Chris Whelan: Build on success but avoid fads and experimentation

An educated population drives prosperous, innovative and productive economies and tolerant, stable societies.

An educated population drives prosperous, innovative and productive economies and tolerant, stable societies.

OPINION: Make no mistake, the Productivity Commission's report on tertiary education, due out on Tuesday, is of importance to every single one of us.

It's been commissioned by the ministers of finance and tertiary education to advise the Government on how well the system is doing and how well placed it is to keep serving this country in the coming decades.

It is the first comprehensive look at our tertiary education system since the late 1980s. A lot has changed socially and economically since then, including the scale of personal and public investment in tertiary education.

Today, more than 350,000 New Zealand students and 61,000 international students are enrolled in one of the country's 16 institutes of technology and polytechnics, three wananga, around 240 publicly-funded private training organisations, as well as our eight universities.

This costs about $3.1 billion a year (excluding student loans and allowances etc). While this is a significant sum, it is an investment in New Zealand's future thinkers, leaders and innovators, employers and employees, and parents.

This growth in tertiary participation is mirrored in every developed country. An educated population drives prosperous, innovative and productive economies and tolerant, stable societies. For prospective students and new graduates, they expect an education and qualification will provide them with the skills and knowledge that will open the door to productive lives and successful careers.

Against this backdrop, the Productivity Commission's draft report in September was much anticipated.  Its main finding was that funding and regulations are so locked down that they are constraining innovation throughout the system and limiting its ability to adopt new models of teaching and to adapt to evolving requirements from both students and employers.

There was fairly broad support for this finding, but much less support for the options the commission proposed to fix it.  In a nutshell, it proposed deregulation of the tertiary education system and opening it up to more competition – think the United States.

The evidence supporting its recommendations was highly selective and its analysis of the options was almost non-existent.  It was widely (and rightly) criticised for this.

With the final report imminent, there are two things I really hope the commission has heard from us and responds to. 

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Fix the funding quagmire

The commission's draft report correctly described the tertiary funding system as a Gordian knot, which is hamstringing innovation.

While the university sector's share of government tuition funding has grown in nominal terms, funding per student has not kept up with cost increases and has actually declined in real terms.

In New Zealand, the average expenditure per equivalent full-time student is US$15,400, which is 5 per cent below the OECD average. In comparison, in Australia it's US$19,916, in the UK it's US$25,700 and in the US it's $27,900. 

Additionally, in New Zealand, the Government's tuition subsidies are allocated by subject.  If you are a tertiary education provider delivering an undergraduate Accounting degree, you get exactly the same funding per student whether you are a small rural polytechnic or a large city-based university.  Or whether you are delivering your courses in a classroom or online or in the workplace.  Or, whether your students are academically able or from lower socio-economic relatively disadvantaged backgrounds.

I hope the Productivity Commission will recognise this and recommend that investment levels be increased particularly where there are real societal problems such as under-representation of Maori and Pasifika in degree-level education.

Similarly, we want to see funding and performance settings that encourage and incentivise, rather than stifle, innovation, to better meet the needs of both students and employers.  Given the benefits of students learning alongside other students and having access to specialist laboratories and workshops, I believe campus-based learning will remain the dominant model for university education for the foreseeable future.  But, we need to complement this with more options to make it easier for people to study while working and to continually reskill as they progress through their careers.

Universities want to support the Government goals for a productive and innovative New Zealand. But the scale of the changes sought cannot be realistically achieved within current funding levels and settings.

Don't fix what's not broken

We have a high-quality university system that is one of the most effective and efficient in the world.  

  • We are the only country to have all its universities ranked in the top (3 per cent) in the world.
  • Our universities are also ranked in the top 50 universities in the world across 22 subjects and in the top 100 in 39 (out of a possible 46) subjects. 
  • New Zealand has some of the best qualification completion rates in the world.  Only 16 per cent of full-time students who start a bachelor-level qualification at a university in New Zealand do not have a qualification within eight years.  By comparison, reported non-completion rates are 18 per cent in the UK, 27 per cent in Australia, 41 per cent in the US, and 50-55 per cent in South America and Asia.
  • Only 2 per cent of graduates (including arts graduates), are unemployed.
  • Graduate under-employment averages 12 per cent.  This is where degree-holders are employed in jobs where a degree is probably not needed – such as courier or postal worker.  This can be compared with the United States where 10 years after graduation underemployment is 33 per cent.
  • Our universities are efficient.  Per student, the sector spends just 77 per cent that of Australian universities and only 61 per cent that of Canadian universities.


I think it would be a disaster for New Zealand and its young people if we went down the same deregulation paths that the United States and, more recently, the United Kingdom have followed. 

In the latter, the government has spent the past five years deregulating various parts of the tertiary education system and very quickly putting back regulations as for-profit providers have entered the market offering high cost but low value degrees to students who couldn't normally get into a university.  Unsurprisingly, these degrees are not getting students into degree-level jobs and taxpayers are having to cover the cost of student loans that will never be paid back.

Universities welcome positive change, but they don't want to put advances and their international reputation at risk, for faddish thinking and experimentation.

There's a lot at stake – my fingers are crossed that the Productivity Commission gets it right this time.

Chris Whelan is executive director of Universities New Zealand. ​Universities New Zealand is the voice of New Zealand's eight universities, representing their shared views and interests, nationally and internationally.

 - The Dominion Post


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