2026/27 Budget and higher education

“Treasurer Jim Chalmers spoke of delivering “five budgets in one” with cost of living and tax cuts forming the centrepiece of the federal budget, paid for by removing tax breaks for investors in a move he conceded was fraught with “political risk”. Despite ruling out changes to negative gearing and capital gains tax before its landslide victory at last year’s election, the Labor government has addressed housing affordability head on. Reforms are being made to negative gearing and capital gains in what Mr Chalmers called a “broad and ambitious” housing package. He said changing these policies was essential to help young Australians get into the housing market. “I acknowledge that this is a controversial change, I acknowledge that this is a government coming to a different view to the view that we held 12 months ago,” he said. “Of course it invites an element of political risk when a government comes to a different view, but we’re explaining why we have, we’ve done that for the best reasons which is we can’t see these tax arrangements lock more and more people out of the housing market as the pressures on young people … intensify.” Slashing red tape was a key element of the government’s package to boost productivity. The efforts spanned sectors, from streamlining housing approvals and simplifying payroll administration to cutting nuisance tariffs and opening up investment in start-ups, promising to reduce regulatory burden by $10.2bn each year and ultimately boost GDP by around $13bn. Touting the package as “the broadest productivity push in a budget since the 1990s”, Mr Chalmers said it “will help us attract and absorb more investment, make it easier and quicker to build, and slash compliance costs”. What’s in the budget for higher education When it comes to higher education, the sector has expressed a mixture of disappointment and support for the budget. Universities Australia (UA) acknowledged the difficult economic circumstances, framing its concern about the lack of investment in universities and students as an issue of productivity. “We understand the government is operating in a tight fiscal environment and trying to ease pressure on inflation while lifting productivity and growing the economy,” UA chair Professor Carolyn Evans said. “But Australia will not become more productive or competitive by investing less in the people and institutions that drive productivity.” UA chair Carolyn Evans. Picture: Peter Wall The Strategic Examination of R&D report (SERD) last year recommended a number of fixes to boost research capacity and productivity, including restoring funding to the Australian Research Council (ARC) and National Health and Medical Research Council (NHMRC) neither of which were addressed in the budget. There were some positive moves in relation to other SERD recommendations around tax incentive reforms for business. These included: Increasing the offset rate for "core" R&D by 25 to 50 per cent. Increasing the turnover threshold for the highest offset rate from $20 million to $50 million, allowing growing firms to retain benefits longer. Lifting the maximum expenditure threshold from $150 million to $200 million. Professor Evans acknowledged other research and development announcements made in the budget. “The establishment of a National Resilience and Science Council, steps toward greater research specialisation, measures to incentivise startups to engage in and commercialise research, the commitment to Horizon Europe and a boost to the Medical Research Future Fund are all very positive,” she said. “What’s critical is that investment in research and development continues to grow so that Australia can reverse its long-term decline in R&D investment and lift national productivity.” The Group of Eight also praised the Budget measure to fund association to Horizon Europe. “The government’s commitment to fast-track association to Horizon Europe in January 2027 will place universities, businesses, and researchers at the heart of global innovation. It will accelerate research breakthroughs, fast track the commercialisation of Australian discoveries, create high‑value jobs, and connect our brightest minds with the world’s most ambitious research and innovation networks,” it said. UA CEO Luke Sheehy also commented on the government’s response to the SERD recommendations. Universities Australia CEO Luke Sheehy. Picture: Supplied “We welcome the focus on R&D in the budget, but it can’t simply come from moving funding from one pot to another. “It’s disappointing to see no further investment in the Australian Universities Accord and only a partial response to the Strategic Examination of Research and Development in this budget,” he said. “We do welcome the government’s continued investment in the CSIRO, but our university researchers also deserve funding stability and certainty, and this budget rips $800 million away from them.” UA was also critical of the government for not addressing the much-maligned Job-ready Graduates scheme (JRG), which Mr Sheehy called “a failed, broken system that continues to push up costs for students while stripping billions out of university funding.” In its response, the National Tertiary Education Union (NTEU) said the budget is the “first step on the road to major reform” when it comes to universities as workplaces. NTEU national president Dr Alison Barnes said more investment is needed “to combat the explosion in insecure work, rampant wage theft and a broken governance model.” “Already-stretched university staff simply can’t afford more funding cuts after a disastrous decade under the Coalition,” she said. The budget also announced a planned levy on universities to foot the bill for the National Student Ombudsman (NSO). Over the next four years, the government will fund the NSO to the tune of $44.3 million to cover operations, but later this year it plans to introduce legislation for the levy, which will fully recover the costs starting 1 January 2027. The levy will be distributed based on the student population of the institution. According to reporting at Times Higher Education , the Council of Australian Postgraduate Associations is critical of this approach, saying “The government created this office; the government should fund it.” In other sector moves, the government is allocating $9.4 million over five years to the Tertiary Education Quality and Standards Agency (TEQSA) to support reforms to its watchdog powers. The 2026/27 Education Portfolio Budget Statement said “these reforms will ensure TEQSA is able to respond to systemic risk in the sector such as governance failures at universities and ensure all higher education providers are taking appropriate steps to prevent and respond to racism, including antisemitism.”

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