An Australian report has outlined principles for setting universities’ tuition fees and determining which courses should attract subsidies, to resolve “anomalies” in both.

The report by the James Martin Institute policy thinktank charts ways of injecting consistency into undergraduate fees, which currently range between A$4,445 and A$16,323 (£2,333-£8,566) a year, and government support for postgraduate places, 55 per cent of which are currently unsubsidised.

The approach is designed to “remedy perverse outcomes” from the Job-ready Graduates package, replacing it with a system where “‘price’ is not used to influence student choices”.

The report was commissioned by the Australian Universities Accord panel and claims to present the panellists’ preferences in “general terms”. James Martin chief executive Libby Hackett said the document had been written in “close partnership” with the panel members to help them “determine their preferred funding model”.

This includes no change to international education. The report says the current “deregulated system” for international students provides a “highly valued source of income for the sector” as well as “benefits to the broader economy”.

The report outlines five broad study bands – fully subsidised access courses, partially subsidised undergraduate, partially subsidised postgraduate, full-fee domestic and full-fee international – with details about how each would operate.

They include eligibility for core and needs-based funding, loans and course subsidies and the role of the proposed Australian Tertiary Education Commission (Atec).

The report proposes a “transparent list” of the postgraduate degrees that attract government subsidies. Currently, the allocation of postgraduate subsidies is ad hoc, often reflecting arbitrary decisions made decades ago.

Eligibility for subsidies could go to postgraduate programmes that are required for professional accreditation or  help to “build a national priority workforce”. But Ms Hackett stressed that it would be up to Atec to determine these rules.

The report also specifies a “continuation of the current system” for international students, with no role for Atec. But Ms Hackett said Atec involvement in international education remained a possibility.

“The accord panellists talk about international students being within the remit of Atec. If we’ve got a managed growth model in our domestic higher education world, then perhaps you could move towards managed growth for the international market as well.”

She said the “spectrum” of funding system design ranged from a “demand-driven free market right through to a centrally planned system. The panellists were clear that they were aiming for something in the middle of that – this concept of freedom within a framework, or a stewarded system.”

Ms Hackett said it would be “very challenging to run a managed growth system, either in domestic or in international education, without an independent Atec. If you land in this middle ground of wanting a stewarded system, the current structures just aren’t going to deliver it.

“Getting the Atec’s design right – not as a regulatory body, not as a bureaucratic agency telling institutions what they can and can’t do, but as somebody stewarding the system overall – is going to be crucial.”

The report says a funding component for research should be reintroduced into teaching subsidies. Over time, Australia should develop a “core” research funding mechanism “beyond the existing block grant funding”, it adds.

It also says an “equity levy” of perhaps 20 per cent would be imposed on unsubsidised degrees with high fees – above A$40,000 (£21,000) a year, for example – to fund scholarships that give “historically underrepresented students” access to these elite courses.

john.ross@timeshighereducation.com