Government pumps more money into tertiary sector in response to financial crisis

Public Policy / news

An additional $128 million will be invested into the tertiary sector to mitigate current financial problems

27th Jun 23, 12:52pm by Eric Frykberg

Source: 123rf.com

The Government's pumping an additional $128 million into the tertiary sector over the next two years in order to increase tuition subsidies at degree-level in response to an enveloping crisis in the sector.

The additional money represents a 4% rise in tuition subsidies in each of 2024 and 2025. All this is in in addition to the 5% increase provided at Budget 2023.

This follows serious financial problems in the sector, leading to huge deficits and hundreds of redundancies at Otago and Te Herango Wake - Victoria Universities.

“The Government has heard the concerns of the sector," Education Minister Jan Tinetti said.

"When we began our Budget process Universities and other degree providers were forecasting enrolment increases. The opposite has occurred, and it is clear that there is a need for additional support."

She says the funding will help[ maintain the quality and breadth of higher education offerings and research capability in tertiary institutions.

The money will go to all degree granting institutions including Wānanga and Te Pūkenga.

Tinetti adds that while recent focus has been on Victoria and Otago Universities, other institutions have previously managed declines in student numbers, and she did not want to disadvantage institutions which in some cases had already made difficult decisions.

“Presently, our tertiary institutions are experiencing an unexpectedly large decline in domestic enrolments and increased cost pressures. In addition, although international enrolments are increasing, they remain well below pre-COVID levels," Tinetti says.

"Similar issues are being faced by tertiary providers worldwide.”

The Government says it will also review higher education funding, including the Performance Based Research Fund, and the latest funding is a temporary boost for two years.

“The current financial situation of some tertiary institutions points to the need take this broader look into the way our higher education system is funded and financed," Finance Minister Grant Robertson says.

"Decisions on the scope and approach to the review will be taken before the end of 2023."

The three largest recipients will be Auckland, Otago and Massey universities.

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33 Comments

by Yvil | 27th Jun 23, 1:34pm 1687829665

That's a good example of the problems most country face, broke governments like NZ, spend more money they don't have, to satisfy various needs, whilst the central banks plead to spend less to reign in inflation. All the while many segments of the country scream out for more money to be spent by the government to alleviate their problems.

It can't end well :-(

by HouseMouse | 27th Jun 23, 1:41pm 1687830112

Current government has thrown a lot of money at motels- who would have struggled hugely with covid - to provide emergency housing.

You been drinking that Hypocrites Kool Aid again Yvil?

by Nzdan | 27th Jun 23, 2:17pm 1687832255

A bit of a stretch to call them motels, more like a disused halfway house being repurposed for motel use with minimal expense.

by Yvil | 27th Jun 23, 2:40pm 1687833605

What's with the anger HM ? Having a bad day ?

by HouseMouse | 27th Jun 23, 3:52pm 1687837975

No anger. Just calling out your ongoing hypocrisy. Which is frankly absurd.

I can’t believe you can’t see it. You must be a pretty non-self aware dude!

by Yvil | 27th Jun 23, 4:06pm 1687838767

What are you smoking HM ? Yes I get lots of income from MSD for providing emergency accommodation, it's wonderful !!! You almost sound like you're not happy for me ?

by HouseMouse | 27th Jun 23, 5:33pm 1687843985

What are YOU smoking?

You criticised the government for throwing public money around to address an issue, and support institutions and jobs, and a public good (education)

How is that fundamentally different from the government throwing money at motels, to support their existence and provide a public good (emergency housing) - ie. your livelihood. Would your motel have survived without that? As a taxpayer, I am subsidising your motel business.

This is nearly as bad, in terms of hypocrisy, as when you called people on the North Shore opposing apartments ‘NIMBYs’, yet submitted in opposition on the council’s plan change to enable apartments where you live! Astonishing…

by Yvil | 27th Jun 23, 5:46pm 1687844786

Yep, I thought you didn't understand my original post. As always you assume too much. I didn't criticise the government at all, I simply described a very tricky situation many governments find themselves in. Unlike you, I didn't associate a qualitative value of good or bad to it, I just said it's a typical example of the huge problems governments are facing.

by HouseMouse | 27th Jun 23, 5:47pm 1687844832

Oh come on, the underlying tone was critical.

won’t waste my time on this any further, bye

by Yvil | 27th Jun 23, 6:04pm 1687845846

I guess you realise you lost the argument and that, indeed, you were assuming things. My daughter will start university next year, I have absolutely no reason object to the government spending more on varsities

by Advisor | 27th Jun 23, 2:03pm 1687831398

by malamah | 27th Jun 23, 2:29pm 1687832961

Couldn't be that inflation is fine so long as the cause money is spent productively? ie on education? And that inflation is bad if the cause money is spent on non-productive assets? ie the same house again and again?

The government can spend what it likes so long as it balances this with tax take. Banks which flooded the market with money for non productive assets, which are given tax breaks, that's what tips the balance sheet. A major influx of money with nowhere to go.

Pick your poison;

Increase in productive spending, credit crunch, CPI inflation and real HPI deflation.

Reduction in productive spending, credit crunch, CPI disinflation and nominal asset price destruction.

by Yvil | 27th Jun 23, 2:37pm 1687833454

"The government can spend what it likes so long as it balances this with tax take"

Absolutely, but that's exactly the problem, the NZ government books are deeply in the red, and that was my point!

by HouseMouse | 27th Jun 23, 5:34pm 1687844080

Yet it’s ok for them to throw money at motels, such as yours? And that’s wasteful and unjustified.

