Lower enrolment rates saw money syphoned away from unis
The below article was originally published in University of Otago student magazine ‘Critic Te Arohi’ and is republished here with permission.
Otago Uni Associate Professor Brian Roper claims that $355 million budgeted towards tertiary education is going unspent. This is enough money to bail out Otago, Vic, Canterbury, and Massey universities. Three times. And it was literally in the 2022 budget. Seriously, these documents are public and if you just keyword search the pdfs for “tertiary education” you can find these numbers. Page 151.
Here’s the rundown in two different styles:
IN MONKEY TERMS:
In 2022 it was forecasted that we would get 53 bananas next year (2023), and the year after that (2024) we would get another 53. But because not enough monkeys showed up to the party, we only got 49 in 2023. They gave the other 4 to other monkey roadbuilders or monkey doctors or something. Now, heading into 2024, we’re told we’re only getting 52 bananas. And we’re being told we should be happy about it because that’s more than 49, even though we were originally meant to get 53. They’re telling us that those “extra” bananas could be better enjoyed elsewhere, but just remember that even a single banana is enough to bail out the entire University of Otago. And while the value of a banana has shrunk over time, the amount of bananas given has not kept up with banana shrinkage. Hope that helps.
IN TECHNICAL TERMS:
The 2022 budget set aside $4.939 billion for tertiary education. They only spent $4.486 billion, a “savings” of $453 million dollars, because money is allocated based on the number of full time enrolments. Those enrolments dropped below what was forecasted, so the money dropped as well. It’s a “dollar-per-head” sort of thing. In that same budget, they set aside $5.328 billion for spending in 2023. But now that we’re in 2023, the new budget revised that number, dropping it by $355 million to just $4.973 billion. So, they underspent by $453 million in 2022 and have since cut $355 million from the budget, even though that money was set aside last year, and even though the sector as a whole is in desperate need of a bailout. This money was mixed back into the pot and spent elsewhere.
| Year | 2022 Forecast | 2023 Forecast | Difference between forecasts | Actual |
| 2021 | N/A | N/A | N/A | 3,288 |
| 2022 | 4,939 | N/A | N/A | 4,486 (-453) |
| 2023 | 5,328 | 4,973 | 355 | N/A |
| 2024 | 5,302 | 5,265 | 37 | N/A |
Above: tertiary sector forcecasted funding according to the Budget Economic and Fiscal Update 2022/2023
In 1984, the Labour government changed the NZ university system forever by imposing a fees-based model. This pushed students into accruing student loans from the government and incentivised universities to raise their fees as much as possible every year. The number of full-time enrollments controlled the amount of funding a university got because the more students enroll, the more services they need to provide. That’s the idea, anyway.
Brian said that arriving at the “355” number was simple, but the maths got trickier from there; this is excluding student allowances and student loans, which Brian said “[don’t] really count since it just provides for students getting deeper in debt.” We’re focusing solely on money for tertiary education providers, not money set aside for student loans, as student debt can appear as a financial asset for the government.
And while the latest budget announcement was celebrated for having “the single largest increase in tertiary funding in NZ in 20 years,” a sum of $521 million, this isn’t the complete picture; that doesn’t even bring us back up to 2022 forecasted levels, and much of it is funding for student loan loan programmes, NOT education providers. According to Brian, the ‘22-’23 cuts were the “deepest annual cuts to funding for tertiary education providers since 1984, allowing for inflation and the 1.7% and 2.7% caps on fee rises.”
“This is scandalous when five of eight NZ universities are experiencing severe financial difficulties,” said Brian. You don’t have to be an economics student to see the difference in forecasts between 2022/2023 but, as of yet, “no one has noticed the $355 million dollar underspend,” according to Brian. $281 million of this might be due to Labour cutting the fees free programme (and breaking an explicit promise in the process), but that hasn’t been confirmed. “Either way it doesn’t matter,” said Brian. “It amounts to appalling financial misgovernance of the sector.”
Daniel Benson-Guiu, local Tertiary Education Union organiser, said that “the root of the problem is a funding system that only sees our universities as institutions that should make a profit. Currently, our institutions can only get by one of two ways: through continuous growth or by cutting.” He said that, while the TEC has made a system that pays based on student numbers, “the Tertiary Education Union has long fought for a tertiary education system that is seen as a public good, not a tidy investment for Government coffers.”
Budget ‘23 also said that tertiary education spending in 2024 will be $5.265 billion. “This is lower than the original allocation [for 2023] of $5.328 billion for tertiary ed outlined in Budget 22,” said Brian. We’re getting less money next year than we were forecasted to have this year. He finally pointed out that while Budget ‘23 describes “an increase of 5.3 percent for tertiary tuition and training subsidies,” this claim “is not supported by the figures provided by Treasury in its Economic and Fiscal Update 2023.” If you factor out additional funding for student loans and allowances, this leaves the total funding increase for tertiary education providers at $71 million. That’s a 2.2% increase from 2023, which isn’t even above the forecasted inflation rate of 3.3%. Brian suggested that this is effectively a cut.
All of this is set against the backdrop of a university system that is, to put it lightly, kinda fucked. Otago and Vic are both set to cut hundreds of staff. Student fees continue to rise. Healthcare graduates continue to leave the country. Inflation is tightening. And as more and more professors lose their jobs, students are paying higher and higher fees to offset the national deficit – paying more for less, while money that was set aside to dam the tide is reappropriated behind congratulatory smiles.
Image credit: PETER MCINTOSH
