Tertiary Fees Cap

The Herald reports:

The New Zealand Vice-Chancellors’ Committee yesterday called on the National Government to view universities as national “infrastructure” that was in desperate need of investment.

The committee’s primary concern was that student financial support had been put ahead of university funding.

Victoria University vice-chancellor Pat Walsh said: “Put simply, the financial interests of students have been put ahead of the universities they attend.”

Th committee said the OECD average was for 82 per cent of government funding to be devoted to institutions and 18 per cent to student financial support. But in New Zealand 58 per cent went to institutions and 42 per cent to students.

The VCs are absolutely right. But you know they are a few years too late in complaining.

While in theory this would mean taking money from student’s allowances to give to the universities, University of Auckland chancellor Hugh Fletcher said “politically that’s not a reality, is it?”


Professor Walsh said its preferred outcome was to get $230 million to $250 million a year from Government to avoid a “zero-sum game scenario of institutions versus students.

The VCs get 0/10 for timing. I presume they have read headlines about a decade of deficits, the recession getting worse etc.

The Vice-Chancellors’ Committee said if universities were not going to get increased funding, it would need more money from fees – which is prevented for domestic students by the “fees maxima” cap.

It said New Zealand’s fees were on average cheaper than in Canada, Australia and the United States.

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.

The cap on fees tertiary institutes can charge is basically a crap policy. National I suspect knows it is a crap policy but pledged to retain it as Labour would have scaremongered about higher fees if you vote National. We have an inherited legacy of bad public policy, and sadly National has ruled out sensible reform.

The motivation behind a fees cap is to keep pressure on universities to keep costs (esp staff wages) down. But this turns universities into a competition for the lowest common denominator and makes universoty councils fall guys for the Government, just as DHBs are.

The Government sets the level of government subsidy and the level of student fees, yet leaves it to the institutions to take the blame for not being able to increase wages etc.

I prefer to keep costs down in universities by that dreaded word competition. I would let universities price their courses to meet demand. Why shouldn’t Vic Uni be able to make a commerce degree more expensive than an arts degree?

And competition is not just on price, but on quality. A law degree at Vic should cost heaps more than a law degree from Waikato, as it is far more highly regarded. Students should have the choice of a cheap B class degree or a more expensive A class degree.

Now don’t get me wrong – I don’t actually want fees on average to be increasing. I’d still want incentives to keep fees down. Some of those incentives will be competition. But the other is putting the right people on university councils. The Government should get rid of price caps, but put people on Councils who will support efficency measures, and strove to keep fees low. But at the end of the day the individual universities need to be able to control both their income and expenditure and be held accountable for it. Taking away any say over income, and making them responsible for expenditure only is not a sustainable model.

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