Universities have warned the national economy could be billions of dollars worse off if the rate of tertiary degrees remains stagnant.
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New modelling shows a cost to the economy of $7 billion by 2026 if university attainment levels don't rise.
Universities Australia chair David Lloyd told the National Press Club on Wednesday more tertiary degrees were essential to address skills shortages.
"The National Skills Commission's employment projections show that in the next few years, more than half of all new jobs will be highly skilled - meaning they will require a university qualification," he said.
"The looming iceberg of skills shortage requires a much shorter turning circle than the provision of traditional three-year degree programs if it is to be avoided."
Professor Lloyd said a rethink was needed to meet future demand.
"The ways in which we educate for attainment - our very definition of attainment - must now be reconsidered," he said.
"Addressing this challenge for our national benefit will require us to rethink how we upskill, reskill, and deliver units of education to learners in a manner commensurate with life-long learning."
The calls to boost university investment come as the first round of reforms were introduced to parliament following the Universities Accord interim report.
The final report, due to be handed down by the end of the year, will look to overhaul the university sector in a bid to help more students to graduate.
The first reforms include abolishing the 50 per cent pass rule, which was previously introduced as part of the Job-Ready Graduate scheme.
Under the rule, students who failed more than half their subjects would no longer be eligible for Commonwealth funding.
Prof Lloyd said the scheme was hurting students.
"Universities cannot continue to do more and more for the nation with less and less," he said.
"But that's exactly what we were compelled to do under the Job-Ready Graduates package - itself positioned as 'a reform'."
The Universities Australia chair said the accord had the potential to shape the future of higher education.
Prof Lloyd said unity was needed from federal politics in order to fund future university graduates.
"The job of government is to act in the national interest and the provision of human capital for this nation, and the educational attainment of this nation is in the national interest," he said.
"It behoves both sides of government to act in a bipartisan way to commit to the delivery of the highest outcomes for the nation's people."
As parliament debates laws stemming from the accord recommendations, the coalition has hit out at the removal of the 50 per cent pass rule.
The opposition has argued students would be put at risk of not completing their course and would suffer financial hardship as a result.
It has also urged the government to explain how it would hold universities to account for Indigenous completion levels, should Commonwealth-supported places be uncapped.
Prof Lloyd said participation for Indigenous students at university was not the only outcome.
"Having people come in the doors is one thing, we need people to have successful graduates and learners and leave skills that will translate into their benefit," he said.
Prof Lloyd also used his address to call for a greater investment in research.
Australia's spend on development and research sits at 1.8 per cent of GDP, while the figure for the OECD is 2.7 per cent.
"This is not good enough for a nation of Australia's standing. I don't think any Australian believes we should lag behind like this - it seems to me to be, well, un-Australian," Prof Lloyd said.
Australian Associated Press
