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What could yesterday's spending cuts mean for tertiary education?

Prime Minister John Key announced yesterday that he intends to reduce the government's already diminished government operating allowance – the allowance for new spending in the 2011 Budget –from $1.1 billion to $800 million.

"Nonetheless, this year’s Budget will continue to prioritise new spending to health and education in particular, and to initiatives that promote economic growth," stated Mr Key.

With Treasury already forecasting government spending to fall by over $200 million between now and 2014, even before Mr Key's announcement, further reductions in new spending would likely translate into further cuts. Tertiary education represents about 6 percent of government spending.  It would need to receive a significance and disproportionate share of the only $800 million of new spending that the government is budgeting to avoid further cuts.    For individual tertiary education institutions this could mean hundreds of thousands of dollars difference to their forecast funding.

CTU policy director and economist Dr Bill Rosenberg says that saving about $300 million will have very little effect on reducing debt – it only equates to one week of debt payment.

"But it will hurt in the additional pressure it will place on government services like health and education," says Dr Rosenberg.

Also in Tertiary Update this week:

1. Polytechnic rolls grow to all time high


2. Tertiary education will feel inflation pressures


3. Commission faces more job cuts


4. NZ academic salaries gaining on Australia


5. Govt funds research trade show for businesses


6. Other news

Polytechnic rolls grow to all time high

Student enrolments at many of the country’s institutes of technology and polytechnics are at an all-time high according to James Buwalda, spokesperson for the New Zealand Institutes of Technology and Polytechnics (NZ ITP).

Applications at some Institutes of Technology and Polytechnics (ITPs) are up 10 percent from the same time last year and with NCEA results released this week, NZITP says providers can expect another surge in applications.

Dr Bulwalda says that there is growing competition for available places.

“The Government has funded 455 more student places at ITPs for 2011, but increased demand is surpassing that so unfortunately people are still going to be turned away.”

Dr Bulwalda believes it is too early to assume, at this stage, that record high rolls combined with reduced government funding will result in growing student: staff ratios.

"The more fundamental question is how the teaching practice in polytechnics is going to evolve over time. On one level, undoubtedly there is pressure to become more cost efficient, and student: staff ratios are one way of doing that. But it is also important to focus on good outcomes for teaching; giving students every chance of success. That is about the total student experience. A simple metric of student: staff ratios does not do justice to the total student experiences."

Instead Dr Bulwalda believes that ITPs will be focusing on the Tertiary Education Commission's measurement of completions and progressions.

"ITPs need to do what it takes to improve their own statistics around completions and progressions.  If they are doing that, they are giving the students who do enrol the best chance of success."

Tertiary education to feel inflation pressures

Inflation figures released last week by Statistics NZ show that while the consumer price index (CPI) rose 4 percent last year the cost of tertiary and further education rose 6.4 percent. The sharp increase in inflation was influenced by a rise in goods and services tax (GST). There was a 2.3 percent increase in CPI for the December quarter, which was the largest quarterly increase since the last time GST increased in the September 1989 quarter. 

Tertiary education costs however did not rise at all during the December quarter, as would be expected. The 6.4 percent increase in the cost of tertiary education was recorded all at the beginning of the year when most students pay fees and so does not yet include the flow on costs from the increase in GST.

As well as facing the increased costs of higher GST and inflation when buying goods, tertiary institutions will also find they have less money this year from government, with government funding forecast to fall every year until at least 2014.

TEU National President Sandra Grey said it was time someone in government did the maths.  Currently we have less government funding every year, more students, and higher costs.

"It's not hard to see that the other side of that equation is skyrocketing fees, staff redundancies and pressure on high quality New Zealand education," said Dr Grey.

Meanwhile, CTU secretary Peter Conway said that we can expect to see the inflation rate go higher in the year ahead.

"Real wages are falling as a result, causing New Zealand to drift further and further behind Australia. The Government must take all these factors into account when it considers the upcoming annual adjustment to the minimum wage."

Mr Conway said that employers can expect unions to be seeking appropriate wage increases this year which take all factors into account including the on-going effect of higher prices.

Commission faces more job cuts

The Public Service Association (PSA) announced last week that the Tertiary Education Commission plans to cut up to 123 jobs.

The restructuring proposal also includes 39 new jobs, so would mean about 80 of the approximately 300 jobs currently at the Commission would be lost. About 40 of the threatened jobs are currently vacant.

PSA national secretary, Brenda Pilott, said that the proposal did not include any plans to reduce the workloads of the remaining staff.

Ms Pilott said staff, who were already under pressure after the Commission cut about 70 jobs 18 months ago, were concerned they may not be able to keep up with the workload if the job cuts go ahead. The National Party came to government during the last election with a policy to "clarify the role of the TEC, trim its bureaucracy and streamline its functions".

