There are claims the funding system is pushing tertiary institutions towards fraud.

This follows an audit that's uncovered alleged fraud of at least $10 million through false claims by some tertiary institutions.

The Tertiary Education Union spokeswoman Lesley Francey says the fraud is one manifestation of a funding system that constantly pressures institutions to teach more students with less money.

"If you have a funding model where it's dependent on the number of students that were enrolled and then there's no actual controls in investment over what's being delivered, then you're going to have a rotting of the system."