Dialogue: Benefits of parsimony are in short term only

JOHN HOOD says the Government must urgently tackle universities' funding problems if it is genuinely committed to a confident knowledge economy.

There is a deceptively simple computer game called Tetris. Blocks cascade down the screen and the objective is to position them in an unbroken line. It is easier said than done.

As a nation we are engaged in a similar, real-life challenge as we try to arrange the different elements of our economy and society into a robust whole. But as events demonstrated last week, every time we move one block, we affect another.

I refer to the decision by the University of Auckland, and other universities, to accept the Government's offer of a 2.3 per cent increase in bulk funding in exchange for a freeze on tuition fees next year. This means students now know what fees they will pay in 2001. It is positive because it narrows the widening gap between the cost of higher education and students' ability to pay for it.

But while closing this gap is good for students, their own leaders have also quickly recognised it comes at a cost to the universities. In the University of Auckland's case, the 2.3 per cent increase represents an overall increase in our base funding of just 1.5 per cent.

On present domestic inflation and cost-increase projections, we expect to be out of pocket by at least $4 million following the decision to freeze fees.

For the university, the consequences include the erosion of quality of our infrastructure and of our ability to do the job New Zealand desperately needs - the education of the highly skilled people who will create an equitable and economically competitive, robust society.

That is why this $4 million shortfall is a matter of grave concern. It comes on top of successive years of inadequate funding that have forced the university into an increasingly precarious financial position. There is no fiscal buffer we can use to close the gap between our revenue and our costs. A decade of diminishing funding has taken its toll.

Successive university administrations have attempted to balance the books but again, as one gap was plastered over, others opened. The result has been a grave erosion in staff conditions and a steady and significant deterioration in investment in the university's physical and information infrastructures.

This has serious implications for New Zealand and to one of the Government's most important policy platforms, the admirable goal of closing the gaps between the advantaged and disadvantaged in society. This will not be achieved by short-term attempts to darn the holes in the fabric of society. It can be achieved only through developing an economy driven by the innovation, ideas, skills and knowledge that are as much the tools for success and prosperity in the 21st century as our natural resources and physical labour were in the 20th century.

Britain's Secretary of State for Higher Education, David Blunkett, earlier this year described a society where the disparities between rich and poor were closed through a productive and knowledge-led economy.

The contribution to be made by universities to the development of such an economy is obvious. They are the powerhouses of original research and academic training that is so vital to our transformation into a vibrant, innovative and competitive economy.

The Government, in its pre-election policy statements, recognised this vital need. That is why the University of Auckland and others in higher education are increasingly impatient for the tangible signs that will demonstrate how this recognition will translate into effective policies. The political response will be, "It is early days yet," particularly given that the Tertiary Education Advisory Commission is still engaged in the complex task of determining how a viable funding regime can be evolved.

We understand that but we are also gravely concerned that we have precious little time to produce the robust regime needed to equip the nation's premier teaching institutions with the tools to deliver the innovation this country needs urgently.

Already, there is an alarming difference between the ability of universities here to fulfil this vital role and the capabilities of our counterparts in other countries that are also striving to develop knowledge-based economies.

Australia is one example. A recent study by the University of Auckland established a considerable disparity between our capital and operating resources and those of Australia's leading universities.

And the Australian situation, while enviable from this side of the Tasman, is considered disturbing in the global context. Professor Alan Gilbert, the Vice-Chancellor of the University of Melbourne, remarked recently that "every exercise in international benchmarking confirms that the leading universities in Australia are gravely under-resourced in comparison with their counterparts in Singapore, Hong Kong, Japan, North America and Europe." Thus the gap between ourselves and Australia becomes a gulf in the international context.

It is a source of frustration that the staff conditions and the infrastructure of New Zealand's research-led universities have fallen so seriously behind the standards of comparable international institutions.

This disparity lessens our ability to attract and retain excellent staff and students. Research opportunities are being lost and researchers, both staff and students, are going overseas to pursue work in locations that offer greater support.

It is dangerous to underestimate the seriousness of these losses. Research-based teaching leads to the development of highly trained minds. These are the talents that create new companies based on innovative ideas and provide employment opportunities and income. Lose the researcher and there are significant implications for a country aspiring to create wealth through knowledge.

One measure of success in the knowledge race is the filing of patents. Last year, New Zealand filed 194 world intellectual property organisation patent cooperation treaties, 39 of which originated in the University of Auckland.

The figure sounds impressive for a relatively small country, but we are lagging well behind countries with comparable populations in terms of transforming ideas into wealth and job-creating opportunities. Israel, for example, filed 663 treaties, Denmark 625 and Finland 1042.

The Government cannot allow this trend to continue if it is truly committed to the development of a high-tech knowledge economy, to the education of the people who will contribute to it and through it to the wealth generation that will lead to a more equitable society.

It is encouraging that it has expressed a commitment to address the funding problems faced by universities. The challenge it faces is to replace the present flawed funding model with one that encourages the growth of a differentiated, quality tertiary sector that will fuel New Zealand's aspirations.

In the Tetris game, every failure to close a gap makes the game more difficult. The blocks fall faster and faster, accelerating the chance of error. In a game the consequences of failing are minor. In a nation, they will be cataclysmic.

* Dr John Hood is the Vice-Chancellor of the University of Auckland.