The renewal of quality in Australian higher education comes at a time of significant change in the external policy framework. Such changes are timely due to the growth of higher education and the emergence of the quality and equity agenda in the context of ongoing decline in public funding. The article provides an overview of current quality assurance arrangements and the outcome of the recent review of higher education. The dilemma faced by Australian universities in improving quality outcomes and maintaining high standards, while meeting the government's aspiration to increase the enrolment of students from targeted equity groups, is outlined. The article critiques past inequity in rewarding universities based on measures of student satisfaction, rather than using measures of access, participation and retention of students from diverse equity groups. The challenges facing universities in meeting the government's 2020 equity targets without compromising academic rigour, standards and quality outcomes are presented.