LH Martin Institute

The NZ University System Shifts Gear

28 November 2011, by Prof Pat Walsh

Professor Pat Walsh is Vice-Chancellor of Victoria University of Wellington and Chair of the Universities New Zealand (UNZ) Committee on University Academic Programmes.

Though not accompanied by banner headlines, or even especially noticed by the broader populous, the last few years have seen the tertiary sector in New Zealand embark on a distinctly new policy direction.

The move from one system to another has thrown up a range of challenges, exacerbated by the degree to which previous ways had become entrenched. The new challenges cannot go unaddressed.

The early 1990s in New Zealand saw the introduction of a volume-driven funding model which, in its various forms, was oriented towards widening access and participation across all forms of tertiary education. This system—commonly if inelegantly dubbed ‘bums on seats’—prevailed until 2007, with participation rates growing 65% between 1994 and 2007.

The new policy setting was accompanied by non-university institutions getting the green light to offer degrees and, by 2007, 14 percent of degree-level students were enrolled in non-university institutions such as polytechnics, private training establishments and indigenous educational institutions known as wananga. The resulting proliferation of non-university courses, both degree-level or otherwise, gave rise to issues around quality control.

Among universities, the most noticeable effect of the volume driven system related to the composition of their student bodies. With pressure on to open the doors more widely, the emphasis all too easily fell upon participation over success. One result of this was first-year cohorts of very disparate educational backgrounds, and it was a challenge for universities to ensure that students across the spectrum were catered for.

Meeting this challenge was no bad thing. Rather than accept higher rates of attrition, failure and repeated courses, it was incumbent on universities to invest heavily in student learning support and pastoral care. In order that the student’s experience of university amounted to more than a significant debt and a sense of failure, New Zealand universities were compelled to introduce some very different practices in induction and orientation, in bridging programmes, in learning and teaching, in assessment, in learning support, and generally in the relationship and implicit contract between students and institutions. “Student experience” is now a key focus at Victoria University of Wellington and a recognisable part of the University vernacular, and we are a better institution for it.

Another outcome of New Zealand’s volume driven system was that public expenditure on tertiary education grew steadily but also unpredictably, through both direct funding to institutions and student support in the form of loans and allowances. Consequently, successive governments sought to drive down expenditure on a per-student basis. Over time, the real value of government funding per student fell to a level where, by 2007, our eight universities collectively received $230m per annum less than they would have under the funding regime of the early 1990s.

A number of factors brought an end to volume driven funding in New Zealand. Predictably enough, the most important policy driver was the drain on the public purse. Indeed, even this might have continued to be manageable had it not been for the decision in 2005 to make student loans interest free, an egregious misallocation of funds that was nonetheless entrenched due to its attractiveness to voters. Other factors were the often unsatisfactory rates of student progression, particularly in the non-university sector, and disquiet regarding the merits of many non-degree programmes.

Which brings us to present-day drivers. The factors cited above led the previous Labour government to abandon the volume driven system and, in 2008, introduce a capped funding system whereby each tertiary institution negotiates an Investment Plan with New Zealand’s intermediary funding body, the Tertiary Education Commission. In these plans, funding agreements are reached based on student numbers by subject area. Universities, indeed all tertiary institutions, are required to manage their enrolment levels within a tolerance band of plus or minus 3% of negotiated levels. Falling below 97% of the agreed level leads to a claw-back of funding. Exceeding 103% attracts less immediate sanction but risks greater scrutiny in subsequent funding negotiations.

Only as we have shifted to a more tightly managed capped system has it become apparent just to what degree the previous volume-driven model had shaped institutional cultures. On the positive side, it bequeathed an environment that encourages innovation, permits risk-taking and is relatively forgiving of failure.

At the same time, however, it promoted the same growth in programmes seen in the non-university sector. The Universities New Zealand committee that exercises statutory authority to approve new programmes approved some 30-35 per year in the early 1990s, rising to over 100 in 2000 and 2001, before settling at between 50 and 60 in the years since.

This proliferation in turn bred intense competition, both between and within universities. Academics became increasingly adept at demonstrating that their new course, programme or research centre would attract students who would otherwise be lost to the university. Back in the real world, reviews submitted to Universities New Zealand have routinely shown that a high proportion of new programmes failed to attract anything like projected numbers. A direct legacy of this is an array of university programmes that are not financially viable and require substantial cross subsidisation from other programmes.

This presents universities with a challenge that will lead them to take actions which may be resisted by students and staff. Put simply, with only very limited growth in student numbers permitted for the foreseeable future, the introduction of new programmes will require the deletion of existing ones to liberate funding and student places. As you would expect, there is no great enthusiasm among academic staff for deleting programmes.

Without such rationalisation, however, our universities will reproduce the status quo and appear to stagnate at the very time they need to demonstrate they are relevant and vital organisations that are adaptable to an ever changing and increasingly competitive external environment. Viewed more positively, adapting universities’ range of programmes to external factors might also be seen as an opportunity.

Another such opportunity, albeit enforced, has been the need to diversify our funding away from traditional government sources. As well as improving our resource base per se, such moves have the added virtue of driving greater external engagement on the part of universities—with business and industry, other centres of research, individual government agencies, overseas universities and other institutions, and, not least, our global alumni base. I think it is a safe bet that the outstanding universities of tomorrow, and also those best placed to withstand ever intensifying global competition, will be those that have built rich and enduring connections. Though our points of emphasis may differ, that is something all of New Zealand’s universities are striving for.