New Zealand budget leaves university sector ‘in the cold’

Boost to teaching subsidies will not keep pace with inflation, critics warn

May 19, 2022
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New Zealand’s government has committed NZ$340 million (£174 million) to help tertiary institutions cope with increasing costs and enrolment pressures over the next four years, but the extra money appears unlikely to compensate for rampant inflation.

The 2022 budget includes a NZ$267 million “cost adjustment” to tuition and training subsidies, designed to help universities and colleges manage increases in their delivery costs.

Policy analyst Dave Guerin estimated that it would boost universities’ income for domestic students by about 2 per cent. But with inflation projected at 6.7 per cent this year, the sector faces straitened times.

“Staff are going to be looking for significant pay increases to cope with that cost-of-living change,” said Mr Guerin, editor of the Tertiary Insight industry newsletter.

The government controls the other key source of university teaching income by mandating tuition fee levels, but Mr Guerin said that these amounts had been set last year when cost rises were muted. “[Universities’] income will be constrained at a level much lower than inflation,” he said.

The government has allocated NZ$73 million to cover additional tertiary enrolments, with demand next year forecasted to exceed existing funding “baselines”. Wellington has also carried over NZ$40 million of unspent subsidies, after this year’s enrolments declined from a 2021 peak.

While these amounts exceed the NZ$90 million allocated to university teaching in last year’s budget, they are dwarfed by the big-spending allocations in 2020. “It’s not a very exciting budget for tertiary education,” Mr Guerin said.

Dubbed the “well-being” budget, it has proven more interesting for students. Many will benefit from broader welfare measures, with an estimated 2.1 million people on low incomes to attract new cost-of-living payments of NZ$350 each.

But the New Zealand Union of Students’ Associations dismissed this measure as tokenistic. “[It] won’t fix the broken student allowance system,” said national president Andrew Lessells. “[It] is yet another example of the government claiming to care about well-being while presenting us with an ambulance at the bottom of the cliff.”

He said the budget’s “real-terms cut in tertiary funding” would have a huge impact on students. “Staff conditions of work are students’ conditions of learning. This budget will mean more staff burnout, poorer support for students and larger class sizes.”

The Tertiary Education Union said education and training had been “left in the cold” as inflation soared to a 30-year high. “If you’re not investing in our sector, you’re not investing,” said national secretary Sandra Grey.

“Total appropriations for tertiary education have gone down. The effect of this is no money for training counsellors, information technology specialists, farmers, forestry workers or Māori [language] speakers, among other areas needed to deliver a well-being budget.”

The cost adjustment does not apply to research funding rates, which have been left unchanged for three years running. But the budget includes NZ$41 million to create an “RNA technology platform” tasked with fostering international research and development partnerships and boosting pandemic resilience.

John Fraser, dean of medical and health sciences at the University of Auckland, said the allocation signalled the government’s willingness to invest in the “exciting and powerful new science” of mRNA technology. “This will allow vaccines and other therapeutics to be rapidly developed at a local scale, with less reliance on the huge resources of a relatively limited number of giant pharmaceutical companies,” he said.

Auckland vice-chancellor Dawn Freshwater said the budget allocations were “insufficient to meet our rising costs. [This] comes on top of the Covid-19 years when the border closure radically reduced our international student numbers and associated income.

“We understood that this was not a budget for the university sector as the government focused on immediate and urgent priorities. As the government begins its 2023 budget process [we hope] we can discuss how the university…works with all sectors of New Zealand to weather the difficult economic times that lie ahead.”

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