NZ carrot offered to peg fees

New Zealand's Labour/Alliance coalition has promised universities and other tertiary sector institutions a 2.3 per cent increase in government subsidies next year in return for an assurance that they will peg their tuition fees at this year's rate.

The NZ$30.5 million (Pounds 9.6 million) is in addition to an estimated cost of NZ$409 million to fund all growth in student numbers until 2003. The decision on whether to accept the trade-off will be up to individual institutions.

Students' associations are predicting some institutions will choose to increase fees rather than accept the money, particularly those in a precarious financial situation. Institutions, which have about two months to decide whether or not to accept the offer, are concerned the amount will not be enough to cover inflation and the lost revenue from fee increases.

Graeme Fogelberg, chairman of the vice-chancellors' committee, said: "In real terms the institutions would be edging backwards financially if they accepted the offer."

But a spokesman for Steve Maharey, the minister responsible for tertiary education, said the offer was based on the reserve bank's prediction of a 1.6 per cent increase in the consumer price index for the year to December 2001, and a further 0.7 per cent was added to compensate for fees inflation.

The Association of University Staff welcomed the move to stabilise fees, but said universities were being asked to take a bet that domestic inflation would be low next year. Union president Neville Blampied also noted that much university expenditure, such as spending on research equipment, library books and journals, had been severely affected recently by the fall in the value of the New Zealand dollar.

Private providers will continue to have access to government subsidies and a significant number have said they will accept the government's 2.3 per cent offer.