From the Chair: Do we need a Higher Education Funding Review?

By Professor Cheryl de la Rey
Tumu Whakarae | Vice-Chancellor
University of Canterbury
Chair of the New Zealand Vice-Chancellors' Committee

As part of Budget 2023, the previous Government announced it would review the higher education funding system. It remains to be seen whether the incoming Government will proceed with this, prompting the question, is a Higher Education Funding Review needed?

The financial challenge facing the university sector is actually pretty simple. Government controls most of our income. Research funding hasn’t increased for five years and funding per student went up by just 5.5% over the past three years at a time when inflation went up by 17.1%. If income had increased in line with costs, we wouldn’t have a problem.

Any changes to the funding system must begin with increasing funding levels. It must also aim to unlock more value for the country, while simultaneously contributing to financial sustainability. 

A funding review that just focusses on chasing further organisational efficiencies and savings may succeed in helping universities make payroll and keep lights on, but it will be at the expense of the actual value able to be unlocked by universities.

However, if the incoming Government sees value in proceeding with a Higher Education Funding Review, it must satisfy four key principles:

Protect the core mission of universities – ensure universities continue to conform to international norms for what they do and how they operate so they can continue to attract and retain the best staff and students and continue to generate world-class teaching and research. 

Provide financial sustainability – even universities with relatively strong enrolments are struggling financially at present. The system is now underfunded. Any funding review that just tries to move funding around or to do more with the same amount of money will not achieve much.

Preserve core capability – universities are being forced to make savings to reduce or head off losses.  In some cases, these savings will result in much greater loss of capability for the country or have adverse impacts socially, culturally, and economically for the cities and regions served by the university. Cuts need to be looked at in a wider context so that things that make universities more financially sustainable do not flow through to significant lost value for their communities and regions.

Remain simple, predictable, and stable – a funding system needs to avoid uncertainty. Universities need to be able to invest in staff, programmes of study, technology systems, and built infrastructure with as much certainty as is possible as to likely funding streams for the foreseeable future.

The university sector is ambitious to do more for this country and its communities but is limited by current resourcing. A higher education funding review needs to recognise that the sector needs real and substantial investment if real and substantial additional value is to be delivered.