The Student's Guide to Everything

The Student's Guide to Everything: university student and graduate life from a New Zealand perspective

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Wednesday, November 26, 2008

NZ universities chafing at fee caps

Now that we have a new Government, New Zealand universities are pressuring the Government to remove caps on the amount of fees universities can charge. Called the "fee maxima", Labour introduced the policy in 2004 to help keep university affordable for students. The policy restricts the amount that universities can raise their fees by, to no more than a 5% increase yearly. In practice, this means the universities have generally raised their fees by the maximum each year. In 2008 the program was extended, although the requirement to reduce the cost of courses already over the maximum was dropped.

So now universities are arguing that they need more funding, and they want to increase domestic fees (i.e. for NZ students) to compensate for what they see as a lack of Government investment and funding. They argue that they should be able to increase their fees to match those of the United States or Australia. Having lived in the US, I think it's worth pointing out that these are an unfair comparison - wages there are a lot higher comparatively, when you take into account the New Zealand dollar.

So, are New Zealand's universities as a whole, as desperate for funding as they say? Let's look at a few:

Victoria University - $16.7 million surplus in 2007
Massey University - $9.1 million surplus in 2007 (consolidated)
Auckland University - $22.6 million surplus in 2007
Otago University - $26.4 million surplus in 2007

I noticed while reading their annual reports, that even in 2007, the universities were complaining about fee maxima. From the Government's view, money is being prioritised to help more students afford university in the form of the fee maxima, allowances making it a tug of war between funding the universities or the students.

Education Minister Anne Tolley said National's policy was to retain the fees maxima "so no doubt we'll disappoint them [vice-chancellors] with that". She said there were no great plans to change the proportion of funding to students and to universities either.

Edit: Alexander has helpfully pointed out that the university surpluses may not be as big as they first appear, as each university is required by the Tertiary Advisory Monitoring Unit to maintain an operating surplus of at least 3% of total revenue.

Victoria University - 4.3% in 2007
Massey University - 2.4% in 2007
Auckland University - 3.0% in 2007
Otago University - "above targets" in 2007

Even if universities don't have enough funding to expand, taking the money from students by increasing fees would work against, or even undo the last Government's attempts at keeping education affordable.


Anonymous Alexander said...

Hey Tina, sorry I haven't been in touch in AGES.
Anyway, I'm not sure the point about surpluses are valid... from what I understand and can remember (without having any numbers in front of me), victoria has tried to keep to a goal of a 2 or 3% surplus, which is quite standard in businesses, as it gives them more capital if a big project comes along, and means if they have a bad year they will hopefully only have a small loss (Vic was in some serious debt with huge deficits early in this decade).
I'll be checking back on this blog.
- Alexander

November 27, 2008 at 5:55 PM  
Blogger Tina said...

Hey Alexander, I checked it out and you're right about the surpluses. I've amended. :)

(Massey had a deficit in 2006 as well.)

The main thing is that allowing universities to charge whatever they like would be a bit hard on students, which is why the fee maxima was introduced. I guess the Govt prioritises affordability.

November 27, 2008 at 7:46 PM  
Blogger Amy said...

Unfortunately the various stakeholders in the tertiary sector seem to be pulling against each other. I think everyone knows the universities really do need more money, but that's all they can agree on.

The NZVCC claims that student support is a much greater proportion of tertiary funding than the OECD average, but ignores the fact that a huge chunk of that is loans that go straight to the university in fees. They way the universities came out swinging against Labour's campaign promise of universal student allowances was very telling.

Meanwhile, NZUSA constantly campaigns for a universal student allowance, and along with all the member associations pushes fee increases to be kept at zero every year. But they never tell the government that the universities need to be better-funded, or the quality of the education they receive will decline if fees stay the same.

And Anne Tolley sits back and declares that everyone is outta luck.

She also never finds time to fit an interview with Radio One into her schedule, unfortunately (or any other student outlet, as far as I know).

December 9, 2008 at 10:26 PM  

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