New Zealand subsidy hike ‘a good first step’

While national budget includes big increase to tertiary education funding rates, it still falls short of inflation

May 19, 2023
Auckland, New Zealand

Sector representatives have labelled a funding boost in New Zealand’s budget a “good start”, but one that fails to keep pace with inflation.

The budget includes a 5 per cent “cost adjustment” to tertiary tuition and training subsidies to help universities and colleges manage blowouts in “delivery costs”.

“It is the biggest increase we’ve had, but at a time when inflation is the biggest we’ve had,” said Universities New Zealand (UNZ) executive director Chris Whelan. “It doesn’t materially alleviate the pressures on the sector, with five universities currently going through significant cost-cutting.

“On one level, it’s great to get the increase. On another level, we’re still going to have a lot of worried vice-chancellors.”

Mr Whelan said New Zealand’s consumer price index of inflation was projected to rise by 34 per cent over the decade to 2024, with student funding up 16 per cent over the same period. “These…statistics have real-world consequences for university staff, students and our wider communities. We are continuing to slip backwards in our funding per student.”

The Tertiary Education Union said tuition subsidies had been raised by 1.2 per cent in 2022 and by 2.75 per cent in 2023. Inflation over that period had peaked at 7.3 per cent and was now running at 6.7 per cent.

National secretary Sandra Grey said the 5 per cent subsidy increase, which applies from next year, was the “first significant recognition” by “any government in the last couple of decades” that the system was chronically underfunded. “We’re pleased it was more than a couple of percent but…we’re still facing hundreds of job cuts across the tertiary education sector.”

The budget also includes an allocation for enrolment growth between 2024 and 2025, and a 0.3 per cent boost in tuition subsidy rates to help fund Māori culture and language education. Spending on tertiary teaching is projected to rise by about NZ$700 million (£351 million) over four years.

UNZ also hailed a NZ$55 million allocation for research fellowships and an applied doctoral training scheme largely based on Australia’s National Industry PhD Programme. Another NZ$451 million has been earmarked for the co-location of research institutions in the Wellington region, under the “Science City” project, while NZ$38 million has been committed to secure New Zealand’s access to Horizon Europe research and innovation funding.

But in a budget constrained by a massive disaster recovery bill and fears that public spending could stoke inflation, the government did not boost student living allowances. Instead, it has permanently extended a 2022 scheme providing half-price public transport for teenagers and young adults.

The New Zealand Union of Students’ Associations acknowledged the government’s “receptiveness” to its advocacy for better transport and research funding.

The government has also saved itself NZ$30 million by cancelling commitments to the Centres of Asia-Pacific Excellence, currently operating at four universities, from mid-2024.

Dr Grey said that while the budget contained mixed news for the sector, she was heartened by funding increases for research and doctoral education – albeit from low bases.

She added: “Any time the government moves to invest in science, it’s got to be a good thing. New Zealand is a unique place in the world and in the Pacific. We need to grow scholars and researchers that can address those issues.”

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