As in other countries, the Australian higher education system is a set of institutions originally created to serve a small elite of the population, faced with a modern economy in which everyone needs some form of post-school education. As in other countries, this problem has been dealt with in haphazard fashion. The first big expansion in higher education, following World War II, was met with the creation of a number of new universities, institutes of technology and colleges of advanced education (mostly former teachers colleges). Then, in the 1980s, the latter two groups were converted into universities, with a corresponding expansion of their range of offerings. Meanwhile, existing universities opened a range of new campuses.

The process, already slowing in the early 1990s, came to a near-complete halt under the Howard government. The last new university in Australia was the University of the Sunshine Coast, opened in 1994. And, under Howard, new enrolments of domestic students stagnated, while the public contribution per student was cut.

The system was saved from financial disaster in part by increasing the fees charged to domestic students, but even more by an expansion in the number of full-fee paying overseas students, mainly from Asia. More than in any other country, Australian universities saw overseas students as representing a market that could profitably be served. Meanwhile, for rapidly developing Asian countries, the availability of Australian universities provided an alternative, or supplement, to massive expansion of their own higher education systems.

With the 2007 change of government in Australia, followed by the impacts on job prospects of the financial crisis, the growth of domestic enrolments has resumed, while demand from overseas students has remained strong. But the funding to support these developments, promised as part of the Rudd government’s ‘education revolution’ has so far fallen far short of what was promised. A big increase in higher education expenditure is needed, but it remains to be seen whether it can be delivered under the current system.