But, according to Tertiary Education Minister Steven Joyce, too many graduates emerge from our universities lacking vital skills and incapable of the "innovation" needed for economic growth. It's not just graduates who are letting the country down. Research within universities is not sufficiently aligned to industry needs; it needs to be more oriented towards "user needs" and have potential to be commercialised.
A stronger focus on "outcomes" is needed in the tertiary sector, says Joyce, whose other ministerial hats are important here: economic development, small business and science and innovation. If you believe Joyce, it's not an arm-wrestle over how many engineers and ag scientists we need versus philosophers and poets, but a struggle for international competitiveness - both for our universities and economy.
He warns that universities face stronger competition from Asian countries investing heavily in tertiary and research institutions. Ours are not going backwards but being overtaken in the international rankings race. Far from growing foreign student numbers to boost their income sources, our universities risk falling further behind and foreign students going elsewhere.
The newly minted tertiary education strategy signals where the Government thinks universities, wananga and polytechnics should be heading: it makes "delivering skills for industry" priority number one. The strategy emphasises matching skills to labour market needs; addressing skill shortages in information technology and the STEM subjects; and increased co-operation between industry and institutions. Another priority is to steer research more to industry needs - "rewarding commercialisation of research".
The levers now being primed to push universities in those directions seem less than overwhelming, but are nevertheless meeting staunch academic and political resistance.
One involves a law change affecting the governing councils of universities and wananga. An amendment to the Education Act would reduce the size of councils from the current maximum of 20 members to between eight and 12. University staff and students would lose their guaranteed places on these governing bodies. But the number of ministerial appointees would be unchanged - at three for a council of eight and four for a council of 12 - significantly boosting the proportion of ministerial places. The draft Education Amendment (No. 2) Bill also adds clauses on the duties and accountabilities of council members, including that they must "act in the interests of the institution" - potentially muzzling dissent. Joyce says the aim is to make councils more nimble and efficient; his critics say it is all about control.
A further change involves the way research funds are divvied out, incentivising institutions to gear research more towards "user needs". Subject to consultation, it's also planned to reward those who draw more income from industry and other non-government sources, including contract research.
The reforms follow funding boosts at schools and tertiary level for STEM subjects in a bid to encourage more graduates - raising fears that arts and humanities courses will feel the pinch. Arts enrolments at the University of Auckland dipped below targets last year after the university council increased entry requirements in response to the Government funding only an agreed number of students.
The Government has also introduced National Science Challenges, goals intended to align researchers - and research funding - with national priorities.
If the latest reforms seem incremental, the outcry against them suggests either cloistered academics who need to get real (backed by politicians with ulterior motives) or a dangerous step towards state interference in institutions whose autonomy and status in society is jealously guarded.
Trevor Mallard, Education Minister in the last Labour Government, told Parliament the Government's plan for universities was to "turn them from institutions of education into institutions where students are passive consumers in degree factories".
Labour's current spokesman, Grant Robertson, said the proposals "undermine everything that universities and tertiary education are about" and "fundamentally change the model of university governance".
The reduction in the size of councils echoes a similar change to polytechnics in 2009. But where polytechnics emphasise vocational skills, universities are billed as "places of higher learning" where students learn to think, as well as gaining academic skills. Their councils are supposed to be broadly representative, embracing many "stakeholders" including staff, alumni, clients and an increasingly diverse student body.
Academic staff are supposed to increase knowledge by focusing on "blue sky" or investigative research, not just solving industry problems. They also serve as the "critic and conscience" of society, with their freedom to point out flaws in Government policy protected by law.
As Heinemann says: "Universities are a source of challenge to the government of the day."
He fears universities may lose their creativity and draws a Catch-22 scenario: "Once they lose their ability to create what hasn't been imagined yet, we'll never know what we've missed."
It is also notoriously difficult to anticipate future employment needs. Employers may complain of skill shortages in certain industries today but within a few years demand has shifted elsewhere.
Professor Roy Crawford, vice-chancellor at the University of Waikato and chairman of Universities NZ, says universities are supposed to have long horizons. "There's very strong pressure from the Government at the moment to have short-term economic objectives - produce more civil engineers, more IT specialists. In four years, the market has changed and that demand is no longer there."
The era when students did more drinking than thinking died with user pays and student loans, Crawford adds. "We find market forces work extremely well in the university sector. Most students enrol in courses where they can see future job demand, such as IT."
University of Auckland vice-chancellor Stuart McCutcheon says universities equip students for careers spanning 40 to 50 years; many will soon stray from their initial field of study. "We give them long-term skills, like critical thinking, being able to analyse and express themselves. I think it's relatively narrow to focus only on employment outcomes."
He says the Government already has the power to determine the numbers pursuing particular courses - "so it doesn't need to change the governance model to do that".
Business and industries are already well-represented on university councils, McCutcheon says, and there is no evidence of a problem that the governance changes can fix.
