Labor’s confirmation that it would bring back uncapped student numbers in Australia has been welcomed as potentially enhancing the higher education system’s “capacity to adapt” to student and labour market needs.

Bill Shorten, leader of the opposition party, outlined the plan in his response to the government’s budget, saying that Labor would reverse the Liberal-led administration’s suspension of the demand-driven system and its freeze on funding, imposed in December 2017.

The uncapping of student numbers is also a political battleground in England, where a Conservative-led government lifted number controls in 2015. Tory criticisms of Labour’s plan to abolish tuition fees and introduce direct public funding of universities often contain the claim that such a policy would mean the reintroduction of number controls and thus the exclusion of disadvantaged students from higher education.

Australian Labor’s policy of uncapping places would cost almost A$9 billion (£5 billion) over 10 years and would be paid for by closing “generous tax loopholes and concessions”, a party spokesman was .

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Although Labor, which introduced the demand-driven system in government in 2009, had indicated previously that it would reinstate the system, Mr Shorten’s budget response was official confirmation and brought both supportive and hostile responses.

Universities Australia called Labor’s announcement “a win for fairness, productivity, the national economy and social cohesion”. But Simon Birmingham, the education and training minister, : “Labor doesn’t believe there are any efficiencies to be found in universities, despite the record funding they’re getting. They’ll just let unis write their own cheque no matter the cost to working Australians.”

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“For higher education policy, Labor’s announcement is very significant,” said Andrew Norton, higher education programme director at the Grattan Institute and co-author of a 2013 review of the demand-driven system for the government, which recommended that caps not be reimposed. “It’s about much more than the money; it is about the system’s capacity to adapt to changes in student preferences and labour market needs.”

Julia Gillard, the former Labor prime minister who introduced the demand-driven system as education minister, previously told ����Vlog that it was the obvious response in Australia to the growing worldwide demand for higher-level skills.

“You’ve got to answer the question: What education structure enables you to get enough students into a system that gets them those higher level skills? In Australia, that did mean growth,” she said.

In terms of Labor’s plan to fund the uncapping of numbers, Mr Norton said: “Labor is planning to increase a range of taxes and not keep some Liberal tax cuts, so in general they are dealing with funding issues via tax revenue.”

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He added that Labor was “also planning a big review of post-school education. There needs to be some rebalancing in favour of vocational education, which is usually cheaper on a per-student basis. But we don’t have much detail on how that would work.”

Before the demand-driven system was suspended, the Group of Eight, which represents research-intensive universities, had attacked the system – saying that rising costs to the government from greater student numbers could put an unsustainable burden on the higher education budget.

“The Group of Eight seemed to believe that if less money was spent on demand-driven funding, more could be spent on research,” Mr Norton said. “But in my view that was never very likely. When the freeze came, it was to deliver savings to the overall budget, not to spend money on other higher education priorities.”

john.morgan@timeshighereducation.com