New Zealand’s universities are facing unprecedented financial challenges and the country’s higher education system is at risk, an official briefing says.
The warning comes in the Tertiary Education Commission’s just-published briefing to the incoming Minister for Tertiary Education and Skills, Penny Simmonds.
The commission is the funding and monitoring body for tertiary education and delivered its briefing in November 2023 after post-election negotiations resulted in the creation of a National Party-led coalition government.
The documzent reveals that the nation’s eight universities are expected to record a collective net financial loss for 2023, the first time the entire sector has made a deficit.
“The challenges facing the university sector are unprecedented. Widespread uncertainty and risk remain. For the first time on record, the sector is forecasting a deficit in 2023, and another deficit is forecast in 2024. We are closely monitoring the performance of several universities and considering what levers can be used to mitigate risks to the Crown and the nation’s network of provision,” the briefing said.
It said universities were struggling because government funding had fallen well behind inflation in recent years, COVID-19 border closures reduced international fee income, and domestic enrolments had fallen.
The briefing said many tertiary institutions had been slow to adjust to the declining domestic learner numbers and shifting patterns of enrolment.
“The varied institutional responses to these financial pressures continue to impact the range of programmes and services being delivered, and the network’s overall capability and capacity for higher education and research is at risk,” it stated.
The briefing suggests the minister could use the government’s funding levers to change the tertiary education sector by driving economies of scale, specialisation and differentiation of provision between universities.
The document also warns that long-standing disparities affecting Mori, Pacific and disabled students represent a threat to New Zealand’s economic prosperity.
“Disparities are worse at degree level. In 2022, the qualification completion rate for learners enrolled in a degree was 63 percent. But more than half of Mori and Pacific learners who enrol in a degree will not gain that qualification. In 2022, qualification completion was 49% and 44% respectively,” the report said.
“Achieving equity of outcomes is critical to meeting New Zealand’s future skill needs. If we do nothing, there will be ripple effects for our economy – loss of human capital, decreased social mobility and increased social dependency.”
Responding to the briefing, Universities New Zealand Chief Executive Chris Whelan said government funding was key to their success.
“New Zealand’s universities are all Crown entities with just under 80% of funding from Government or controlled by Government. Nearly all the risk that the TEC refers to arises from per-student funding increasing by just 5.5% in 2021, 2022, and 2023 at a time when inflation is running at 17.1% and university costs are growing ahead of inflation,” he said.
“If the Government just kept funding in line with inflation – as they have for most of the past 20 years – the sector wouldn’t be dealing with these risks.”
Last year several universities made significant staff and course cuts in response to falling domestic enrolments.
