Modern Australia evolved from separate colonies, which came together as a federation a century ago. The balance of state/federal responsibilities is relevant to most aspects of Australian life. This includes higher education, where universities are largely state owned but federally funded (with government funding declining), while the other higher education institutions are largely under state oversight. The article begins by describing the evolution of the higher education sector and the various approaches taken to addressing its quality over the years. Ten years ago, the Australian Universities Quality Agency (AUQA) was established as the national quality agency with responsibility for auditing universities (emphasising good processes and achievement of objectives within the universities, and diversity between them) and the state accreditation agencies (with emphasis on national consistency of treatment of the non-university institutions). The article describes AUQA's approach and actions that have led to effectiveness nationally and internationally, and an international reputation. The article also refers to other issues, including funding, rankings and standards. It concludes with an outline of the Federal Government's current plans to bring AUQA and the state agencies into a single national agency. (Contains 2 notes and 1 table.)