Canterbury University's post-quake struggles

MORALE LOW: Staff at the University of Canterbury are concerned for the future of the institution.
MORALE LOW: Staff at the University of Canterbury are concerned for the future of the institution.

As the University of Canterbury struggles to recover from the earthquakes, some academic staff are concerned that management is taking it in the wrong direction and that morale is at rock bottom. PHILIP MATTHEWS reports.

What does austerity look like at a university? A "staff news" memo from the University of Canterbury might give you some idea.

The Press has obtained a copy of an internal memo circulated to staff last month by the university's vice-chancellor, Rod Carr. In it, staff were told to expect tighter controls on fixed-term contracts and new appointments. Staff were asked to use up annual leave and were told that sabbatical and study leave will be limited.

It goes on. Travel costs will come down by 20 per cent, year on year. Procurement of library materials will be reduced by $500,000 below budget for the rest of 2012 and further reduced by 15 per cent in 2013. There will be tighter controls on software purchases.

On one hand, this seems symptomatic of any company in a recession. It is the academic world's equivalent of those staff notices that tell employees to use less tea and coffee and cut down on couriers.

But it is not the recession that has dealt a blow to the University of Canterbury. The earthquakes did serious damage to buildings, student numbers and the income that students represent. But many staff also question the university's management style and some decisions that were made even before the earthquakes.

How bad is the financial situation? The Press has also obtained a "10-year forecast model" produced by management in July. It describes a perilous financial position.

The university is tearing through its cash reserves at the rate of roughly $100,000 per day. By 2019, according to the forecast model, there will be a cash requirement shortfall of $169.4 million.

Carr agrees that the figures are alarming, especially as these projections are based on the relatively positive assumption that the university will get almost all of its pre-quake domestic student numbers back, and international students will also return.

While things have changed slightly since the model was drawn up in July, the figures are still a real concern.

"We used to have a little surplus," Carr says. "Now we have a reasonably large number of continuing years of deficit.

"You would look at that and say, what's going to happen here? We either have to get more students, get paid more money or cut our costs. Or borrow it, or get a grant."

A business case has gone to education officials in Wellington for consideration. Next month, Tertiary Education Minister Steven Joyce is likely to present their advice to Cabinet. Carr should hear back before the end of the year, or early in the new year.

The university should also hear next month if the Government will keep Canterbury's student achievement component funding at the same level as in 2011 and 2012, despite falling rolls. This makes up about $120m of the university's $300m operating costs.

Tuition revenue has fallen as a result of having 1900 fewer domestic students and 450 fewer international students since the earthquakes. That shortfall is $19m per year and "the Government has not offered to compensate us for that loss", Carr points out.

Despite that, is he optimistic the Government will support the university's business case next month?

"I think it would be sensible for the Government to make the investment in the university," Carr says brightly. "And since I think the Government does sensible things, then I'm optimistic."

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There are many worried people at the University of Canterbury. Carr and other managers try to make the grim numbers work. Below them are the academic and general staff who know to "cut our costs" usually means to cut jobs.

Over the past two months, a figure of 50 jobs per year over three years has been bandied about. The university asked for volunteers first and Carr says that between 10 and 15 fulltime equivalents are likely to disappear through voluntary redundancy, after 28 people applied.

Late last month, the university announced it will cut an English- language programme, affecting four fulltime and three part-time staff. Factoring in other attrition and turnover from 2012, Carr believes the university will be at the staffing level it needs to be at the end of 2012.

Could he say that it is very unlikely the university will be looking for more people to make redundant between now and the end of the year? He can't quite make that assurance.

"There will always be a couple of little programme reviews going on, so I don't think I could say that, but we're on track," he says. "And then next year's another year."

The "forecast model" from July has academic, general and technical staff numbers continuing to decline over the next four years, with redundancy costs factored into the budget - for 2015 alone, redundancies are projected to cost $2.5m.

It's no surprise that this kind of uncertainty damages morale. An academic staff member tells The Press that "staff morale is through the floor", especially in the College of Arts, where "every single person who is able to leave is looking for a job elsewhere".

The staff member says that people feel they have an axe over their head, that they have to constantly justify their jobs. There is increasing use of human resource workload models to monitor how staff use their time. Carr's response?

"I can't always speak to how people feel but like everybody in the community, people do have to make sure that the contribution they're making is understood, and that the contribution they're making is substantial," he says. "I don't apologise for that. But the intention is not that everybody should feel under immediate and urgent threat."

As staff numbers reduce, pressures on existing staff increase. More time is spent teaching and taking tutorials and less on research, despite the financial importance to the university of the Government's Performance-Based Research Fund (PBRF), which funds universities depending on research output. In the 2006 PBRF rankings, the University of Canterbury was rated third behind Otago and Auckland.

Besides the PBRF, the university also rates highly in the QS World University Rankings, which ranks the world's top 400 universities. Canterbury came in at number 221, behind Auckland (83rd place) and Otago (133rd) but ahead of Victoria, Massey and Waikato.

