Universities won't be getting a general increase to funding per student and the current system of student contributions, described as inequitable, will stay in place.
Tertiary Education Minister Chris Evans responded yesterday to the 2011 higher education base funding review by pointing to the "unprecedented investment"Labor had made in universities since2007.
"Given the record investment in recurrent and capital funding for our universities made by this government, there will be no further general increase in base funding at this stage," he said in a statement.
He cited an Ernst & Young report that found last year the funding per student place had increased by 10 per cent from Labor's increased investment.
The government said universities had to maintain international competitiveness and increase productivity, like any other sector of the economy.
"The great challenge for universities over the next few years will be to ensure that the significant additional funding from the government does not make them complacent about the actions they need to take to constrain costs and look for ways to be more efficient," its response states.
The base funding review, released in December 2011, recommended an increase to the average level of base funding.
It also recommended that all students pay 40 per cent of their course costs, with the Commonwealth providing the balance.
The review panel, led by Jane Lomax-Smith, found the existing system where student contributions range between 19 and 85 per cent was "inequitable".
Senator Evans ruled out increasing student contributions.
"The Gillard government does not want greatly increased debt to burden young people well into their working lives," he said.
The review had proposed a system whereby existing students weren't charged higher fees, but new undergraduates entering courses where the contribution was below 40 per cent could see fees rise "in a sequence of smaller steps".
Courses with student fees above 40 per cent would have had those fees frozen until indexation brought the government contribution up to 60 per cent.
The government's response says having a single contribution rate for all courses would introduce new inequities.
"The potential private benefits from some courses are sufficiently high to justify differential student contributions rates," it states.
The government also rejected a recommendation that universities be allowed to develop "flagship programs" which would attract up to 50 per cent extra funding per student.
It accepted in full or in part 13 of the panel's 24 recommendations. AAP