As the sector faces mounting pressures – from staff wellbeing to cyber threats – resilience is no longer optional. So, what are the current challenges facing the industry?
Financial instability
Universities face mounting financial pressures, with debt levels rising and cash reserves declining. These are compounded by:
- Escalating salaries, operating costs, and ageing infrastructure challenge financial sustainability.
- Declining enrolments and increased competition drive the need for income diversification, including transnational education and intellectual property commercialisation.
- Transition to demand-driven, needs-based funding and managed growth systems for Commonwealth supported places.
International students
Policy turbulence around international student enrolments has been a defining feature, with the government’s attempts to cap numbers sparking sector-wide debate. Some key themes to note include:
- Visa caps and high processing costs, alongside regulatory scrutiny from TEQSA on recruitment and admissions, are reshaping international student strategies.
- Universities are diversifying markets and strengthening recruitment strategies to adapt to shifting global preferences.
Staff and student wellbeing
Recent TEQSA updates highlight a renewed regulatory focus on safety, wellbeing, freedom of speech, and academic freedom, with ongoing consultations and the development of new guidance for grievance and complaint mechanisms. Some key themes to note include:
- Persistent change fatigue and rising mental health concerns among staff and students, especially through organisation restructures and workplace changes.
- Introduction of new gender-based violence legislation and the National Higher Education
- Code to Prevent and Respond to Gender-based Violence, prompting universities to review policies and support mechanisms.
Cybersecurity threats in the age of AI
The sector faces sophisticated cyber threats, including AI-driven phishing, deepfake impersonations, and internal breaches. TEQSA’s regulatory agenda now includes a sharper focus on cyber resilience, foreign interference, and academic integrity risks, especially those posed by generative AI. Some key themes to note include:
- Recent incidents highlight vulnerabilities: password breaches, sensitive data exposures, and denial-of-service attacks affecting university operations.
- Universities are urged to adopt AI-powered security tools, enhance incident response capabilities, and invest in ongoing staff training to counter evolving risks.
Governance and regulatory reform
Current regulatory and government policy reforms in the higher education sector mean universities must adapt to new funding models, heightened compliance requirements, and evolving expectations around quality, equity, and student safety. These changes drive institutions to review their governance, risk management, and operational strategies to remain competitive and compliant in a rapidly shifting landscape. Examples of recent reforms and changes in policies:
- Senate inquiries and TEQSA’s Statement of Regulatory Expectations (SRE) on wage compliance are driving governance reforms.
- The Universities Accord and Commonwealth Practicum Payment (CPP) reforms are reshaping funding models and operational processes.
- The sector is also preparing for legislative changes to modernise and strengthen TEQSA’s powers, with consultations underway to streamline regulation and focus on student outcomes.
Payroll compliance
The sector is still grappling with wage underpayment or compliance issues, with many still remediating issues identified over the past 3 years. Some key themes to note include:
- There will be more Enforceable Undertakings with the Fair Work Ombudsman in the sector.
- Other wage compliance issues and blind spots (e.g., long service leave) remain critical audit areas which are yet to be addressed by the sector.
Academic debates around free expression
Institutions are navigating complex debates around free expression, inclusion, and safety, with regulatory bodies and government inquiries shaping new expectations. Some key themes to note include:
- Heightened debate over freedom of speech, especially in relation to campus protests and contentious topics.
- Universities Australia and TEQSA have issued new guidance and definitions aiming to protect students and staff while upholding academic freedom.
- Calls for clearer complaints processes, transparent reporting, and ongoing staff training.
- Critics caution that broad definitions may risk stifling legitimate debate and academic inquiry, particularly on political issues.
- TEQSA is developing updated guidance to support both freedom of speech and campus safety, with sector-wide consultations underway.
Emerging risks and FY26 audit priorities
Looking ahead to 2026, there are several priority areas for risk profiling and internal audit planning:
- Psychosocial risks and wellbeing support
- Accessibility and disability support
- Academic integrity and AI governance
- International student pathways and agent network ROI
- Data governance, cyber resilience, and technology transformation
- Financial sustainability and investment strategy
- Governance reviews and compliance oversight
We’re here to help
With an evolving landscape, it is critical higher education institutions know how to prepare and safeguard against potential risks. Please reach out to Prakash Wilson or Max Tan if you would like to have a more detailed discussion on any of the topics above.
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