New Zealand universities oppose new tax on assets

November 27, 1998

New Zealand universities are outraged at the government's latest move to introduce a capital charging system, saying it will inevitably lead to higher student fees.

Vice-chancellors say the charge, to be levied through a differential tuition subsidy, will put polytechnics and private providers at an advantage at the expense of universities.

The differential subsidy will not take account of donated assets, but other details have yet to be worked out.

Predictably, polytechnics have welcomed the policy, but universities regard it as an unfair assets tax. They say rather than following the "Robin Hood" principle, the government should provide extra funding to compensate asset-poor institutions.

Vice-chancellors' committee chairman Bryan Gould described the proposal as a "clumsy and bizarre method" of tackling a perceived problem. The only way to recover the funding cut would be through increased student fees, he said.

But education minister Wyatt Creech sees the lower subsidy for asset-rich institutions as the way to redress an historical imbalance that has enabled old-established universities to accumulate publicly-funded assets while the newer polytechnics have not.

Vice-chancellors are also upset that a new NZ$20 million (Pounds 6.5 million) competitive research pool will have its money drawn from existing funds, at the expense of university postgraduate funding and to the advantage of polytechnics.

They argue that more money, not a redistribution of existing funds among more players, is needed if universities are to maintain their research capability.

The proposals were among the policies set out in the long-awaited tertiary education white paper made public last week. Other policies include smaller governing councils of seven to 12 members, and a new quality assurance watchdog, the Quality Assurance Agency of New Zealand.

A new system of funding, which removes the cap on the number of funded places and links funding more directly to the student, had been announced earlier.

It progressively opens government funding to approved private institutions, putting them on an even footing with state institutions by 2000. The "study right" policy, whereby institutions get a higher subsidy for younger students, will be abolished but higher cost courses still get a higher subsidy.

Institutions will, with the approval of government, be able to set up as trusts; low-risk institutions will get full control of their assets; and the one council will be able to govern both a polytechnic and a university.

There will be tighter financial monitoring requirements with institutions having to prove ongoing financial solvency and viability before getting government funding.

The government backed off some of the more extreme proposals in the earlier green paper, such as ministerial appointments for all council members.

However, the policies have still been heavily criticised by tertiary staff and student groups as paving the way towards the commercialisation of tertiary education and inevitably leading to higher tuition fees.

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