New Zealand universities flounder as lifeline pulled back

Much of a recent rescue package for New Zealand’s cash-strapped universities will be whisked away again, with half the sector facing imminent cuts because of “significant” under-enrolments.  

The Tertiary Education Commission (TEC) has unveiled a NZ$52 million (£24 million) reduction to this year’s funding allocation to four universities and the national vocational training provider, Te Pūkenga.

The four affected institutions – Massey University, Otago University, Auckland University of Technology and Victoria University of Wellington (VUW) – all registered deficits last year. Education minister Jan Tinetti was advised of the cut a month after she and finance minister Grant Robertson had announced a NZ$128 million lifeline to relieve the financial “pressure” on the sector.

Government funding for New Zealand universities has been going backwards in real terms for well over a decade, and in recent years their finances have taken an additional battering from Covid-related border closures and an inflationary surge in costs. Plunging domestic demand is exacerbating the damage.

The Tertiary Education Union said it was “outraged” by the latest development. “A month after the government announced…additional funding that was supposed to save courses and jobs, the TEC has seen fit to claw much of it back from the institutions that needed it most,” said VUW branch president Dougall McNeill.

“The TEC should be an advocate for…the tertiary education sector, but instead all they seem to do is force institutions to cut jobs and provision.”

He said VUW union members would picket the TEC’s Wellington headquarters on 1 September so that its staff could “see the faces of the people impacted by their choices”.

Massey University said it had asked for the reduction to be deferred until next April, when the commission plans to reconcile this year’s funding allocations, but the TEC had refused the request.

“Massey is disappointed at the response and notes the additional financial strain this decision will impose,” a spokeswoman said.

The University of Otago, which had also unsuccessfully requested a delay, said it had anticipated the cut. “This adjustment between the forecast and actual happens every year, so was expected,” a spokeswoman said.

The TEC declined to say how the funding reduction would be apportioned among the five institutions. In an “aide-memoire” to Ms Tinetti, it said they were collectively expected to “underdeliver” NZ$108 million of their funded places this year, and the commission only proposed to recover around half that amount.

Nevertheless, this “standard operational” decision posed “reputational and media risks” to the minister because it “may be perceived as the TEC ‘taking money away’ from universities”.

“Whilst other sub-sectors have experienced this downward funding adjustment before, the university sector is not usually in this situation,” the memo notes.

It says that the TEC considered recovering a smaller proportion of the unexpended funds, but decided this “would set an unwelcome precedent” by encouraging institutions to treat under-delivery as “free cashflow”.

“While it may assist their cash position in the short term, it is not conducive to the institutions effectively managing their organisation based on the true level of student enrolments,” the memo says. “It is not the role of the TEC…to support [institutions’] financial viability through deferring recovery of unutilised TEC funding.”

Times Higher Education asked Ms Tinetti’s office whether the minister would intervene, but received no response.

john.ross@timeshighereducation.com