Right……

by KH | 27th Jun 23, 1:38pm 1687829883

Typical Labour. An announcement with some headline figure but no clear statement of what is to be achieved.

Universities need to adapt to circumstance just like the rest of us.

by donny11 | 27th Jun 23, 2:06pm 1687831583

Agreed. They sit on a goldmine of land assets. If the they cashflow problems they should utilise these assets more efficiently or sell them. Work with local government to re-zone some land or somthing. Universities are meant to be hubs of innovation.... yet they can't be innovative when it comes to their own financial situation.

by realterms | 27th Jun 23, 3:04pm 1687835061

Yes and no. The universities have a strange relationship with the government and are only semi-independent. They can't, for example, set their own prices on their primary product. So they don't necessarily have the latitude that you expect in other contexts.

The $ is just a plaster. The real question is what comes out of the last part that you perhaps didn't read:

“The current financial situation of some tertiary institutions points to the need take this broader look into the way our higher education system is funded and financed," Finance Minister Grant Robertson says.

"Decisions on the scope and approach to the review will be taken before the end of 2023."

What comes out of that (if anything) is the real question.

by KH | 27th Jun 23, 5:38pm 1687844331

I did read it. But I spared you the grummmp about yet another working group.

by KH | 27th Jun 23, 5:41pm 1687844483

DP.

by Advisor | 27th Jun 23, 2:25pm 1687832755

Agreed. Fees-free tertiary education for first year students was costing the NZ taxpayer almost $200m a year back in 2019. This was put in place despite industry advice to make the subsidy more targeted towards skill shortages (apprenticeships, nursing, etc.).

What has that cash-splash achieved to date? We know for a fact that enrolments did not increase in NZ in any of the years since the subsidy was introduced.

by xingmowang | 27th Jun 23, 2:10pm 1687831823

Te Pukenga is what? Its receiving doubles what the AKL Uni does.

by donny11 | 27th Jun 23, 2:19pm 1687832356

It manages apprenticeships in the trades.

by morepork | 27th Jun 23, 2:30pm 1687833031

It's the new entity that came out of merging all the polytechs

by ngakonui gold | 27th Jun 23, 2:49pm 1687834190

Now that the Govt have built 100,000 homes and eradicated poverty they can afford to have a bit of a splash out.

by Wrong John | 27th Jun 23, 3:06pm 1687835196

Perhaps the people thinking of going to university have changed their minds. It is becoming very obvious that most of what they trying to teach young people today is not helping those who have to go into debt to do it. Perhaps they might like to teach the students some real useful education like how to get a job, attend it every work day & in doing so they get to learn what the real world is all about & how they can get ahead within it.

Yes, I know. I'm old fashioned like that.

by kiwikidsnz | 27th Jun 23, 3:14pm 1687835696

Unis have become a make work job creation scheme for non jobs, particularly in the public sector.

https://www.spectator.com.au/2023/01/elite-revolt/

by K.W. | 27th Jun 23, 3:42pm 1687837331

Perhaps insisting on teaching "Maori Science" wasn't the smartest plan. Now serious STEM students need to go find a real University overseas to attend in order to get a qualification that wont be laughed at by global employers.

As for international students, who wants to pay $100k for mandatory indigenous studies in every degree? Its bad enough we force foreign nurses to pay $13k to complete a compulsory Treaty of Waitangi and "cultural safety" course, but its a joke if we think University level students are going to pony up for it. Its a fair bet that even foreign immigrants long resident in the country are sending their kids back to their home countries to attend University.

Lastly the Govt destroyed the last 3 years of high school students education with the lockdowns, school closures, mandatory home isolation every time someone you knew had covid, and shutting down classes whenever a teacher or student got Covid. Most of them wouldnt even be equipped to cope with University now. That's generational damage that will never be undone.

by nktokyo | 27th Jun 23, 4:07pm 1687838835

When the borders shut and we had zero covid there was a massive business case to bring in a lot of students from overseas. We were virtually the only country where you could have a normal university experience. The army barracks could have been quarantine facilities and you could have done it all at a profit.

by Squishy | 27th Jun 23, 4:08pm 1687838918

I'm not sure this was a great use of funding to be honest.

by J.C. | 27th Jun 23, 4:13pm 1687839196

What's the vice chancellor of Auckland Univ on pa? $1 mio?

by Kate | 27th Jun 23, 5:31pm 1687843875

The additional money represents a 4% rise in tuition subsidies in each of 2024 and 2025. All this is in in addition to the 5% increase provided at Budget 2023.

Tuition subsidies - I'm assuming it's all funding linked to bums on seats - not enough bums and your fixed/sunk costs don't get the boost, I assume..

by iliketobike | 27th Jun 23, 6:45pm 1687848307

An absolute waste of money, there aren't going to be the students available to fill them, we may as well start merging and closing some of them.

https://m.youtube.com/watch?v=A6s8QlIGanA

by Advisor | 27th Jun 23, 7:31pm 1687851105

That's right. It is also worth noting that Vic and Otago somehow have more employees than they did pre-Covid for some reason.

Education has become more accessible for better or worse with online courses becoming available.

I'd recommend grads to get an online masters from TU Delft that costs the same as masters from Waikato Uni.