Comprehensive review of university funding unveiled as government asks them to co-operate more in the wake of a funding grant to help them through crisis

Universities will undergo a thorough review of who pays for them and why. 

They will also be asked to compete less and co-operate more to make sure that all subjects currently on offer can be taught at least somewhere in New Zealand. 

These announcements have been made in the wake of financial crises that have left Te Herenga Waka - Victoria University and Otago University millions of dollars in deficit and having to lay off hundreds of staff.   

Other universities have similar problems and have either dealt with them or not yet faced up to them.  

In the wake of this issue, the Government has agreed to pump an additional $128 million into the tertiary sector over the next two years. This is on top of the 5% announced in the budget, and represents in total a 9% rise. 

"When we began our Budget process, universities and other degree providers were forecasting enrolment increases, the Education Minister Jan Tinetti says.

"The opposite has occurred, and it is clear that there is a need for additional support."

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

However, the Government is making clear this is not a permanent fix. The Finance Minister Grant Robertson says the two years of extra money will allow time for a thorough review into all aspects of university finances. 

"We have a model of tertiary funding that has proved itself to be unsustainable, and we have a number of different sources of funding that we need to consider altogether," Robertson says. .

Robertson says there are several sources of money for universities that could be considered.

"Universities have multiple sources of funds already. They have funding that we provide them through the Government, and through the Performance Based Research Fund (PBRF)," he says. 

"The universities also obviously have international student revenue, and they have revenue from their commercial activities and research and so on.

"We have looked individually at a number of bits of that, such as the PBRF, but what has not happened is a holistic look at the whole tertiary funding system."

Robertson says all these matters have to be considered and a decision will be made on the scope and the approach to the review before the end of 2023.

He says he hopes the findings of the review would be able to be implemented at the end of the two year period. 

Robertson and Tinetti's comments come in the wake of financial crises worth millions of dollars and hundreds of job losses at universities in Wellington and Dunedin. The proposed redundancies could also remove entire academic subjects from the curriculum. 

Robertson says he wants action taken quickly to prevent that.

"We have asked the Ministry of Education to come back to us by the end of July to determine if any of the changes being proposed by the universities mean we could lose capacity right across the country or lose programmes or courses entirely right across the country".

Robertson says he does not want that to happen and he wants universities to co-operate more and compete less.   

And he is issuing a challenge to them.

"We would ask the universities, which are autonomous, to think about using the next two years to manage their way through (the financial crisis) as we do the funding review, and to look again at the proposals they have made."

But is is not just about that, Robertson says, it is connected with problems with the entire system.

"Ultimately, the (funding) model is what is colloquially called a bums on seats model. It is also one where we have a level of competition between universities that possibly is not justified in a country of our size.

"There are a lot of questions I get from students and staff about the way universities are managed and this review will shed significant light on that.

“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," says Robertson.