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April 27, 2009 | by  | in Features |
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A short history of tertiary education funding in New Zealand

Sarah Robson presents the first part of an education series in which Salient provides you with a user-friendly guide to tertiary education funding in New Zealand.

I have a massive student loan. You might have one too. My mum never had a student loan. No, it wasn’t because she worked her butt off in a shitty hospo job trying to pay her own way through her tertiary education in the 70s. Nor did my grandparents fork out the cash for it. Our parents’ generation had it sweet. They were blessed with a tertiary education system that may as well have been free, with a couple of catches here and there. Student bursaries were enough to live on. Going to uni was something you did if you a) had ambition or b) had nothing better to do, as long as you had University Entrance. Some people dropped out. Others stayed and completed their qualifications. They’re probably running the country now, or something. I lay blame for the generation gap in student university experiences entirely on the changing face of tertiary education funding in New Zealand.

As it has transpired, in the years since the first university was established in New Zealand (the honour belonging to Otago University, established in 1869), significant changes have been made to the way tertiary education has been funded. Government funding has always played an integral role in keeping New Zealand’s tertiary education institutions afloat. In the early days of New Zealand’s tertiary education system, grants—requested from the government—were the most important source of income for universities. Stephen Hamilton writes in A Radical Tradition that when Victoria College was established in 1899, its founding Act stated that the highest fee charged to students by the college was not to exceed the lowest fee set at any other college in New Zealand. Up until 1911, the fee set by Victoria was one and a half guineas, which was then doubled in 1912. This egalitarian sentiment encouraged students from “all but the lowest socio-economic sectors of society” to enrol. Most students during Vic’s nascent years only studied part-time, allowing them to work full-time or tend to other domestic commitments. It was not until the 1960s that full-time students became the norm on campus—a direct consequence of the tweaking of the tertiary education funding system.

It is relatively easy to simplify the model of tertiary education funding that prevailed in New Zealand from mid-last century until the dramatic upheavals of the mid-1980s. Generally, the University Council would gather round every few years and decide on a sum of money that they would request from the government of the day. The government handed universities this sum of money, with which they did as they pleased. These grants were not, on the whole, misused, according to Matt Russell in his 2007 critical analysis of funding reforms in the New Zealand Journal of Teachers’ Work. “The system worked for as long as the government took little interest in how universities operated, and [the government] tended to see them [universities] as indistinguishable from one another,” Russell argued. He concluded that while some staff put minimal effort into teaching and research, and some courses were of a questionable quality, New Zealand’s tertiary institutions managed to churn out graduates of a reasonable standard.

The 1960s and 70s have been described as the “glory days” of student life [see Nina’s feature on page 32]. University campuses were hotbeds of political dissent and protest, and students were actively engaged with issues on campus. How did they have time to do all this, drink, study, and have an all-round “quite monumentous” time? Rather than the current targeted student allowance scheme, university students back in the day were provided with government bursaries. While the bursaries were not exactly generous, they were adequate enough to allow students to enrol at university without the worry of having to juggle study with a part-time job. “We didn’t have to worry,” my mum told me. As long as you got yourself an A or B bursary, and did a bit of work during the holidays, you could actually save money, and be a student. I kid you not. Mum told me. Mum is always right.

Unfortunately, things got a bit fucked up. Rob Muldoon, as any half diligent POLS student will know, right royally screwed up the New Zealand economy and ran it into the ground. He’s one man to blame for the death of the golden, carefree days of being a student. Muldoon’s caveman-era-esque protectionist economic policies, alcoholism, and blatant refusal to listen to anyone’s advice culminated in the infamous drunken announcement of a snap election in 1984. Whiskey got the better of Rob’s judgement one too many times. In rolled Labour and David Lange in a landslide, with his much-maligned sidekick, Roger Douglas, in tow. Neo-liberal economic reforms were the name of the game and “free market” became the new catch-cry of the nation. The education sector was not immune to Roger’s magical wand-waving free market transformation of New Zealand’s economy.

In the late 1980s, as had happened earlier in other areas of the public sector, the tertiary education sector was opened up to the forces of the free market. A series of competitive policies were introduced by the Labour government with the intention of making tertiary institutions more financially self-sufficient. Increasing demand for places at tertiary institutions, and pressure to expand the tertiary education system meant that the government could not be relied upon for a significant chunk of the funding required by tertiary institutions. Tertiary education in New Zealand, from 1990 onwards—in simple terms—operated on a “user pays” basis. The student loans scheme was introduced to assist students with their fee payments. Students were not happy, and mass protests, complete with banners, placards and arrests, ensued.

In Salient’s first issue of 1989, Rebekah Palmer questioned the benefits of the new funding scheme for students. Then-Education Minister Phil Goff estimated that the new funding scheme would allow an additional 10,000-17,000 student places to be created. Goff was reported as saying “the student contribution is necessary to bridge the gap between funding available for expanding tertiary education and the huge rise in demand for tertiary places.” Goff maintained that the changes would improve both access and equity to tertiary education. Palmer ended her story with the wise words “eat, drink and be merry while you can folks, for tomorrow we shall pay.” Those words still ring true today. Student debt continues to increase, with no practical solution to our debt woes in sight.

The 1990 general election saw the National party take over the reins of power. The free market reform of the tertiary education sector continued. It was National that introduced the “bums on seats” funding model, in which universities were funded based on the number of equivalent full-time students (EFTS) enrolled. The more students you have enrolled, the more money you’ll get from the government. Competition between universities to attract students was encouraged. One positive consequence of this funding model was the higher rates of participation in tertiary education. However, EFTS has had its fair share of problems, including concerns over the duplication of courses across tertiary institutions and wasteful spending. EFTS still plays a controversial role in the funding of tertiary education to this day.

Throughout National’s nine years in power, government funding of the tertiary education sector steadily decreased. Universities resorted to rising student fees to cover deficits, a trend that still persists at universities across the country. The election of Labour in 1999 did not stem the tide of changes to the way tertiary education is funded in this country. But I might save the story of how Aunty Helen and Uncle Michael funded tertiary education for next time.

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Editor for 2010, politics nerd, panda fan and three-time award-winning student journalist.

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  1. robin says:

    an interesting overview of the history of tertiary education funding in nz. thanks from a current BEd (adult) student

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