Some academic staff are concerned that teaching and other pressures could push the PBRF and QS rankings down.

Academic staff members spoke anonymously to The Press. One says that "the morale issue is that the university is just not a nice place to work at the moment. That flows through to the students. They get a sense of that."

The academic staff member is quick to add that it is not the earthquakes that have caused staff to feel this way.

"People are reaching the end of their tethers," the staff member says. "The kind of language people are using when they talk about the vice-chancellor shows that they are angry about how things are going. The sense that everything is being left to decay. People leave and don't get replaced."

How do the Tertiary Education Union's local organisers Gabrielle Moore and Paul Corliss assess the morale of academic staff?

"Despite some of the ill-advised decisions of senior management and a natural disaster, I think staff are doing well," Moore says. "They're worried about some of the changes the vice-chancellor is trying to push through. They don't think it's going to be good for the university."

"The Government funding issue worries them immensely," Corliss adds.

Asked about morale, Carr consults the figures. He says that the academic staff voluntary turnover rate in the year following the February 2011 earthquake was 4 per cent, in line with the averages of the previous five years. That has risen a little, to 6 per cent, in the first half of this year. This tells him morale is fine.

"We do not have a big queue of people wanting to leave the institution," Carr says. "In fact, quite the opposite. We have a large number of people deeply engaged in their teaching and research who want to stay."

This large number is the silent majority in his opinion. He believes they "don't necessarily feel the need to be as articulate or concerned about their mental health" as other staff.

But staff that The Press spoke to say that turnover rates can hardly be taken as a happiness survey. Quitting and leaving isn't that easy. People have commitments. Some want to stay to see things get better.

Some staff suspect that behind the university there is a Government with its own agenda, and "it's not going to come along and say, we see that it wasn't your fault, you didn't cause the earthquake". They suspect the university has tried to "read the tea leaves and guess what Steven Joyce's priorities are in order to appeal to the Government".

The assumption is that the Government "wants to get rid of things like Arts and Law and focus on Science and Technology", which suits Carr's view of universities, they say.

The Government is already on record as preferring so-called STEM subjects. STEM is education shorthand for Science, Technology, Engineering and Maths.

You sense an irreconcilable culture clash at Canterbury. Carr came to the university in 2009 from Jade Software. As Jade chief executive he made about 25 per cent of the workforce redundant within weeks of taking over. That was in 2003; Jade staff told The Press at the time that they felt they had a "metaphorical gun pointed to their heads".

Now Canterbury staff talk in similar terms.

Within Arts especially, staff talk of the transformation of university management culture "into a highly managerialist style and structure". They see the style as top-down and autocratic. They wonder why staff are not asked to contribute ideas to help the university through its crisis.

"What is the university?" a staff member says. "It is a collection of an enormous amount of skill and knowledge. Why would you not turn to that body of skill and knowledge?"

They look at the likes of that staff news memo with its talk of "workload modelling" and see language that seems alien to a university culture.

They worry that corporate-style "managerialist" thinking is about the short term. Carr is on a five- year contract that takes him through to February 2014. But the chickens will really come home to roost, in financial terms, another five years later.

The projected cash position looks especially bad in 2019, they note, because the university's controversial $50m philanthropic bonds are due then.

So does Carr want or intend to stay on past 2014? Too early to say.

That conversation will happen next year, he says. His direct employer, the University Council, will signal its intention, and then he will signal his, "but I've signed the pledge to stick around Christchurch while we go through this recovery so in one guise or another, I'm here for the ride".

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University management's bungled attempts to close down Theatre and Film Studies this year does not inspire those in other departments with confidence. Some were vexed by revelations that university management had secretly tried to offload the programme onto the Christchurch Polytechnic Institute of Technology (CPIT).

After a three-hour meeting in late May, the University Council voted to save Theatre and Film Studies and Cultural Studies, but American Studies was axed, along with an operations research course within the Management Science programme.

Andy Pratt, Director of Biochemistry and one of three academics on the University Council, reportedly told the meeting that the review was based on a false premise and that much of the data seemed to be wrong.

In other words, it is not just those in Arts who are worried.

Last month, "more than 100 law students stormed the central library," according to a report in student magazine Canta. They demanded that Carr hear their protest. But he was away and did not attend, Canta reported. It was noted by Chris Gallivan, Acting Dean of the School of Law, that communication has been very poor.

What was the beef? Students had been kept in the dark about plans to align the School of Law with the College of Business and Economics. They were concerned about losing the Law library.

Law student and protest organiser Jeremy Bell-Connell told The Press that the changes are "not only detrimental to law students, but are part of a wider trend of declining services and quality at the University of Canterbury". Bell-Connell added that: "We need to stem the flow of cuts to protect the university's quality services and reputation. The university has already made cuts to Arts, resulting in job losses and course cuts.

"Rebuilding Christchurch is going to require world-class skills and education," he said.

