Stuart McCutcheon: Universities hold key to the future

Education spending has increased from $5 billion to $8.6 billion since the Government took office in 1999, but almost half of those surveyed in a Herald-DigiPoll do not think education has improved.

This is hardly surprising, given controversy over questionable tertiary spending, the unsustainable growth of some tertiary institutions, and fallout from NCEA and Scholarship issues. All of these have firmly placed education as a key issue in the lead-up to the election. It seems the community doesn't believe increased education spending is delivering value for money.

In some respects this is not surprising. We have not traditionally thought of education spending as an investment, so have not thought about where the return on that investment might be greatest. Of course "returns on investment" need not be only economic - they can in this case also involve a more educated and tolerant population, improved health, a better understanding of our culture and place in the world, and so on.

Furthermore, because education spending, at least in the tertiary sector, has grown with enrolments, there has not been the pressure to allocate scarce resources in the most effective manner.

As a small country we have limited resources that must be allocated effectively. If more spending isn't perceived as delivering better education, clearly the answer is to look at how and where the education dollars are spent and where this investment will deliver the best return.

On the face of it the penny appears to have dropped with the Government, which says it is now focusing more on "quality and relevance" in tertiary education. The Minister for Tertiary Education, Trevor Mallard, has also signalled a harder-nosed approach to funding for some vocational, hobby or community education programmes.

These are steps in the right direction. But in recognising where it is wasting resources at the lower end, is the Government investing enough at the higher end of the tertiary system - that is, in our universities? I don't believe it is and this view is shared by my fellow vice-chancellors of our eight universities.

We believe that investment in the universities delivers a real return to individuals, to our economy and to society. As the linchpin for prosperity, we consider additional public sector investment in universities is critically important to our future.

Why? Because if living standards are to improve, there must be a highly-educated workforce, with the skills to create new knowledge and innovation, helping to develop the new industries and products that will create more homegrown jobs.

There is an overriding concern that we are losing our brightest and best young people overseas. A big part of the equation in keeping them here or attracting them back is to have a vibrant economy to which they can contribute - an economy that is well-positioned to take advantage of the latest advances in medicine, science and technology, arts and culture.

The research-led teaching of the universities is the key to achieving this, producing graduates who have the knowledge and skills to be innovative and to develop and adopt new technologies.

Having a pool of highly educated people is critically important at a time when the biggest challenge is how we earn our living in an increasingly globalised and competitive world. With other developed countries, New Zealand is confronting a serious issue that will change the face of society.

By about 2040 our population will have peaked and will start to shrink. By mid-century, one in four New Zealanders will be over 65, compared with one in eight now. There will be just 2.2 workers for every person over 65. These changes loom as the single biggest economic and social issue confronting us in the next half-century.

If that future smaller workforce is to support an increasingly ageing population, our children and grandchildren will have to become a lot more productive than we were. Given this scenario, we are going to have to get smarter about where and how we choose to invest the higher education dollar to ensure we are prepared for this more competitive future.

This is where the benefits of a research-led university education come to the fore. A university degree teaches much more than just a job-specific set of skills. It teaches people how to think and problem-solve, to carry out research, to critically analyse new concepts and ideas, and to communicate.

These are all transferable skills which are essential for success in the changing workplace, particularly given that many of the jobs today's young people will do during their working lives are yet to be invented.

The contribution of universities is clear. Yet New Zealand continues to invest less in universities than many OECD countries. While total investment in tertiary education is about $3.6 billion a year, only $790 million of this is invested in university tuition.

Whichever way you compare the figures, New Zealand is at the bottom when compared with the United States, Canada, Britain and Australia. Australia, our nearest competitor for our brightest and best, invests nearly twice as much for each student as we do in its universities. And let's not pretend that the level of investment is unrelated to quality.

Another benchmark for international comparisons is the level of investment in research and development. Here, too, national spending is not even two-thirds of the OECD average.

Despite our low level of investment, we have a highly-efficient research sector which is ranked 11th in the world for research productivity and first in the world for cost-effectiveness. Imagine what we could achieve with levels of investment comparable to our OECD competitors.

But even more importantly, New Zealand underinvests in basic or "blue skies" research - the kind that will help us to deliver new ideas, products and industries and the kind in which the universities excel. We need to be able to do more of that kind of research and build on our impressive record of commercialising university research to the benefit of New Zealand.

Our universities form a huge part of the research infrastructure, employing two-thirds of the country's researchers, many of whom are world leaders in their fields. Our researchers add to New Zealand and global knowledge as they tackle major health issues such as cancer, diabetes and osteoporosis, develop lightweight materials for the aerospace industry, solve complex engineering problems in bioprocessing, discover more about our history and our multicultural roots in the South Pacific, and develop new thinking in areas as diverse as environmental sciences, education, commerce, law and the arts.

We have talent in abundance, and as a society we have a responsibility to ensure this is nurtured by providing access to the best education. Our universities have a vital role in building a prosperous, equitable and socially cohesive society.

Employers look to us to provide an educated productive workforce; society looks to us to provide answers to our most pressing social and health concerns. The intellectual power of universities contributes directly to advancing knowledge, making discoveries and driving innovation.

It's timely, therefore, that the debate about where taxpayers should invest tertiary education dollars to get the best return in support of economic and social goals is at the top of the national agenda.

* Stuart McCutcheon, vice-chancellor of Auckland University, also chairs the Vice-Chancellors Committee.