Australia’s demand-driven higher education system should be reintroduced in hybrid form, with university places capped in city campuses but not rural ones, under proposals in a new report.

Regional students studying at metropolitan campuses should automatically qualify for the full rate of government income support, according to recommendations from an expert advisory group.

The proposals are among 33 “actions” prescribed in the , released by education minister Dan Tehan. The report highlights the obstacles to university participation in non-metropolitan areas, putting access problems at the top of the list.

“There are fewer tertiary education options in [regional] communities,” the report says. “Policies that increase access…are critical.”

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The group, headed by former Victorian premier Denis Napthine, says the best policy would be a revival of demand-driven undergraduate places for students at regional and remote campuses. There should also be no limit on subsidised places for university students using the 16 community-owned “regional study hubs”, it says.

“In order to increase university participation rates, some lifting of the current caps on funding for university places is necessary,” the report insists.

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The government reapplied caps on university places in late 2017, after other measures to reduce higher education spending had been blocked in parliament. But since then the government has funded extra places at a handful of non-metropolitan institutions.

Regional universities arguably also enjoy a privileged position in the proposed performance funding scheme which will bankroll limited growth in student places from next year. Country campuses have an implicit advantage on one of the four performance measures, equity, because of the relatively high numbers of Indigenous, rural and socio-economically disadvantaged people in their catchments.

The extra funding will also be based on national population growth rates – another factor that could benefit country areas, where population increases have generally flatlined.

Over the past nine months, the government has also ���������������a longstanding scholarship scheme with one restricted to regional study, and frozen a generic research funding scheme to pay for extra regional higher education delivery.

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But the Regional Universities Network said country institutions were not being unfairly advantaged. “The whole point of the review was to recognise that we don’t have an equal system at present,” said executive director Caroline Perkins.

“It’s very hard in regional Australia and the panel put forward a bold blueprint, recognising that this inequity will take a generation to address.”

The report says middle-aged regional Australians are less than half as likely to have degrees as their city counterparts – a disparity, it says, that should be halved by 2030. The advisory group acknowledged that its recommendations would involve “significant costs to the budget” and “sustained effort” from all levels of government.

Mr Tehan said the government would consult on the report’s specific recommendations, while accepting its overarching ideas. “Many of the actions…require possible reform of the sector and budgetary considerations,” he said. “Delivering the strategy is a 10-year proposition.”

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However, he has recently acknowledged a likely need to ease funding restraints in response to future demographic growth.

Dr Perkins said the government could consider a “step-by-step approach” to uncapping university places in rural areas. “You could start in areas of skills need in the regions – things like nursing, teaching, engineering, and environmental and agricultural science.”

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john.ross@timeshighereducation.com