The government will review tertiary funding and fees, make it easier for new tertiary institutions to access government money, and exempt experimental courses from performance measures.
The moves are part of the government response to the Productivity Commission's report on new models of tertiary education, which last year urged major changes to ensure institutions could innovate and adapt to future challenges.
Tertiary Education Minister Paul Goldsmith said the government would also trial new micro-courses that were much shorter than current qualifications, review the requirement that degrees be taught mainly by researchers, and reconsider restrictions that prevent polytechnics running courses outside their home areas.
The government last year ruled out the commission's call for interest on student loans, and its formal response today also said no to abolishing University Entrance and making students pay more for courses that lead to high-paid jobs.
Mr Goldsmith said the government wanted to improve the performance of tertiary institutions.
"Part of this will mean looking at how we fund providers, including performance funding, how EFTS [equivalent full-time students] are calculated, and how fee regulation can restrict innovation and providers' ability to differentiate their courses."
He said a review of fee rules would not open the way for big fee rises.
"What we'll be looking at over the next year or two is the mechanism of the cap on fees. I don't think there's any widespread desire to have a significant increase in fees across the board," he said.
Mr Goldsmith said fee restrictions introduced 12 years ago had left institutions with different fee levels for similar courses.
He said the Qualifications Authority would soon launch a trial of "micro-credentials".
"It's really about enabling people to get qualifications without necessarily having a three-year degree or an 18-month certificate. There is an opportunity to get a little bit more flexibility into the system by allowing bite-sized qualifications," Mr Goldsmith said.
"They could vary from fairly low-level courses relevant to the hospitality sector though to more specific things in the digital economy, which are quite complex."
Mr Goldsmith said the government would review performance measures related to course and qualification completions and consider exempting experimental courses from those measures.
He said the government would consider the commission's recommendation that it remove tertiary institutions' exemption from paying rates.
However, he said institutions would have to be compensated in some way for the new expense and it would only be worth doing if it resulted in more effective land-use by the institutions.