University needs certainty, Labour says
ASHLEIGH STEWART, KEITH LYNCH AND CAROLINE KING
Labour has called for the Government to respond to the University of Canterbury's plea for financial help, as the institute reveals it has a $67 million deficit.
Vice-Chancellor Rod Carr last night said it was "critical" that the Government helped the university.
"We are now working with the Government to determine the optimum level and options.
"This will need to be treated with some urgency to ensure we remain financially viable," he said.
In its annual financial results for 2012, the institution revealed the sobering losses, most of which were attributed to $60m of earthquake recovery impacts and a one-off $20m depreciation of library materials.
Labour's tertiary education spokeswoman Megan Woods this morning said the Government needed to say whether or not it was committed to having a university in Christchurch.
"If the answer is yes, then [Tertiary Education Minister Steven Joyce] needs to commit to expediting Cabinet's funding negotiations with the university and giving them the surety they need to plan for their future," she said.
"The university, like all Cantabrians, need and deserve that certainty so they can get on the job of rebuilding. The Government's lack of urgency on the funding plan for the university means it cannot move forward."
The contrast to 2011 is dramatic. In that year, the university recorded a $28m surplus.
The university will make its case to the Government by April and Carr hopes Cabinet will open the purse-strings by October.
"We need to know by October this year the full extent and timing of government support," he said.
"That timeline, if complied with, will be sufficient.
"The university has cash and reserves which it is using to retain capacity."
Carr believed it was "likely" the Government would help. But if that did not happen, the institution would need to "constrain its capital investment quite significantly and would need to reduce its operating costs quite significantly", he said.
The bulk of the deficit is because of an increase in the cost to repair quake-damaged buildings - a rise from $120m in 2011 to $390m in 2012.
Thorough engineering assessment last year revealed the full extent of the damage, Carr said.
However, ignoring earthquake recovery costs and the library adjustment, the deficit would have been $6.6m, compared with an initial budgeted deficit of $17m.
There had also been an additional $4.5m spent to attract students and a $3m increase in insurance premiums.
In August last year, Carr outlined 10-year forecasts showing the extent of the university's financial worries.
He announced it was losing $100,000 every day and expected to post a $38m loss in 2012.
Tertiary Education Minister Steven Joyce responded by telling the university it must get its house in order before the Government would provide help.
Since December 31, 2009, the university has shed about 12.5 per cent of its fulltime equivalent staff.
There would be no pay increases this year and a major overhaul was not required, Carr said.
"We think we can largely get there through a very careful replacement of staff when they leave. There's no need for a major restructuring of the university."
But why hasn't the Government helped already?
"Part of that is the Government is cautious. It has a number of claims and expectations to support arising from the earthquake.
"It does want to have due process around those businesses cases being made," Carr said.
"Government has indicated it understands the university has a need and we believe it understands the university is worthy of support."
Last year's financial forecasts will now be updated in light of the enrolments this year. The information will be made available to Government in April.
Joyce was last night complimentary of the university's effort.
"They're not out of the woods yet, but I have to say that was a good result when you consider the circumstances that they've been in."
He said the Government still intended to provide financial support, but was not sure when the decision would be finalised.
"There's nothing in this result which changes the overall direction of things. Progress is being made. It will be this year but I don't know exactly when."
Carr's call for urgency would not speed the process up.
"It now depends on the university and timing, and insurance settlements which we have no control over."
Despite the result, Carr said the University of Canterbury was still showing signs of recovery.
"On the positive side, first-year student numbers were 14 per cent higher than expected and total operating revenue increased by $2.4m from 2011, an improvement on budget of $17.5m."
- © Fairfax NZ News
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