Bell-Connell also looked beyond Carr to Steven Joyce: "The Government is cutting our future by refusing to give the university the funding it needs to retain the quality academics and resources it needs to compete."

Carr dismisses the protest as "about 50 students who were concerned about their library space". He believes there "has been some misinterpretation in terms of what has changed and what hasn't". He claims that law students won't see any difference in terms of their programme.

But are even greater mergers possible? In August the Ministry of Education and the Tertiary Education Commission released a document called Directions for Education Renewal in Greater Christchurch, which anticipated last month's controversial proposals to close and merge Christchurch schools.

The document has been through several incarnations. It asks questions about tertiary institutions as well as schools.

It suggested "greater collaboration between tertiary providers" and "opportunities for complementary delivery". Government could prioritise "investment in facilities that will have shared use".

It says "priority will be given to investment in facilities that will make a positive difference to New Zealand's and Canterbury's economy". Institutions would be supported to "build on areas of strength that are economically important such as engineering and agriculture".

It says that "while the emphasis is on collaboration, the Government will be open to proposals to rationalise organisational arrangements".

It says that "providers must also keep a focus on the industries that will generate prosperity beyond the rebuild" and "enhance programmes that can deliver an economic advancement for the region".

It also notes that while "providers are self-managing and guaranteed autonomy in the legislation, the Government can facilitate dialogue, encourage and participate in network planning, and help broker relationships between providers and agencies". Government may also suggest that "institutions make changes in their portfolios".

Government may even, "if necessary, step in to resolve impasses".

Does this sound ominously like preparing the way for a tertiary sector overhaul in Canterbury? Carr says "there is no evidence of any Government intention to force institutional rearrangements".

Since before the earthquakes there has been an alliance through which Canterbury University, Lincoln University and CPIT compare notes and look for duplications and areas for overlap, Carr says.

In the past six to nine months, this work has become more intensive, but he says that opportunities for working together are modest.

"The Government has been pretty clear. It wants the three institutions to satisfy themselves, and I guess ultimately the Government as funding agent, that there are not duplications.

"If we're seeking support from the Government in the way of capital, they want to make sure on behalf of New Zealand taxpayers that those assets will be well used.

"We believe we've looked earnestly, with an open mind, at those opportunities, and the reality is there's not a lot of duplication."

The same document noted that international students, and the revenue they represent, have left the region in large numbers since the earthquakes.

But one reason why Carr says the outlook is a little rosier now than it was in July is because the university has recently contracted Australian private education provider Navitas to recruit international students and teach them English.

Carr says that despite the timing, this is unrelated to the closure of existing English- language programmes.

He explains that international students who are ineligible for first-year study at Canterbury would do a year with Navitas on the Canterbury campus before going on to a normal second year.

Some academic staff and union organisers are sceptical, but Carr says that Navitas programmes will be quality assured and the reason that students who would normally be below standard can be quickly brought up to speed is because Navitas teach from nine to five for 40 weeks of the year rather than 26 weeks.

He says that the first small group of 50-60 Navitas students will start late next year.

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Back to those alarming figures. As noted, the debt suddenly gets much worse in 2019 which is when the philanthropic bonds are due.

In 2009, the university raised $50m by issuing bonds to about 1000 bondholders. At the time, some thought an interest rate of 7.25 per cent per year for five years was generous, especially so soon after the global financial crisis.

By comparison 10-year Government Bonds were at about 6 per cent in late 2009, and are now at slightly less than 3.5 per cent.

Was it generous? Carr disagrees, arguing that more investors would have subscribed if that was the case. There was the capacity to sell up to $100m of bonds.

The $50m was intended for building costs. It has "largely been committed within the biological sciences area".

Privately, some call this a $50m albatross around the university's neck. Despite the debt, Carr still believes it was the right decision.

"We got value for money," he says. "We've got assets we didn't have before and we've got substantial opportunities to produce graduates in the science fields. This is all good stuff.

"There's no particular evidence that the university would be able to access capital markets today. It's funds that, post-earthquake, we may not have been able to borrow at all."

Every year, $3.5m is paid out in interest. "One per cent of our costs is interest on the bonds," Carr says.

In 2019, the university pays back the $50m or refinances.

"We still have the buildings we built. We still get the stream of services from those buildings beyond the 10-year period of the bonds."

Part of the "philanthropy" in the arrangement is that bondholders can donate the interest or the bond itself. According to the rumour mill, few have opted to do this, despite the university asking them.

Yes, the number of bondholders who have become donors is "not significant", Carr says.

"We have reminded bond holders that it's an option but we haven't aggressively gone after them."

But in the pre-earthquake days, this philanthropic aspect was one of the selling points, at least from the university's perspective.

Comments Carr made to The Press in 2010 seem instructive, and to those in areas like Law and Arts, they give a sense of where his priorities for the university lie.

"There are people out there who just think education is a good thing and they're happy to leave their money to education," he said.

"It might be because they are interested in things we're interested in, like science, engineering and technology. Those kinds of things inspire people to give."

The Press