Higher Education 47: 211–240, 2004. © 2004 Kluwer Academic Publishers. Printed in the Netherlands. 211 Turning right at the crossroads: The Nelson Report’s proposals to transform Australia’s universities S.J. DUCKETT Faculty of Health Sciences, La Trobe University, Victoria, 3086, Australia (E-mail: s.duckett@latrobe.edu.au) Abstract. During 2002, the Australian Education Minister conducted a year-long review of tertiary education under the title Higher Education at the Crossroads. The policy statement arising from that review was released on 13 May 2003. It incorporates a combination of new financial incentives on students and universities, potential expansion of full-fee places, and increased intrusion into university priority setting. The policy statement promised a $A1.5b expansion in funding over four years, with more fully-funded university places, and an emphasis on improving the quality of teaching and learning. The strategy is market-driven and could create a ‘fee-culture’ in Australian universities. Implementation of the new policy is not assured as it has to pass a hostile Senate. The imple- mentation process also carries risks for government and universities. This paper describes the government’s proposals and analyses their premises and effects. Keywords: Australia, autonomy, equity, government policy, marketisation, universities On Budget night 13 May 2003, the Australian Commonwealth government released its long awaited policy statement on the future of tertiary education entitled Our Universities: Backing Australia’s Future (Nelson Report). If implemented, the policy proposals presage a transformation of the Australian university sector through a mix of financial incentives, increased fees for students, new opportunities to bid for project funds, and expanded regulatory intervention. These changes could lead to the most significant reshaping of the policy framework for Australian universities since the abolition of the binary divide some 15 years previously. This paper describes the context and content of the Nelson proposals and analyses their impact on the Australian university sector. The first universities in Australia were established in colonial times by State legislatures and State legislation is still the predominant mechanism for establishing universities. Of Australia’s 39 universities, 35 are established as State or Territory institutions, one (the Australian National University) by Commonwealth legislation and there are two private universities. The publicly funded multistate university (the Australian Catholic University) is also established by state (New South Wales) legislation.