Campaign to increase Government funding for public tertiary education

The New Zealand University Students’ Association (NZUSA) is campaigning with others, including the Association of University Staff (AUS), the Association of Staff in Tertiary Education (ASTE), the New Zealand Vice Chancellors Committee (NZVCC), and the Institutes of Technology and Polytechnics of New Zealand (ITPNZ) for the current Labour-led Government to significantly increase in the level of funding to New Zealand’s public tertiary education system.

The result of funding cuts in our tertiary sector over the last 25 years, and the imposition of a competitive market in public tertiary education, has led to the emergence of and continued increase in tuition fees. The more students are asked to fork out to pay fees to fund our public tertiary education, the more our tertiary system essentially becomes privatised.

Stagnant staff salaries, higher student/teacher class ratios, cuts to both academic and non-academic student services, such as libraries, and ridiculous duplication of courses within regions have also been the result of under funding and minuscule increases in the tertiary sector.

NZUSA’s position on funding our public tertiary education system

When it comes to government funding of our public tertiary institutions, NZUSA strongly believes:

•  New Zealand public tertiary education institutions must be provided  with sufficient funding for research, teaching and administration to meet student demand.
•  Public tertiary education institutions must be adequately funded on the basis of projected student numbers, not by funding individual attendance at the institutions and fuelling a competitive bums-on-seats market between our tertiary institutions.
•  We believe tertiary education is a right and should be fully funded by the government through taxation revenue to ensure free and equal access to all suitably qualified citizens.

NZUSA opposes the imposition of tuition fees upon students because the benefits of a highly educated society accrue to the whole of that society.

Government funding of tertiary institutions

There was a decrease in the government’s total expenditure on tertiary education between 2003/04 and 2004/05, where it decreased by 1.7 percent, from $3,765 million to $3,700 million.

Major items in the government’s tertiary education expenditure between July 2004 and June 2005 included:

•   $1.882 million (51% of expenditure) for Student Component and research  funding     for TEOs;
•   $969 million (26%) for student loans;
•   $359 million (10%) for student allowances; and 
•   $218 million (6%) for other programmes, including industry training and                    targeted programmes.
•   $36 million (1%) for training incentive allowances.

Tuition subsidies are the largest component of tertiary institution revenue provided by government. This amounted to $1.52 billion in 2004.

Government revenue represented 48 percent of the total income received by all tertiary institutions in 2004. This was a reduction from the 2003 figure of 51 percent, and represented the lowest proportion since 1996. However, there are vast differences when the total income from government, as a percentage of total institutional revenue, is broken down by sub-sector. On average in 2004, the university sector received 39 percent of total income from government funding, while the Institutes of Technology sector received around 60 percent of their revenue from government funding.

Recent research contracted out to Deloitte’s by the Association of University Staff and the New Zealand Vice Chancellors’ Committee (NZVCC) revealed that government funding only makes up 38 percent of New Zealand universities income compared with 46 percent in comparable Australian universities. The report also noted that 31 percent of the funding to New Zealand universities derives from student tuition fees, compared to only 19 percent for comparable Australian universities.

As fees have increased, so has the amount of money that tertiary institutions have taken from students. The 2004 Profiles and Trends: New Zealand’s Tertiary Sector states that “total student tuition fee income accounted for approximately 29 percent of income in 2004. Domestic student fees contributed $549 million in 2004, up from $531 million in 2003 and $529 million in 2001. This represented 16 percent of total tertiary institution income, down from 17 percent in the previous year and a high of 24 percent in 2000.”

Other income is received from external research contract income, 99 percent of which goes to the university sector.

The government’s total expenditure on tertiary education in the 2004/05 fiscal year, including operating and capital expenditure was $3.7 billion which equated to 2.5% of gross domestic product (GDP). Of this, the largest two expense items were for teaching and learning ($1.9 billion) and student loans ($1.0 billion).

Government operating expenditure on tertiary education between 1999/2000 and 2004/05 increased by 44% (from $1.8 billion to $2.7 billion). In real terms, this amounted to an increase of 27%. However, the government’s operating expenditure on tertiary education of $2,721 million in 2004/05 was less than the operating expenditure of $2,745 million in 2003/04, which equated to a decrease of 0.9 percent. In 2004/05, capital expenditure decreased by 4.1 percent to $979 million.

The main difference between total and operating expenditure is student loans: most of the money drawn down under the loan scheme is treated as a capital item.

As a percentage of GDP, both total expenditure and operating expenditure increased in the period between 1999/2000 and 2002/03, but fell during the 2003/04 and 2004/05 fiscal years. In 2004/05, total expenditure was 2.5% of GDP and operating expenditure was 1.8% of GDP.

Student Component funding through EFTS and historical trends

The largest component of government expenditure in tertiary education is distributed via the Student Component through EFTS based tuition subsidies. Between 2003 and 2004, average tuition funding per EFTS for tertiary education organisations increased by 3.7 percent, from $7,325 to $7,600.

The baseline increase for 2007 for each of the Student Component funding categories is 2.5 percent over 2006 rates, which is in line with the low inflationary or below inflationary funding increases that the government has offered to the public tertiary sector in recent years.

Universities experienced the largest per EFTS tuition subsidy (of Student Component) increase between 2003 and 2004. Over this period, the average tuition subsidy increased by 4.1 percent, from $8,576 to $8,930. During the same period there was a 2.5 percent increase in ITPs, from $6,824 to $6,992.

The Scott and Scott (2004) research revealed that Ministry of Education funding to universities per domestic equivalent full time student (EFTS) fell by 34.76% (in 2002 prices) from $11,293 in 1980 to $7,367 in 2002. The annual decline between 1991 and 2002 was 2.5 percent. The research also found that between 1991 and 2002 EFTS funding fell from 73 percent of university total operating revenue to 42 percent. Between 1999 and 2002, they fell from 46 percent to 42 percent.

Real Ministry of Education funding to universities per domestic EFTS in 2002 $NZ

Year	Funding per EFTS (in 2002 $NZ)
1980	11,293
1981	10,998
1982	10,622
1983	10,417
1984	10,166
1985	11,186
1986	11,024
1987	10,770
1988	10,747
1989	10,087
1990	9,473
1991	9,741
1992	9,609
1993	9,358
1994	8,947
1995	8,788
1996	8,451
1997	8,094
1998	7,833
1999	7,309
2000	7,061
2001	7,202
2002	7,367

Source: Scott and Scott (2004)

Breakdown of university operating revenue from government funding and fees as a percentage of total operating revenue

Year	Government funding	Domestic fees	International fees	Total fees	Funds from government funding and fees
1991	73.4%				87.1%
1992	75.8%				87.6%
1993	70.4%				85.2%
1994	63.8%				81.0%
1995	58.8%				76.6%
1996	61.7%				83.6%
1997	51.9%				73.1%
1998	49.6%				71.1%
1999	46.4%	19.4%	3.9%	23.3%	69.7%
2000	45.4%	21.3%	4.8%	26.1%	71.5%
2001	43.4%	20.2%	6.7%	26.9%	70.3%
2002	42.2%	18.6%	10.3%	28.9%	71.1%

Source: Scott and Scott (2004)

Conclusion

NZUSA says that if New Zealand is serious about having a highly educated society, where citizens are able to participate in our social and economic future, then we need to fully fund our public tertiary education system. Decreasing rates of investment by government in our tertiary education system has resulted in high fees for students and high student debt for graduates. Students are calling on the Government to significantly increase the level of funding to New Zealand’s public tertiary education system.