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.