Steve Maharey: Tertiary education getting lots more in state funding

COMMENT

Many of the claims Auckland University's acting vice-chancellor, Raewyn Dalziel, uses to suggest that inadequate Government grants are to blame for the increase in student fees cannot go unchallenged.

If New Zealand is to succeed in today's knowledge-based world, we need to continue investing in science and education. Over the past four years Government spending on tertiary education has increased by 41 per cent, including everything from loan interest write-offs to the development of modern apprenticeships. And we intend to keep investing in it.

We are working with the Vice-Chancellors Committee and the Association of University Staff to develop a constructive way to do so. It is essential that these talks are based on the full facts rather than constructing arguments to make the situation seem more dramatic.

For instance, Professor Dalziel's claim that the Government has pegged funding increases to the consumers price index is wrong. We have built in CPI adjustments to give tertiary education providers greater certainty, but each year the final rates have exceeded that. Last year funding rose by 4.5 per cent, compared with a CPI rate of 1.6 per cent in the calendar year. This year the increase was 3 per cent, and the Reserve Bank inflation estimate is 2.5 per cent.

As for the call for an alternative index to cover the actual cost increases faced by universities, the Vice-Chancellors Committee and the Association of University Staff have funded economists Guy Scott and Helen Scott to construct a university price index. The latest version estimates university inflation as having been below the CPI over the 22-year span of the index, and virtually identical to it over the most recent 10 years measured.

Professor Dalziel also says that the Government's bulk grant accounts for a much smaller proportion of Auckland University's funding than it did in 1992. That is true, since the previous National Administration deliberately transferred costs to students by cutting tuition subsidy rates and forcing fees up. This was bad news for students, but less so for the universities.

The fee increases offset the Government funding increases so that, according to Scott and Scott, tuition income a student (measured by the university price index) rose by 13 per cent between 1991 and 2002. Part of this has been a major surge in fee income from international students, barely mentioned by Professor Dalziel although it has contributed $35 million to Auckland University over the past two years.

Non-tuition income has also grown rapidly. Professor Dalziel's article implies that this is an unfortunate necessity, although both the Government and the universities have hailed this diversification as a healthy development.

Most of this income comes from research activities. Universities earned $264 million in research contract funding last year, a huge increase on the $131 million earned this way in 1997.

Much of this funding came from the Government. Professor Dalziel omits to mention that a large amount of Government investment into universities comes through non-tuition subsidies. In 2003-04, the universities would have earned more than $120 million through public research funding. Auckland would have taken a major share of that, just as it stands to do with the $33 million a year of new money that will be flowing into the Performance-Based Research Fund by 2007.

The tertiary funding system has moved increasingly to provide funding for outstanding initiatives, for which Auckland University has been a major beneficiary. Auckland has received: about $38 million over three years for four centres of research excellence it hosts; up to $25 million (subject to matching funding from the private sector) for the Auckland Business School; up to $10 million for an Institute for Innovation in Biotechnology; up to $10 million for research to identify barriers to tertiary participation; $2 million to underwrite biotechnology spin-off company Protemix's world-leading diabetes work; and just over $2 million for other projects, such as e-Learning software, an ICT innovation academy, and initiatives to support entrepreneurship and the plastics and composites industries.

Each of these projects would have had its own associated costs, but I do not accept that there has been no net overall financial gain to the university from all this funding.

We need to have a serious and constructive discussion about how we can best move forward, but that can only happen in the context of a full, accurate and dispassionate understanding of the situation.

And we need to appreciate that there are a great many other needs in the community that the Government also has to meet.

* Steve Maharey is Associate Minister of Education.