Major shake-up planned for NZ universities

Some sweeping proposals have been dropped, but a final report into the state of New Zealand’s tertiary education system still recommends a major shake-up.

For a university reading the final, 500-page report on the state of the adult education sector, it’s not pretty reading.

They exist in a system that stymies and prohibits innovation, punishes risk-takers and has failed to keep up with their more innovative peers overseas.

Produced by the Productivity Commission, the final report is the result of an 18-month investigation ordered by a Government worried about how the industry will respond to the needs of future students.

A main criticism throughout is that the tertiary system is not “student-centred”, doing a good job to support and protect providers while failing to try to adopt new ways of delivering education.

“This is largely due to the high degree of central control that stifles the ability of providers to innovate.

“Nobody set out to design a tertiary education system characterised by inertia. But over time government has responded to fiscal pressure, political risks and quality concerns by layering increasingly prescriptive funding rules and regulatory requirements on providers. These have the cumulative effect of tying the system down.”

A draft report was released in September last year, meeting a lukewarm response from both universities and politicians.

Following submissions on the draft, some of the main recommendations have been kept, or dropped:

* A proposal for a funding shift from universities to students, dubbed a “Student Education Model”, is no longer suggested

* Advice to re-introduce interest on new student loans remains, but has been finessed with a suggestion borrowing could at least be weighted to the Consumer Price Index (CPI).

* Career services in schools, which are “fragmented and operating poorly”, should be redesigned.

* A need for incentives for providers to invest in teaching quality, which suffers as more importance is placed on research performance.

* University Entrance, which is restrictive and disadvantaged Māori and Pasifika learners, should be scrapped allowing all universities to set their own entry requirements.

Perhaps the most radical suggestion from the draft was the Student Education Model, which would have seen a switch from funding tertiary providers to funding individual students.

On turning 16, every citizen and eligible resident would be entitled to $45,000 that they could spend on any approved course they wanted.

But after receiving submissions and exploring overseas examples, the Commission found it would be “very challenging” to introduce the model in New Zealand at this time, considering concerns about student decision-making.

Bringing New Zealand providers up-to-speed with more progressive international counterparts is also recommended.

Overseas institutes where online and on-the-job education had been introduced are highlighted as breaking down barriers to student participation.

These include an online joint venture between Melbourne’s Swinburne University and private firm Seek, and the University of Waterloo in Canada which offers a co-op programme spread over five years that includes 24 months of work experience.

To encourage new models, the Commission recommended providers be allowed to use a portion of their funding on “experimental courses” that would be exempted from published performance data.

This would encourage tertiary providers to experiment and successful models could be scaled up.

Of course, the recommendation that will garner most media attention will be student loan interest.

The Commission noted its suggestion to reintroduce interest was unpopular with many submitters and had been ruled out by the Government.

But it has refused to back down and it remained the Commission’s “first, best advice” that it be reintroduced on new student borrowing.

In 2014, 186,000 students, or about 72 percent of those eligible, borrowed $1.6b.

But the Government only recovered 60 cents per dollar lent to students because of a lack of interest, which created a strong incentive for it to control student numbers and fees.

Perhaps in an acceptance that their suggestion is unlikely, the Commission added a second recommendation to their final report that any new student borrowing should at least be adjusted for inflation.

Funding the real issue

Chris Whelan, executive director of Universities New Zealand, had little praise for the report.

“Look, we’re disappointed. First off the Productivity Commission really ignored their original brief which was to really look at future models of tertiary education and was the system positioned for it.

“They’ve come back to the conclusion ‘oh it’s because there’s not enough competition in the system’ without actually looking at things like ‘well is there enough funding in the system?’.”

This was the crux of the problem – funding – and it was useless to compare New Zealand institutions to those who had vastly superior cash flow.

Every system the report had cited had at least three times the funding, with one American University getting an average of US$53,000 annually per student while the New Zealand average was NZ$14,500.

Whelan said it had also ignored the role of universities in producing high-quality research and their links to the community, while solely concentrating on how to produce highly capable graduates.

This was important and it was good to open discussion about the future of the sector, but the Commission had missed the mark.

“It’s a report that’s kinda a bit all over the place, it feels like something that’s been written in a bit of a hurry following feedback received in September/October last year … there were a range of slightly inconsistent findings in the report, in some cases pretty much full deregulation, in other cases the Government should be going in and doing a whole lot more.”

What the politicians think

Being an election year, we’re unlikely to see any of the recommended changes adopted this year.

It won’t be high on the Government’s agenda and any moves to shake up interest on student loans, even minor, could have a disastrous impact.

Loan interest seems to be something no party wants to touch, although other areas could be addressed in the longer term.

Tertiary Education Minister Paul Goldsmith was keeping an open mind on all recommendations, with the exception of student loan interest.

“The Government is committed to retaining interest-free student loans for borrowers residing in New Zealand.

“We do not want to see young people starting their working lives with unmanageable debt.”

Goldsmith says no pressure was put on the Commission to remove the proposal for student education funding, but the Government believed it was simply swapping one complex system for another.

Gareth Hughes, the Green Party’s tertiary education spokesman, said if you took the report as a whole it would be “quite the experiment” with an entire generation of students.

The report was a worthwhile contribution to the debate and the Green Party agreed with some aspects, including raising the loan payment threshold, improving career advice in schools and loosening performance-based funding.

But other areas, including interest on loans, were out of the question.

“I disagree with the Productivity Commission’s general approach, they see government control and even some aspects of quality assurance as de facto negatives in the system but we’ve got to remember universities are run for the public good and public benefit of New Zealand and given the government is the major funder it is appropriate to have government control, regulation and quality assurance.”

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