The political environment for higher education in Australia is becoming more difficult and constrained. Although there are many sources of influence and constraint, by far the most important source is government--both federal and state. Both universities and colleges of advanced education (CAEs) now receive almost all funds from the federal government which sets the total higher education budget and requires commissions and state coordinating agencies to carve it up. Because of the way the funds are administered, institutions cannot make up budgets for more than one year at a time. Institutions no longer determine academic salaries which are instead set by the Federal Academic Salaries Tribunal. Institutions are likewise losing control over decisions about which students and how many students to accept, as these decisions are now being made at the federal and state level. Some of the constraints experienced by educational institutions result from shifts in power--particularly from state to federal levels, and, at the federal level, from the commissions to other agencies and to ministers and the Cabinet. All these constraints have resulted in a substantial erosion of autonomy for universities and some CAEs. (Author/JM)