NEW ZEALAND: Universities win more funding

New Zealand's government has announced extra funding for universities just days before publication of a report claiming big economic benefits from such spending.

The independent report commissioned by Universities New Zealand concluded that a $40 million (US$30.2 million) increase in annual government spending on universities would, after five years, result in a permanent increase in gross domestic product of $370 million by 2025.

But just days before the report's publication last week, the Minister of Tertiary Education, Stephen Joyce, announced the government would spend $55 million to increase the number of student places at universities in 2011 and 2012.

The money was redirected from spending on workplace-based industry training, which Joyce said was not being used because the recession had reduced the number of apprentices and other employees receiving training.

The minister said the increase would subsidise 1,580 student places next year and 1,315 in 2012 and bring the number of full-time places at universities next year to about 119,000 - their highest level ever.

New Zealand's eight universities have been lobbying hard for increased funding for many years and have been keen for government spending to be redirected to them from other areas of tertiary education.

The chair of Universities New Zealand, Derek McCormack, said universities appreciated the investment. "The additional funding over the next two years will alleviate some of the financial pressure our institutions are facing from the high demand for student places," he said.

But later in the week, McCormack launched the organisation's report on the value of university investment.

It concluded that the nation received most benefit from increased spending on undergraduate rather than postgraduate places.

The benefit would come from more skilled workers earning more money and being more likely to remain employed, and also from the results of research funded by some of the money.

McCormack said New Zealand universities' funding had decreased in real terms for many years and the report highlighted a significant lost opportunity.

The report comes as universities tighten their entry and progression criteria because of a recession-fuelled increase in enrolments. The government funds only a limited number of students at each institution and the universities can only enrol a small number of unsubsidised students.