University told to get deficits under control
The Government has ordered Canterbury University to get its house in order and its deficits under control before it considers additional support.
The university last week released its 10-year financial forecast, which was completed partly to show the Government how it was planning to get its budget under control so it can live within its means.
The plan showed the university will post a $38 million loss this year and will face deficits for the next four years.
It will reach a predicted surplus in 2017, but it will take until 2021 before the university achieves its pre-quake 3 per cent surplus.
University vice-chancellor Rod Carr said it was haemorrhaging $100,000 each business day and he planned to cut 150 jobs over the next three years.
The quakes have put the university under pressure because fulltime-equivalent student numbers have fallen by 2200.
Insurance costs have jumped and staff costs continue to rise.
The university has used $35m of its dwindling cash reserves and plans to increase its debt from $50m to $118m by 2021.
On top of these pressures, the university also needs $150m to repair and renew its earthquake damaged buildings, above insurance proceeds.
The university has asked the Government to help pay those capital costs.
Carr said Tertiary Education Minister Steven Joyce told him the university must get its house in order, deficits under control and it must live within its means before the Government would consider a case for support.
"That's not an unfamiliar message around New Zealand," Carr said.
He said Joyce had told him, without making any commitment, he was prepared for the university to present a case for capital to assist with "worthy" projects.
A business case, called UC Futures, was being worked on and would be presented to Joyce next month.
"Essentially we are saying we think there is a case for capital support for the university to sustain it as a world class place for learning," he said.
Carr said not only did the university have a need for support, it had to prove it was worthy of support too.
"Being needy alone is not enough."
If it were not for the earthquakes the university would have continued to post an annual surplus of $10m to $11m for the next 10 years and it would have accumulated $100m for capital investment.
If the Government did not give it any extra money, the university would have to go down a "different pathway", which would be much slower and harder, Carr said.
Joyce would not say last week if the Government would provide additional support to the university.
But he did say the Tertiary Education Commission was working with it to develop a business case to determine the level of support that would be needed for its capital developments. The Government would then consider the business case later this year.
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