The Australian Government have backed down over plans to raise university fees to Kiwi students.

Kiwis studying at Australian universities will retain their access to government-subsidised fees.

The Australian Government has scrapped legislation that would have seen a significant fees rise for New Zealanders studying in Australia, after the bill stalled in the Senate.

Australia would go ahead with some reforms that were part of its higher-education reforms, but none that required legislation.

LISA MAREE WILLIAMS/GETTY IMAGES The Australian Government has tossed out proposed legislative changes that would have seen Kiwis pay more to study in Australia.

A spokesman for Australian Education Minister Simon Birmingham said this meant there would be no student fee increases, and there would be no changes for New Zealanders and permanent residents.

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On average, Australian taxpayers would continue to pick up more than half of the course costs for Commonwealth-supported places, the spokesman said.

University fees for New Zealanders studying at university in Australia became an election issue after Jacinda Ardern said she wouldn't rule out retaliation if the Australian Government hiked Kiwis' fees.

Australians studying in New Zealand received reciprocal benefits, where they were charged the same fees as domestic students.

During the campaign, and after she took power, Ardern took a strong stance on the rights of the 650,000 New Zealanders living in Australia.

"There's been talk of New Zealanders being locked out of having the same access to tertiary education in Australia as Australian students," she said during the Newshub leaders debate.

"Our view is that if those rights are removed, we should likewise do the same for our subsidised tertiary education in New Zealand.

"On benefits I hold a different view. We're still fighting for New Zealanders' rights in Australia, I think we should maintain the moral high ground that it's only right that if you pay taxes, you have access to those benefits.

"So we're maintaining them in New Zealand, while we continue to argue for them in Australia."

Bill English said Ardern's promise of retaliation was "pretty silly".

The changes to the Australian Government's Higher Education Reform Package was announced as part of its mid-year economic and fiscal outlook.

There would also be a freeze put on funding for the Commonwealth Grant Scheme bachelor courses. This scheme related to New Zealanders and had a complicated tier system.

Essentially the scheme had been scrapped for now, and would be reviewed in 2020.

The freeze put on the Commonwealth Grant Scheme did not affect New Zealanders' ability to access Australian Governemnt-subsidised study.

More than 10,000 Kiwis study in Australia, where the total university student population is about 1 million people.

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