New Zealand universities¡¯ worst fears appear to have been realised, with the staged elimination of tuition fees costing them any hope of a funding increase.

The Labour-led government¡¯s first , handed down on 17?May, included almost no additional money for higher education. Representative body Universities?NZ said that this would leave institutions about 3?per cent worse off in real terms over the next 12 months.

¡°This is the first time, in as long as our records go back, where there hasn¡¯t even been a nominal cost-of-living increase,¡± said UNZ executive director Chris Whelan. He said that, while inflation in New Zealand was running at about 1.1?per cent, the costs of universities¡¯ principal expenses ¨C salaries, construction and licensing ¨C were rising at between 4?per cent and 5?per cent.

¡°This government has talked so much about increasing access to higher education and making sure every young New Zealander has that opportunity to get ahead,¡± Mr Whelan continued. ¡°They¡¯ve focused on making university more affordable for students, without also investing in maintaining the quality of what students get.¡±

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The government has allocated some NZ$2.4?billion (?1.2?billion) to honour its election promise that it would increase student allowances and phase out tuition fees. Students who have completed less than six months of post-school education pay nothing for the first year of tertiary courses, with the fee-free stretch scheduled to rise to three years by 2024.

Critics say that while the pledge may have helped Labour to win power, there is no sign that it has increased enrolments. The opposition has scorned the move as middle-class welfare, with millions of dollars of expenditure producing no tangible result.

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Education minister Chris Hipkins said that the policy was designed largely for mature workers rather than school-leavers. ¡°People are going to need to retrain and re-educate more often in their working lives, and one of the groups most deterred by the cost is [those whose current] jobs are disappearing,¡± he said.

¡°It¡¯s a huge financial sacrifice for them to forgo work. Throw fees on top of that, and many of them aren¡¯t doing it.¡±

Mr Hipkins added that universities could see direct benefits from free fees, with fewer students forced to drop out. ¡°I?appreciate that the universities have financial constraints, like everybody else, although at the moment they have pretty healthy balance sheets and their cash-flow position is very sound,¡± he said.

UNZ chair Stuart McCutcheon, vice-chancellor of the University of Auckland, said that inflation would cost universities between NZ$18?million and NZ$36?million over the coming year. ¡°Already we are having to restructure our operations to cut costs, and we will inevitably see that process accelerated now with further cuts in staffing,¡± he said.

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¡°New Zealand is missing out on having a sector best able to prepare people for the effects of technological change and the demands of globalisation.¡±

Tertiary education analyst Dave Guerin said that the budget had allocated just NZ$400,000 in new tertiary education spending, most of it to be spent on reforms. ¡°There will be no increase to the rates for any of the research or tuition funding schemes,¡± said Mr Guerin, editor of the Tertiary Insight newsletter.

¡°I?thought they would come up with something, but I?was wrong. The government had spent all its money on election promises, which it had already delivered. They had no money left.¡±

john.ross@timeshighereducation.com