Australia needs more graduates but university support is falling

Australia will need a larger pool of highly qualified workers in the decades ahead, but the country may not be on track to produce enough university graduates to meet the demands of a changing economy, Universities Australia (UA) has said.

The warning follows the release of the 2026 Intergenerational Report (IGR), which examines how Australia’s economy, population and government finances could evolve over the next 40 years.

The report projects that the proportion of Australians with a university degree will rise from around 40% currently to 47% by 2065-66. Universities Australia, which represents 38 universities, said that figure falls short of the 55% university attainment target recommended by the Australian Universities Accord for Australians aged 25 to 34 by 2050.

The gap has renewed questions about whether Australia will have enough graduates to fill the skilled jobs expected to emerge as the economy changes.

The IGR identifies artificial intelligence, an ageing population, the energy transition, geopolitical shifts and industrial transformation among the forces likely to reshape Australia’s economy through 2065-66.

Accord targets higher participation

The Australian Universities Accord had recommended increasing the proportion of 25- to 34-year-olds with a university qualification from 45% to 55% by 2050.

It also called for at least 80% of the working-age population to hold a tertiary qualification, including university and vocational qualifications, by 2050. The Australian government has adopted the broader 80% target.

UA chief executive Luke Sheehy is now calling on the government to adopt the 55% university attainment target as well.

The organisation said the issue extends beyond university enrolment numbers to whether Australia can develop the skilled workforce needed for future industries.

Sheehy has previously argued that Australia needs to expand university participation among groups that have historically been less likely to enter higher education, including students from low-income families, regional and remote communities and households without a history of university education.

Funding pressures add to concern

Universities Australia also pointed to the IGR’s projections for public spending on education.

According to the organisation, Commonwealth spending on higher education and vocational education and training is projected to decline by 0.2 percentage points of GDP. The report also projects a fall in income support and student assistance from 3.4% to 2.6% of GDP if there are no policy changes.

For students already facing higher living costs, the organisation has been pressing for broader financial support.

Earlier this month, UA called for concession cards to be extended to all domestic university students and for international students to receive equal public transport concessions. It cited rising costs of rent, groceries, utilities and fuel since 2021.

UA is also seeking changes to the Job-ready Graduates scheme, which determines government funding and student contributions across different courses. The organisation has repeatedly called for the scheme to be replaced with another funding model.

A long-term challenge for higher education

The latest IGR projections have added a new dimension to Australia’s debate over university participation and funding.

UA’s position is that increasing the number of Australians with university qualifications will require more than setting a higher target. It argues that students need stronger financial support to enter and complete university, while institutions also need adequate funding to accommodate a larger and more diverse student population.

The IGR, however, is a long-term projection rather than a prediction of a fixed policy outcome. It sets out how current trends and policies could affect Australia’s economy and government finances over the next four decades, rather than determining what those outcomes will ultimately be.