Asia crisis hits student subsidy

THE FINANCIAL crisis in Asia is likely to force New Zealand to renege on a plan to boost university and polytechnic spending by $NZ103 million (Pounds 33 million).

Prime minister Jenny Shipley said a decision on proposed spending cuts to save NZ$300 million in reaction to the Asian crisis would be made at a cabinet meeting on Monday.

The extra money for tertiary education, in the form of a subsidy for students' tuition, was announced in the May budget.

The universal tertiary tuition allowance was to be spread over two years. It subsidised the tuition costs of every student enrolled in state tertiary institutions and at some private institutions.

The previous system had given a government subsidy of about 75 per cent for the tuition costs of most, but not all, students.

The allowance was the first, and perhaps most important, decision to be announced following a review of tertiary education. Full details of how it would function and the level of subsidy had not been made public.

The tertiary sector reacted with dismay when it learned the extra spending promised was under threat. The allowance was near the top of the list of items the government might defer.

The government has said savings are necessary because of the impact of the financial crises affecting New Zealand's important Asian trading partners.

New Zealand vice-chancellors' committee chairman Bryan Gould said it was likely the government would continue with the allowance's introduction next year.

If necessary the level of the subsidy provided for each student would be reduced in order to achieve the desired saving, he said.

Professor Gould said institutions had already completed their budget plans for next year and would have to raise the fees they charged students to cover the loss.

Most universities charge annual fees of about $NZ2,600 to undergraduate-degree students and this financial year the government expected to spend $NZ1.2 billion subsidising the tuition of the equivalent of 152,000 full-time students.