TEU national president Sandra Grey said that while some of the Commission's tasks had been transferred to the Ministry of Education, tertiary institutions and their staff will be worried about the ability of the Commission to provide institutions with effective and timely support given the proposed massive reduction in staff and funding.

Sir Wira Gardiner, who chairs the Commission, told the New Zealand Herald it was "a fair question" to ask whether the Commission could maintain its services in spite of the cuts.

Sir Wira said the board was also aware that the Commission was operating "in a capped environment".

"There is no more money, and so what we have to do with the money that we've got is try to do better."

Consultation on restructuring at the Commission is due to be completed, and recommendations implemented, by the end of May.

NZ academic salaries gaining on Australia

Results of a recent survey of Commonwealth universities reveal that the gap in purchasing power between the average academic in New Zealand and Australia has narrowed considerably, from 40 percent in 2006-2007 to 21.5 percent in 2009-2010.

The survey, the seventh undertaken by the Association of Commonwealth Universities (ACU), looks at academic salary scales and associated benefits in 46 institutions across seven Commonwealth countries: Australia, Canada, Malaysia, New Zealand, South Africa, and the United Kingdom.

New Zealand academics rank fifth out of the six commonwealth countries surveyed, when purchasing power is considered, having been overtaken by South African academics since the previous survey.

Natasha Lokhun from ACU says the differences in average salaries between the countries have reduced.  She attributes this to increased international competition for academic staff, as well as efforts within individual countries to improve academic salary levels.

TEU national Secretary Sharn Riggs says the comparative improvement of academic salaries in New Zealand relates significantly to the $50 million of tripartite funding available to universities under the previous government. 

"Union members in New Zealand universities campaigned successfully to close the pay gap with Australia. We had important successes up until 2008 - 2009 but now, with the demise of the tripartite funding and cuts to other government funding and the on-going austere budgeting at most tertiary institutions, New Zealand academics risk falling behind again," said Ms Riggs.

Govt funds research trade show for businesses

The New Zealand Herald reports that the government is funding a trade show at AUT next month promoting university research to businesses. More than 200 business people are expected to attend and seven of New Zealand's eight universities will be represented at the show.

The trade shows are funded through the University Commercialisation Office of New Zealand, which was formed in 2005 to bring the universities' commercialisation offices together.           

The government funding – provided through the Tertiary Education Commission mirrors government's current policy direction that research coming out of New Zealand's tertiary education institutions should have greater applicability to businesses.   For instance, the Commission's PBRF funding guidelines last year placed greater emphasis on commercial research and the entrepreneurial application of research.

AUT vice-chancellor Derek McCormack said several other shows had been held and more would be held this year, giving 14 in total over two years. The shows were being held to demonstrate to businesses the benefit of working with universities and using their research.

"This event is more about raising awareness for the business sector on working with universities than just commercialising research," said Mr McCormack.

"The programme was put forward by Business New Zealand, which was concerned universities were not interested in working with businesses. But for the universities that wasn't true. We were very interested. So this is a way to bring the two together and build a relationship."

Other news

Prospects for students have gone from bad to worse, with a three-yearly survey showing increased joblessness, debt and pessimism, student advocates say. The 2010 student income and expenditure survey, run by the New Zealand Union of Students' Associations since 1994, shows average loan debt had increased by 31 per cent to $15,558 since 2001. In just three years, the number of students with a job plummeted by 25 per cent to 65 per cent – Dominion Post

University of Canterbury research has revealed that overall academic performance by undergraduate students at UC in semester two of 2010 was as good as that during the same period in 2009. “While we acknowledge that the earthquake and subsequent aftershocks may well have had a serious effect on some individual students, it appears that student performance in general was not negatively affected by the 4 September earthquake," said a member of the UC research team, Psychology Professor Simon Kemp  - University of Canterbury

New Zealand has the best education system in the world according to Britain's Legatum Institute, which has been attempting to produce different kinds of indices to mainstream economic scales.  The institute says New Zealand’s strong education system inspires high levels of public confidence.

President of the Dominican Republic Leonel Fernández has announced that a new university in Haiti will be completed by 12 January 2012 - the second anniversary of the devastating earthquake. It will be built in the northern city of Cap Haïtien at a cost of US$30 million. The institution will be a public university, in a country where private universities were proliferating before the earthquake –University World News 

Victoria University is being accused of discriminating against mature students. Special admission students - those older than 20 who did not achieve university entrance at high school - are being asked to supply a CV and a one-page "personal statement" explaining study objectives, and may be required to complete English and maths assessments  - Dominion Post

TEU Tertiary Update is published weekly on Thursdays and distributed freely to members of the Tertiary Education Union and others. You can subscribe to Tertiary Update by email or feed reader. Back issues are available on the TEU website. Direct inquiries should be made to Stephen Day, email: stephen.day@teu.ac.nz

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