Tertiary fees to be linked to consumer price index

Tertiary fees are to be linked to the consumer price index (CPI) from now on, the Government said today.

The maximum fee, inclusive of fees and course costs, would now be set at Budget time, Tertiary Education Minister Steve Maharey said.

The schedule would be adjusted annually by the estimated rate of inflation and would also set out indicative rates for the two subsequent years.

"The effect is that fees will be linked to the CPI and will not be permitted to rise in real terms," Mr Maharey said in a statement.

"The Government has worked closely with the tertiary sector... to develop this fee policy and in line with the advice the maxima are being set nationally. They will apply to degree and non-degree courses."

Fees for category A degrees, which include arts and social sciences degrees; and category I (teaching); are set at $3900 in 2004, $3990 in 2005 and $4074 in 2006.

At the top end of the scale category G fees, which includes dentistry, medicine and veterinary science, are set at $10,000 in 2004, $10,230 in 2005 and $10,445 in 2006. A new category has been established for business and law courses which were previously part of funding category A. The funding rate is the same.

Fee maxima were not being set for postgraduate courses because it would have been difficult to strike maxima across the wide range of postgraduate fees, Mr Maharey said.

However, the Government was introducing a requirement that the Tertiary Education Commission approve increases of more than $1000 and a review would be undertaken to ensure postgraduate fees had not risen too much.

"The rates have been set to ensure that all public institutions are able to at least maintain their income per student in real terms. Because the Government has increased tuition subsidies for next year by more than the projected CPI increase, most institutions will not need to raise their fees by the rate of inflation to achieve this," Mr Maharey said.

For the first time, proposed tertiary tuition subsidy rates are being outlined for the next three years, rather than those for the following year.

Just over $421m would go to increasing the student component of the tertiary funding system by 3 per cent in 2004, compared with a projected CPI increase of 1.8 per cent.

For the following two years, rates would be increased by the CPI and further adjustments may be made following consideration of the recommendations of a review of funding categories, Mr Maharey said.

With tertiary reforms now in place, the focus of the budget this year was to provide predictability so the sector could get on with meeting the needs of students, business and the community, he said.

Private training establishments will now be required to be "grandparented" for a year on entry into the sector because of a lack of solid data making it difficult to predict how the fee maxima will affect them.

Those whose fees are above the maxima will not be allowed to increase them.

Today's announcements are part of a $490m package in the budget.

Finance Minister Michael Cullen said the fee maxima policy was an integral element of the Government's objective of ensuring tertiary education remained affordable.

"It will provide some certainty and predictability as to the future costs of tertiary education while also providing some flexibility to providers in terms of their fee-setting behaviour and their future guaranteed income," Dr Cullen said in his budget speech.

Funding for the Performance Based Research Fund is being phased in over the next five years. The budget allocates an extra $3.9m in 2004, rising to $10.3m in 2006. Combined with the funding in last year's budget, the money produced a real increase of $20m in that year, Mr Maharey said.

Another $30m would go to the continuation of a contestable innovation and development fund established last budget for projects aligned with the Tertiary Education Strategy.

Other initiatives announced in today's budget include:

* funding of $23m for a bonded scholarships and research fellowships package to attract students to study and professions important to New Zealand's success;

* $36m over four years for part-time part-year students to access the student loans scheme;

* $4.8m over four years for 16- and 17-year-olds who have completed year 13 to apply for student allowances;

* $4 million over four years for Student Job Search.

- NZPA