The Australian Financial Review Higher Education Summit in Sydney has once again shone a spotlight on a sector caught between its proud traditions and a future that demands sweeping change. Education Minister Jason Clare delivered his address with the energy of someone determined to leave a mark on the tertiary landscape. He spoke of reform, of breaking down artificial barriers between TAFE and universities, of equity, growth, governance, and the inexorable rise of artificial intelligence. His message was that Australia needs a system fit for the next quarter century, not just the next political cycle. Yet, as the Summit revealed, universities remain caught in a tug-of-war between competing visions of what higher education should be: a crucible of knowledge and social advancement, or a conveyor belt of human capital designed to serve economic imperatives.
Clare’s remarks emphasised continuity and scale. He reminded the audience that the Universities Accord, spearheaded by Professor Mary O’Kane, was not a short-term review but a generational blueprint. It imagines a workforce where four out of five Australians hold either a university degree or a TAFE qualification by 2050. To reach that ambitious destination requires not only expanded capacity but also tearing down entrenched barriers that stop working-class and regional Australians from stepping onto campus in the first place. Clare’s blunt truth was that affluent suburbs are already well-represented in higher education. It is the outer suburbs, the bush, Indigenous communities, and families on low incomes that must now be the focus. Without that recalibration, the Accord’s targets will remain hollow numbers on a policy document.
At the heart of Clare’s pitch were the funding reforms that begin rolling out from 2026, including the Managed Growth system and the introduction of needs-based funding. These are not reforms designed to attract headlines but to reshape incentives and stabilise the system. Managed Growth will prevent universities from chasing enrolments in what Clare described as a “Hunger Games” competition, instead allocating places strategically. Needs-based funding borrows from the Gonski school reforms by tying additional resources to student disadvantage, ensuring that universities educating regional, Indigenous, or low-income cohorts receive the extra support they require. Over the next decade, these twin mechanisms will inject $2.5 billion into the sector, quietly but significantly reshaping its equity architecture.
The Summit, however, did not merely serve as a stage for Clare’s reformist vision. It also exposed the governance fractures and reputational crises that threaten to destabilise the university sector. A Senate inquiry has already catalogued a troubling list of issues: casual staff exploitation, opaque governing councils, campus antisemitism, inflated executive salaries, and consultancy fees that defy public accountability. The very legitimacy of universities as custodians of public trust has been eroded by a perception that they chase international student revenue and research rankings at the expense of domestic students and teaching quality. Senator Tony Sheldon’s damning observation that vice-chancellors enjoy exorbitant remuneration while staff and students shoulder the costs resonated in a room where governance reform was already on the agenda.
This credibility gap explains why Clare’s focus on governance struck a chord. He reiterated the government’s steps to introduce a Higher Education Code to Prevent and Respond to Gender-based Violence, establish an Expert Council on University Governance, and strengthen the powers of the Tertiary Education Quality and Standards Agency (TEQSA). As Clare pointed out, TEQSA currently wields “a sledgehammer and a feather” – the ability to cancel a university’s registration entirely or impose minor conditions, but with little in between. His commitment to broaden TEQSA’s regulatory toolkit could prove pivotal, allowing the regulator to intervene early and proportionately when systemic risks appear, without undermining an institution’s very existence. This is less about punishment and more about building confidence that governance structures meet the standards expected by students, staff, and the public.
Another theme threaded through the Summit was the question of universities’ purpose. Should they exist to fuel productivity and industry pipelines, or should they retain their deeper mission of cultivating critical thought, advancing knowledge, and fostering civic responsibility? The Universities Accord reflects both impulses. On the one hand, it calls for doubling enrolments to meet workforce needs in a rapidly changing economy. On the other hand, it acknowledges the barriers that prevent disadvantaged groups from accessing higher education and the need for bridging programs, uncapped support for preparatory courses, and demand-driven places for students from disadvantaged backgrounds. Clare highlighted early wins with Indigenous enrolments, which rose five per cent in 2024 and a further three per cent in 2025, with projections that the number of Indigenous students could double within a decade. Extending demand-driven funding to other disadvantaged groups in 2027 is the next frontier, embedding equity at the core of expansion.
Yet the Summit also confronted the elephant in the room: money. Doubling the student population by 2050 is an audacious target, but it raises a fundamental fiscal question. Where will the billions required come from in an era where the federal budget is forecast to remain in deficit for the next decade? Clare has overseen significant investments—$6.7 billion across reforms linked to the Accord—but the broader financing debate is unresolved. The Group of Eight’s Vicki Thomson noted that success is not about handing universities “buckets of money,” while Melbourne University Vice-Chancellor Emma Johnston called for a $1 billion university venture capital fund tied to the government’s National Reconstruction Fund. These proposals reflect the tension between public funding constraints and the sector’s appetite for innovative financing mechanisms.
The conversation around international students added further complexity. Once the crown jewel of university finances, generating $50 billion annually, the international education sector now faces tighter regulation, capped enrolments, and visa fee hikes. Labour’s proposal to link additional international places to commitments on student housing and Southeast Asian recruitment has been criticised as out of touch with application realities. While universities continue to stress their role in producing world-class research and global engagement, their reliance on overseas students leaves them politically exposed and vulnerable to regulatory shifts. Rebuilding trust with the domestic community may prove as important as diversifying revenue streams.
Artificial intelligence emerged as both a disruption and an opportunity. Clare acknowledged the immediate challenges AI poses to assessment integrity but emphasised the longer-term productivity benefits. Universities such as UTS and Sydney are already embedding AI literacy into degrees, training students to work alongside these tools responsibly. Some vice-chancellors predict AI will be embedded in every degree within two to five years. If realised, this could represent not only a pedagogical shift but also a transformation in graduate employability and national productivity. Yet the Summit also wrestled with the risk that unchecked generative AI could erode the very value of a degree if institutions fail to balance responsible adoption with the preservation of deep learning.
Clare’s speech also hinted at an aspiration for bipartisanship, a rare commodity in Australian politics. He acknowledged the new Shadow Minister for Education, Jonno Duniam, as a “serious thinker” and expressed hope for collaboration beyond partisan skirmishes. Whether that spirit can endure as the Accord reforms move from paper to legislation remains to be seen. Universities have too often been pawns in political battles over immigration, housing, or fiscal austerity. Clare’s vision demands long-term stability, but the sector has learned to be wary of promises that may not survive electoral cycles.
What was clear from the AFR Higher Education Summit is that Australia’s university system is at a crossroads. The Accord, the Managed Growth system, needs-based funding, governance reforms, and the embedding of AI all point towards a sector being reshaped for the future. Yet the reputational damage of past governance failures, the political populism swirling around immigration, and the fiscal constraints of government spending all cloud the horizon. Clare’s blueprint insists that education should not depend on postcode or income and that universities must serve the nation’s long-term needs. The challenge, as ever, is whether short-term politics will allow that long-term vision to take root.
If there was a single takeaway, it is this: universities can no longer afford to drift. Their social licence, once assumed, must now be earned and re-earned through transparency, equity, and relevance. The Accord offers a roadmap, but it is only a start. The real test will be whether universities, governments, and the community can work together to ensure that higher education in Australia remains both an engine of opportunity and a guardian of knowledge. In that sense, the AFR Summit was less a celebration of achievements and more a call to arms for a sector that must find its way through uncertainty and regain the trust of the nation it serves.
