Ministers concede in academic pay fight

University staff in New Zealand can look forward to a pay rise after the Government admitted that the sector was underfunded.

Academic staff will receive an extra 3 per cent, taking pay awards to between 6 and 7.5 per cent. General staff will get an additional 1 per cent, raising awards to between 4 and 5.5 per cent.

The Government's NZ$26 million (£8.54 million) offer is the culmination of a negotiating process that began last year amid threats of strike action. Ministers demanded vice-chancellors and unions put forward a united case for additional money.

Michael Cullen, Minister of Tertiary Education, backed the findings of a report that says universities lack the capacity to increase salaries to internationally competitive levels.

But public higher education bodies spent an estimated NZ$28 million last year on advertising and marketing. The minister told Parliament: "It underlines the stupidity of a funding system based on 'bums on seats' and, therefore, advertising to attract those bums."

He wants to change the way universities receive government money to ensure it is more contingent on outcomes rather than simply the number of enrolments.