grab market share are probably comfortable that they've grabbed it."

Professor James said some potential students could be opting to work instead, particularly in Western Australia, where university offers were down by 2 per cent.

However, Daniel Edwards, senior research fellow at the Australian Council for Educational Research, said the stalling growth in Victoria and Queensland suggested that universities were nearing their physical capacity.