NZ bids farewell to fees
But will free tuition deal hit funding?
Universities and academics in New Zealand have broadly welcomed the government’s commitment to abolish tuition fees, but fear that it will lead to university funding being cut.
Jacinda Ardern (pictured below), the country’s new prime minister, has confirmed that Labour was “committed” to its free tertiary education policy and would “work quickly” to try to start rolling it out from 2018.
The policy will eventually grant three full years of free post-secondary study to anyone who has not previously enrolled in tertiary education. During Labour’s election campaign, Ms Ardern said that students starting courses in 2018 would receive one year of fee-free study, gradually extended to three years by 2024.
Sector figures told Times Higher Education that for 2018 it was likely that new students would still use the loan scheme to pay their fees, but that these would subsequently be written off by the government. In the longer term the government would likely transfer money to universities based on their enrolment figures, they said.
Labour’s pre-election costings put the cost of the free tuition policy at NZ$340 million (£178 million) a year.
John Hattie, director of the Melbourne Education Research Institute at the University of Melbourne, said that the policy was “hugely expen- sive” and that “there is no sign yet [of] what it may do to the university budget”.
“But I imagine, like in Australia, there are few votes affected if the university budgets are slashed,” he said.
Stuart McCutcheon, vicechancellor of the University of Auckland, said that “it has certainly been our experience that when governments set out to be more generous to students they compensate for that by being less generous to universities”.
Grant Guilford, vice-chancellor of Victoria University of Wellington, said that he was “reasonably confident that there will be a transfer from the state to the universities to replace the loss of fees income”, given that the money has been budgeted for. However, he added that it was unclear whether the government would replace the fees “dollar for dollar” or based on the average fee.
Average tuition fees at New Zealand universities are about NZ$6,000 a year, under tiered fee caps that vary across subjects.
Roger Smyth, an independent consultant who recently retired as head of tertiary education policy at New Zealand’s Ministry of Education, said that the government’s costings were based on the assumption that the policy would result in a significant rise in university participation, which he said was “unlikely”.
“This means that the costings are incorrect – the policy will end up costing less than they have assumed,” he said.
Chris Whelan, executive director of Universities New Zealand, added that, prior to the election, “the policy was announced with costings that indicated that higher education
providers would be fully compensated for the reduction in fees”.
“As long as that happens, the policy will work,” he said.
The new government has also brought tertiary education under the responsibility of its new minister for education, Chris Hipkins; previously, education and tertiary education were separate portfolios under different ministers. Research, science and technology is now a separate ministry.
Professor Guilford said that the previous system was a “very good model”, as it highlighted that universities are “not just teaching institutions, we are research-led teaching institutions”, and that the change will make it “slightly more difficult” for universities.
Following its general election on 23 September, New Zealand waited 26 days for a government to be named. Winston Peters’ populist New Zealand First party won 7 per cent of the vote: enough for the balance of power. Peters held court for negotiating teams from the incumbent National Party (which won 44 per cent of the vote) and the opposition Labour Party (which won 37 per cent, but can also count on the 6 per cent won by the Greens). The negotiations were about policy – what policy concessions would win Peters’ favour.
Finally, on 19 October, the verdict was announced: NZF would enter a coalition agreement with Labour, and on 24 October a coalition agreement was signed. This ushered into the prime minister’s office the charismatic 37-year-old Jacinda Ardern, who was rushed into the Labour leadership only six weeks out from the election to stem bleeding poll results.
In many areas, including tertiary education, NZF had policy alignment with Labour. Both parties wanted to increase financial support for students. Both wanted to reduce immigration – in Labour’s case, by reducing international student numbers in lowlevel tertiary qualifications that have been used as a pathway to residency. Both wanted to strengthen careers advice. Both proposed a national dialogue on the future of education.
National’s policy, on the other hand, was almost an afterthought, released in the days leading up to the election. It wanted to work towards having a university ranked in the global top 50 and to raise the target for the value of international education to NZ$7 billion by 2025 (£3.7 billion) – up from the present target of NZ$5 billion.
So, what can we expect for tertiary education? The coalition has adopted Labour’s comprehensive and detailed policies. Its flagship policy of three years of fees-free tertiary education will start its six-year phase-in in 2018. New students will initially get the borrowing for their first-year fees written off. But, as the policy phases in and fees are no longer paid at all for students’ first three years of study, the government will want to strike new funding rates that compensate institutions for those forgone fees.
Given the large variations in tuition fees between institutions, the new fees-free funding rates would see some institutions lose, while others would receive a windfall. Negotiations with the sector – especially with the powerful university lobby – on how to manage this will be…interesting.
The Labour Party expects that its fees-free policy will boost participation. That’s highly unlikely. In New Zealand, everyone who can meet the academic entry requirements for a degree and who wants to study can find a place in the system – if not necessarily in their programme of choice. There may be a small participation response in further/ vocational education, and there may be some movement between different types of institutions. But with a falling schoolleaver cohort and a strong employment market, any overall increase in enrolments is likely to be negligible.
And critics will mark the government down because this measure represents dead-weight spending and because fees-free – especially at the degree level – is highly regressive.
Labour has also pledged an extra NZ$50 a week in the living costs component of the student loan scheme, and for those who receive a grant under the targeted student allowances scheme.
That’s also a high cost: under New Zealand’s interest-free loan scheme, lending costs about 40 cents per dollar. But this policy is a response to housing costs, which have risen much faster over the past 10 years than have the borrowing entitlement and the allowance rate, (which are indexed by the consumer price index).
International student visa rules will also change. For sub-degree students, work rights will go. Requirements for post-study work visas will ramp up, stemming the pathway to residence for those without degrees. These changes are expected to cost providers NZ$250 million a year. Universities will be unaffected, but other providers will suffer.
There will also be an education summit, a requirement for governing councils to have a student member and reviews of both the Tertiary Education Commission and the Performance-Based Research Fund. It will be an exciting three years.