Tertiary funding focus flawed

OPINION: As the vice-chancellor of Victoria University, I have the advantage of being able to see first-hand the potential of New Zealand's best and brightest. I also see first-hand the frustration of those who are not able to chase their dream and realise their potential.

The major financial challenge facing universities is to ensure we have the resources to prepare the next generation to meet the demands of an increasingly competitive world.

The Government's need for fiscal restraint has meant that, since 2008, all universities have been funded for a specific number of student places. Additional students attract no additional funding.

Faced with demand for places well above the number we are funded for, Victoria University recently made the tough decision to not accept any new undergraduate domestic enrolments for 2010.

In a perfect world we wouldn't have to make this decision because we would have the capacity, money and resources to welcome all who wished to study. But if we were to enrol large numbers of unfunded students, we would compromise the quality of our teaching programmes, impose unreasonable burdens on staff and facilities and limit the time staff have for research.

We had already taken steps to manage enrolment numbers at the beginning of the year, including reviewing much more rigorously the academic progress of our students and firmly implementing all our deadlines.

Those measures had a considerable impact on reducing beginning-of-year enrolments, but they were not enough to cope with the unprecedented acceleration in demand we experienced leading up to the second half of the academic year.

From next year, Victoria will admit students on the basis of academic merit. We have only a limited number of student places and it is our responsibility to ensure that those who have the most potential to succeed have access to those places.

We do, however, accept that another of our responsibilities is to improve the university participation and achievement rates of Maori and Pasifika students, and students in other equity categories.

I accept that there is significant restraint on all forms of public expenditure and I do not expect the minister of tertiary education to conjure up large amounts of new money for universities. I do question, however, whether we have the optimal distribution of the current funding.

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By OECD standards, an unusually large portion of New Zealand's tertiary expenditure is spent on student support rather than on improving the quality of programmes and facilities in tertiary institutions. Much of this student support expenditure goes on interest-free student loans.

I fully accept the need for a fair and low- cost student loan system to ease the very real burdens on students. But I do question the strategic wisdom for New Zealand of denying university places to aspiring students so that enrolled students can borrow money at no cost to themselves.

Universities are places of great innovation. We have students who are taught to think outside the square, academic staff who work with international colleagues to create new knowledge and take that knowledge into the classroom, and support staff who provide an extraordinary range of services of high quality to students and other staff.

Most people would agree that fostering the brightest minds is hugely important for New Zealand. There is ample evidence to suggest that investment into university education will provide long-term gains.

The New Zealand Vice-Chancellors' Committee has recently noted that the countries that are emerging from the global recession at the top of the world competitiveness rankings have realised the importance of increased investment in university education, each spending more money directly on universities as a percentage of GDP than New Zealand.

Interest-free student loans may have political appeal but, in a fiscal environment where there is no additional money forthcoming from the Government, we, as a nation, face a choice between continuing to allocate existing funding to interest-free loans for enrolled students or increasing the number of places open to aspiring students.

The choice we make should be that which will deliver the best long-term value to New Zealand. In my view, we are currently making the wrong choice.