The Government is stumping up an extra $128 million for cash-strapped tertiary institutions in the hope it can stave off the hundreds of job cuts threatened and programmes being slashed.
It is also launching a review into the overall funding of the sector and ensuring it was sustainable long term.
The announcement has been welcomed by the sector, but there is still no certainty about whether it will be able to save all of the jobs and programmes on the chopping block.
The funding will be spent to increase tuition subsidies at degree-level and above by a further 4 per cent in 2024 and 2025. This comes on top of a 5 per cent increase provided at Budget 2023, which Education Minister Jan Tinetti said was the “most significant funding increase in 20 years”.
Together the two funding announcements equate to just over $376m over two years.
It will be distributed across all institutions on a per-student basis, with final amounts to be determined by exact enrolments.
From today’s funding announcement, the University of Auckland will receive the largest boost at $14.5m per year followed by University of Otago at $10.5m.
Victoria University of Wellington will receive $6.2m each year, which is still well below the deficit for 2023 of $33m.
The announcement comes after months of financial uncertainty at universities, with Otago University and Victoria University of Wellington each signalling hundreds of jobs were on the chopping block leading to protests.
The universities claimed enrolments were down and the international student market was only slowly rebuilding post-Covid, alongside what they claimed was years of underfunding from successive governments.
The international student population had more than halved compared to pre-Covid levels, which made up significant levels of funding at tertiary institutions.
Tinetti said the Government had listened to the concerns of the sector.
“When we began our Budget process universities and other degree providers were forecasting enrolment increases.
“The opposite has occurred, and it is clear that there is a need for additional support.”
The funding would help maintain the quality and breadth of higher education offerings and research capability in our tertiary institutions, she said.
“This is vital for our students, our tertiary workforce, our broader research system, and for economic and social wellbeing in New Zealand.
“It will not resolve all the issues that universities are facing, but it should make a positive difference.”
The funding will go to all institutions that provide degrees, including wānanga and Te Pūkenga.
Tinetti said it was not only Victoria and Otago universities that faced declines in student numbers.
“Presently, our tertiary institutions are experiencing an unexpectedly large decline in domestic enrolments and increased cost pressures.
“In addition, although international enrolments are increasing, they remain well below pre-Covid levels. Similar issues are being faced by tertiary providers worldwide.”
Finance Minister Grant Robertson said the funding came from underspends elsewhere in the Budget allocation for tertiary education, including from lower-than-expected uptake of the fees-free scheme.
“Tertiary institutions are autonomous and make their own decisions on how best to respond to their financial situation.
“This funding increase will help universities and other institutions deliver their strategic plans as agreed by their councils.
“The Government expects the subsidy increase will be considered by when universities make final decisions on their offerings for 2024 and 2025.”
Both Robertson and Tinetti said it was clear the situation at many institutions was unsustainable, and that would be part of the review.
Te Herenga Waka—Victoria University of Wellington Vice-Chancellor Professor Nic Smith said the funding would “help” but longer term sustainability remained an issue.
“We are working through an analysis of this new information and determining the options available to us, and also speaking with our Council and the Tertiary Education Union.”
National’s tertiary education spokesperson Penny Simmonds said the financial strife was the Government’s own doing, claiming it was too slow to let in international students during the pandemic.
She also criticised the focus on merging polytechnics into Te Pūkenga.
“Covid had a major impact on this, but the Government moved at a snail’s pace to bring these students back.”
Green Party spokesperson for tertiary education Chlöe Swarbrick, who had been a strong advocate of boosting funding, said the Budget reallocation was a practical step to address immediate needs and review “well-overdue” to develop a sustainable funding model.
Swarbrick said more work needed to be done on why fewer students were taking up tertiary education.
“Two-thirds of students regularly cannot afford the basics. It’s past time for a Universal Student Allowance - something I’m sure the many Labour Ministers who once led Student Associations should agree with.”
Act Party leader David Seymour said they supported the funding for the sector but criticised the Government for the economic situation they found themselves in.
Cabinet had asked for a report back by the end of July on whether recently announced changes represented a threat to capability or provision of programmes nationwide, Robertson said.
The Government would also review higher education funding, including the Performance Based Research Fund.
“The current financial situation of some tertiary institutions points to the need to take this broader look into the way our higher education system is funded and financed,” Robertson said.
“Decisions on the scope and approach to the review will be taken before the end of 2023.”