World view: We don't want a fight, but...

June 22, 2001

New Zealand's government promised universities a better deal. It is now time for it to deliver, says Bryan Gould.

The relations between universities and governments are often fraught. In countries with large public funding, politicians on the right are inclined to think that universities are unreformed flagships of an inherently inefficient public sector and that they should be out earning their living in a competitive market rather than living off the taxpayer.

Governments of the left may be more sympathetic to education's claims on public funds, but they see universities as the greediest, most pampered part of the sector, gobbling resources that could be spent to better effect elsewhere.

Throughout the 1990s, New Zealand's rightwing government forced universities to accept cuts whose object was to shift the burden of funding universities from the taxpayer to the individual student. At the University of Waikato, the government accounts for only 40 per cent of our income, and student fees have risen to the point where the evidence of their deterrent effect on participation rates is unmistakable.

The price that has been paid to achieve this policy goal is significant. Despite success in raising income from other sources, funding per student at New Zealand universities is only about 60 per cent of that at Australian universities - and even Australians complain that they are underfunded by international standards.

In opposition, Labour was bitterly critical of the annual funding cuts, the soaring student fees and the monstrous growth in student debt under the student loan scheme. It fought the 1999 election with a promise to stabilise and perhaps even reduce student fees and to reform the student loan scheme. The government elected in 1999 has kept fees stable and mitigated the malign effects of loans. But these goals have been won at the expense of the universities, which have had to endure more annual cuts rather than the improved funding levels they had been led to expect. It is largely the universities that have had to fund the implementation of the government's promises to students.

Paradoxically, the new government has been eloquent in stressing the importance of nurturing a knowledge society and the universities' key role in bringing it about while simultaneously creating a damaging gap between rhetoric and reality. If we had realised that ministers were in effect saying they would encourage universities to contribute by cutting funding still more, they might have had much less support on campuses.

Universities were reluctant to accept the government's funding offer for 2001, but they found it hard to refuse. In return for agreeing to freeze fees, universities would receive a rise in their funding per student. But as the rise was too small to cover increased costs, the effect was a real-terms cut. Universities complained, but they felt they had to accept the government's assurance that the deal was simply a holding measure while a better funding system was worked out for 2002.

"Trust us," ministers said, "we won't be back next year with the same deal." So the universities took the hit. Waikato University alone lost more than NZ$1.5 million (£450,000), and the tertiary sector as a whole NZ$17 million.

Early this year, it was clear that ministers intended to break their word on the 2002 budget. We begged them to talk to us before reaching a decision to allow us to explain why we could not accept a similar deal for next year. Despite their written promises, they held us off for months. When we were finally summoned, we were told that this was not a negotiation, nor even a discussion. Their unilateral decision was the way it was going to be.

It is a bit rich, therefore, to hear the government say that it is now "too late" to make the argument that the deal cannot be accepted.

Why can't the universities accept the deal? On the face of it, the offer seems reasonable. The finance minister says it represents a 5.1 per cent increase, which does not look bad in the light of the budget constraints applied elsewhere. But the increase is over this year and next. If we reject the deal, we are back to the funding level of 2000 and we forgo even the inadequate increase for 2001.

Further, the 5.1 per cent applies only to the government grant and not to our total income, a substantial part of which would be frozen under the deal. When the offer is spread over two years and over our total budgets, it amounts to just 1.7 per cent.

The 1.7 per cent is nowhere near the real rate of inflation. The New Zealand dollar's 28 per cent depreciation has hurt us. We spend millions on imported publications and specialist equipment, whose prices have risen by 20-30 per cent. We also must pay higher salaries to attract staff from overseas. We might be able to grit our teeth and take the hit - if this was not the 12th year in a row that funding had been cut.

Ministers seem intent on making a bad situation worse. To be told there will be no more funds until we are more efficient adds insult to injury. If ministers do not accept that we are super-efficient by international standards, they should join us in a benchmarking exercise. If we are so inefficient, why has the ministry's monitoring unit given Waikato's financial management an A rating?

The government and the universities are on a collision course. If the collision takes place, all will suffer. Fees will rise sharply, student numbers are likely to fall, the universities will be in the dock, and the government will have failed to deliver a central election promise - to hold student fees stable. We desperately need some common sense brought to bear. Everyone wants to hold down fees. All we need to make this possible is a fair offer.

Bryan Gould is vice-chancellor of the University of Waikato. His university council, the first to vote on the government's funds-for-fees-freeze offer, has overwhelmingly rejected it.

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