Tough targets, radical reforms and an eye-watering price tag were delivered in Australia's most significant review of higher education of recent years.

The most controversial recommendation of the independent Bradley review is for a "voucher" system of funding as part of the deregulation of the sector.

Under the proposals, all suitably qualified Australians would be given "learning entitlements". These would allow more people greater scope to choose where and what they study. Under the scheme, funding would follow the student rather than being allocated to institutions.

Large universities welcomed the plan, saying that a system driven by student demand would be more flexible.

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Small universities, however, expressed concerns that students would flock to a tiny number of prestigious institutions and to the most popular courses.

Angus McFarland, president of the National Union of Students, shared the unease. He suggested that there could be a "massive increase" in some courses at the expense of others, resulting in, say, too many lawyers and not enough teachers.

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Among other proposals in the review, which was led by Denise Bradley, the former vice-chancellor of the University of South Australia, is an ambitious target to increase participation.

The aim is for 40 per cent of 25- to 34-year-olds to have at least a bachelor-level qualification by 2020 - a significant increase on the current level of 29 per cent.

This would deliver some 330,000 more skilled graduates, which, the review says, are needed for Australia to remain competitive globally.

Professor Bradley told The Australian newspaper that the 40 per cent figure - which the report calls a "testing" target - could be achieved only if enrolments and completion rates improved.

In addition, the report calls for targets to boost enrolments by students from low socio-economic groups to 20 per cent by 2020.

Professor Bradley insisted that her review's recommendations were "not just about universities" but also about "absolutely critical economic and social issues for this country".

The review also assessed the provision of higher education in the regions and remote areas, which needs "serious attention".

It recommends additional funding of A$80 million (?36.7 million) a year to improve provision in remote areas, and it moots the idea of a new institution that would specialise in delivering higher education to remote regions.

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Other proposed new bodies include a super-regulator for higher and vocational education, which the review suggests should be running by 2010, to oversee accreditation and quality assurance nationally.

"A national system for accreditation of all higher education providers, both public and private, on a regular cycle is necessary to assure the quality of the deregulated system," the report says.

On funding, it says there is "no case" for increasing students' financial contribution through higher tuition fees, and calls for an overhaul of the student-support system.

It also recommends significant rises in government spending in other areas.

Teaching grants should be boosted by 10 per cent in a bid to tackle high student-to-staff ratios and the increasing "casualisation" of the workforce, the report says, and an extra A$300 million a year should be found to increase research infrastructure grants.

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Professor Bradley is unequivocal about the importance of acting to shore up Australian higher education, which she says is falling behind its competitors.

And she warns that, even if all the review's 46 recommendations are adopted, it will "do no more than maintain" Australia's position and performance internationally.

Despite such tough talk, Julia Gillard, the Education Minister, has hinted that the estimated A$6.5 billion cost of the review's proposals might prove too high.

She told The Age newspaper: "We're in tough days, no doubt about that. When we consider the recommendations in the Bradley review that go to government expenditure, they will be considered in the budget context."

john.gill@tsleducation.com

THE BRADLEY REVIEW: 12 KEY RECOMMENDATIONS

- A national target of at least 40 per cent of 25- to 34-year-olds educated to bachelor-level degree or above by 2020;

- At least 20 per cent of enrolments from low socio-economic backgrounds by 2020, with 4 per cent of teaching funding directed to outreach and retention;

- A voucher scheme to drive a deregulated, demand-led system in which funding follows the student;

- A new national super-regulator to oversee accreditation and quality assurance of public and private universities and other higher education providers by 2010;

- An extra A$80 million (?36.7 million) a year, and possibly a new specialist institution, to improve higher education provision in remote regions;

- An increase of 10 per cent to base funding for teaching and learning from 2010;

- Funding reviews every three years to ensure the sector remains internationally competitive;

- An additional A$300 million a year for research infrastructure;

- Up to 1,000 government scholarships for international postgraduate research students in areas where a skills gap exists;

- Regular reviews of the effectiveness of programmes to improve participation among indigenous groups;

- Wide-ranging reforms to student financial support, including an understanding that students should not be expected to pay higher tuition fees;

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- A public fund of A$200 million over three years to match private donations to universities.