A near-dominance of Government representatives on councils could lead CEOs to think twice about defending academic freedom, he says. "I think there's a real risk that sense of independence could be diminished."
In an opinion piece in the Herald, he said the change in the proportion of ministerial appointees "can only be about achieving greater Government control of the institutions, and that is a very dangerous thing in a democracy.
"No society that values its intellectual freedom should allow a situation where Government has sufficient control of a university that it can influence who is hired and what is taught."
Tertiary Education Union president Lesley Francey says there's no evidence that the changes will generate a production line of students with the skills needed to grow the economy. Nor do they address the "brain drain" of top students lured overseas by better pay and prospects. "All the mechanisms seem to be pushing market-led business models into the tertiary sector," Francey says.
Steven Joyce dismisses the chorus of opposition like so many flies (and even McCutcheon acknowledges his Orwellian notions might only come to pass in a distant future under a different Government).
"I'm the last person to say a particular degree of any type is not valuable," Joyce says.
"A big part of going to university is learning to learn. But we also need applied degrees and universities do carry some responsibility."
Nor would he ever wish to change the role of academics as the "critics and conscience" of society, he says.
But, as he told a recent education summit: "The reality is that the vast majority of students who go to university do so to get a ticket to a well-paying job and science, technology and engineering are big growth areas in the New Zealand economy.
"We need more explicit co-operation between industry and tertiary organisations on meeting skill demands."
Joyce told the Weekend Herald skill gaps are evident in occupations where demand is highest, particularly those linked to the STEM subjects. Numbers of engineering graduates are among the lowest in the Western world, he claims. There's a "massive shortage" of IT graduates and shortages in agricultural sciences.
Fee-paying foreign students can play an important role - helping to pay the bills and boosting the economy through lasting "international linkages", he says. "We need graduates who are comfortable working in Beijing or Singapore or Ho Chi Minh city". But our universities lag well behind Australia's in attracting international students. (His critics counter that's because we are slipping in the international rankings due to comparatively low per-student funding and soaring staff-student ratios).
But how far will governance changes and tweaks to research funding mechanisms go towards resolving these problems?
Joyce argues that smaller councils will make decisions more quickly about allocating resources.
"As a general rule, the bigger the board the slower the decision-making."
McCutcheon counters that there's no evidence more representative councils are failing to respond to Government ambitions.
Joyce points to improvements in financial and education outcomes in polytechnics since their councils were reduced in size.
McCutcheon produces a graph showing polytechnics' operating surpluses have declined since the governance changes.
The Government provides 43 per cent of Auckland University's income, Joyce says, and a one-third representation on its board is fair. "I've spoken to plenty of former councillors who say this is a change that needs to happen."
He says the changes to research funding criteria will not affect "pure" research and he sees no immediate need for further tweaks. "With the national science challenges coming through, the system feels more balanced."
Not surprisingly, Joyce has an ally in Business NZ chief executive Phil O'Reilly, who has pushed for a decade for increased "connection" between tertiary institutions and industry.
O'Reilly says research is important to university rankings but research excellence should not be measured solely by the number of peer-reviewed articles.
"For young academics heading out on careers the funding mechanisms tend to point them towards high academia rather than working closely with business. We need to be thinking about ways to incentivise more STEM graduates [to work with business] but we don't want to be determinate about it."
O'Reilly backs Joyce's claims of skills gaps in technologies and engineering - "and in New Zealand the gaps appear to be somewhat bigger and more long-lived than other parts of the world".
Many countries do better in these areas because industries are more involved in courses, he says. The deficiencies are not so much in knowledge but in translating that knowledge to the workplace - the so-called "soft" skills like teamwork, emotional intelligence and critical thinking.
O'Reilly acknowledges that an increased proportion of ministerial appointees risks councils becoming too politicised and could create a perception of government control - a risk critics say could damage our international reputation.
"I wouldn't categorise the changes as a charter for business but we are a pretty important part of the demand side. It's important that universities relate to their communities, but those communities include business."
But he is equally anxious that the current stand-off does not descend into trench warfare. There's much goodwill between the business community and tertiary institutions, he says, and no desire to discourage students from studying the arts or humanities - "business is just part of a society that needs its artists, musicians, priests and poets ...
"Above all, we want academic excellence. We don't want [universities] to be shiny polytechnics."
It is O'Reilly who best explains the Government's step-by-step leverage. "Our interest is in making sure we keep universities positive about change rather than negative. If the cost is to do things a little more slowly and conservatively, then I'm very comfortable. We should wait and see whether these changes have any kind of impact."
Labour's Robertson is not placated. He says the governance changes are "not just reducing numbers. The special character of universities made up of staff, students and alumni has been recognised since the 15th century and this is taking that model away.
"There is no doubt Stephen Joyce sees education like a business. He has the classical economist's view that sees the cost of everything and the value of nothing.
"We have seen additional funding for engineering and science but there is deep concern that courses that are not so traditional-industry focused will get undermined - there's a lot of concern that that will come after the election."
