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Contents > Appendices > Appendix C
Appendix C
Higher Education Cost Adjustment Factor
The Higher Education Cost Adjustment Factor (CAF) is an index reflecting the contribution the Commonwealth makes towards increases in the operating costs of higher education institutions. The CAF does not measure actual price rises but the Commonwealth’s contribution towards annual increases in salary and non-salary costs.
Salary costs notionally constitute 75 per cent of grants. This component of the CAF is based on the Safety Net Adjustment (SNA) as determined by the Australian Industrial Relations Commission.
Non-salary costs notionally constitute 25 per cent of grants and are indexed using the Consumer Price Index (CPI). Before 2001 the Treasury Measure of Underlying Inflation was used instead of the CPI.
Figures for the CPI and SNA are provided by the Department of Finance and Administration in June the preceding year, around 6 weeks after the Federal Budget. The resulting CAF applies to the whole of the following calendar year and indexation starts from the first payment each year. For the 2002 CAF, the SNA was 1.9 per cent of Average Weekly Earnings and the estimated CPI was 3.0 per cent.
In this Report all figures for 2001 are actual 2001 amounts (unless stated otherwise). All figures for the 2002–2004 triennium are estimates using the estimated 2002 CAF. Figures for 2003 and 2004 have not been adjusted for anticipated movements in CAF.
This report is based on the 2002 estimated Cost Adjustment Factor (CAF). At the time of going to print, additional funds were in the process of being appropriated, because the actual CAF for 2002 is slightly higher than originally estimated. The additional funds that will be provided to universities because of this increase are around $8 million in 2002. The actual 2002 CAF is 1.134358.
The Cost Adjustment Factor index is shown in table C1.
Table C1: The Cost Adjustment Factor Index, 1995 to 2002
| 1995 | 1.000000 |
| 1996 | 1.015750 |
| 1997 | 1.033823 |
| 1998 | 1.050122 |
| 1999 | 1.066707 |
| 2000 | 1.085211 |
| 2001 | 1.108650 |
| 2002 (estimated) | 1.132907 |