Chair’s Column – Reflections on the Election Result

Now that we know what the new Government looks like and the policies it will pursue over the next three years, it’s timely to comment on what I think Ministers should be considering when it comes to universities.

As I am sure the Ministers will be aware, the New Zealand university sector delivers high-quality teaching and research and so plays a key part in the social, environmental and economic success of New Zealand and its people. This can be seen through measures such as:

Opportunity and social mobility

• 32% of New Zealand’s youth now start university within a few years of leaving school. Though still under-represented in university study, 12% of Māori youth and 19% of Pasifika youth start university from school. We welcome the appointment of an Associate Minister for Māori Education to help address this persistent disparity.
• Relative to those with only a high school leaving qualification, graduates earn more (by an average $1.4m over their lifetime after costs of study are accounted for), enjoy better employment and health prospects and produce a range of social and economic benefits for their families and communities. With only 2% of graduates on benefits and 9 out of 10 in jobs that require a degree-level qualification, we have some of the best graduate outcomes of any developed country.

Quality teaching and learning

• Our excellent graduate outcomes reflect the high quality of learning and teaching in universities. Surveys consistently show student satisfaction with their teaching well in excess of 80%. New Zealand universities have the best qualification completion rates of any comparable country.

Research

• Universities carry out about a third of this country’s research. In 2016, NZIER calculated that 8.2% to 9.7% of New Zealand’s GDP can be attributed to knowledge generated in our universities. Our research contributes to social, environmental and economic outcomes across a huge range of disciplines.

International Education

• Universities generate 28% of the revenues associated with international education – New Zealand’s fourth largest export market – and operate at the top end of that market. On average, each international student that universities bring to this country spends $168,000 on fees, accommodation, and other living expenses while they study in New Zealand. At least 4,500 jobs exist in New Zealand because of international students studying at our universities.

Jobs and economic activity

• Universities directly employ around 20,000 people and turn over $3.6 billion annually (approximately 1% of GDP). There are further significant economic, social and cultural benefits that flow through to the communities in which universities are located, including the role of universities in creating high quality public infrastructure.

Though universities are necessarily (and sensibly) apolitical entities that expect to exist well beyond the term of any individual Government, half their funding comes from taxpayers through the Government of the day. As such, they have to balance evolving Government priorities with their longer-term role and mandate.

Supporting Government policies

There is a lot that universities can and should do to support the policies of the new Government. This includes:

• Working with schools to improve social mobility – particularly improving access for those who are first in family to attend university.
• Research to support Government policy (including better educational, health and social outcomes).
• Growing the regions by lifting educational attainment of groups traditionally under-represented at university and by generating and transferring knowledge that benefits regional communities and their economies.
• Implementing migration changes that preserve the flow of high quality international students and that also ensure employers continue to be able to get genuinely skilled migrants when they need them.

Risks and constraints

However, universities are severely constrained in terms of how much they can do across these and other areas due to funding pressures.

University funding has slowly declined in real terms over the past couple of decades and New Zealand universities are now funded per student at around 97% of the OECD average. By contrast, Australia has 22% more funding per student, the United Kingdom 51% more, Canada 55% more and the United States 81% more.

A unique feature of the New Zealand university system has been the fact that all eight universities have been ranked in the top 500 of universities globally. This is now at risk.

New Zealand universities dropped an average of 79 places in the Times Higher Education rankings between 2009 and 2017. In 2017 our universities were an average of 12 places lower in QS rankings than they were in 2009.

The ability of the New Zealand university system to attract and retain world-class academics from around the world, to provide New Zealanders with a world-class education, to widen access to university study and to target support to students who might otherwise struggle, to carry out research of international quality, and to attract international students are all jeopardised as a consequence of these funding levels.

This long-term underfunding has made the university sector completely reliant upon international students to remain viable. International student income represents 11% of income for a university sector that is required to generate an average 3% surplus annually. In essence, all the operating surplus of universities – required for reinvestment – comes from international students. Our domestic teaching and research operation barely breaks even.

Universities have come under further financial pressure over the past decade through a proliferation of costly initiatives and unfunded mandates. These include:

• Initiatives with high overhead costs – such as the National Science Challenges, Centres of Research Excellence, ICT Graduate Schools and the Entrepreneurial Universities scheme. While beneficial, all have onerous requirements around governance, administration and reporting.
• Unfunded mandates – such as lifting participation and achievement rates of Māori and Pasifika within the compulsory education sector, and dealing with a massive growth in students reporting mental health issues (for which universities are neither the cause nor the most appropriate solution).
• Compliance exercises – such as Educational Performance Indicators, Rate My Qualification, and the publication of the Key Information Set. None has real statistical validity.

The universities have made strenuous efforts to improve their own efficiency in light of these consistent reductions in real funding per student, including by reducing numbers of staff. However, our capacity to continue doing this no longer exists and we are at the point where we will need to consider cutting services.

If Ministers want us to maintain current activities, never mind enhance them, then they will need to address what has been a persistent under-resourcing of the university sector.

I hope Ministers will engage early and meaningfully with us on this.