Profits from these degrees are used to subsidise research or to teach more expensive courses such as veterinary science and dentistry.

"We have to have a look at how the financial incentives the government has in place actually drive behaviour by the universities in their decision in how many people to enrol in different disciplines," Senator Birmingham told an education conference in Melbourne on Friday.

"And that won't be an easy part of the reform discussion and it's not easy from our perspective either because it means that, perhaps, support in some courses needs to go up, while support in others needs to go down.

"But if we were to actually change some of those enrolment practices - without it going back to a model driven by a bunch of officials sitting around a table in Canberra randomly allocating a number of places for each university - then we need to find a method that drives an outcome that frankly is more attuned with what the employment market demands."

Universities have to be driven by "what is in the best interests of the student and the need of the national economy" when deciding how many students to enrol in each discipline, he said.