Budget equation = $300 less for every student

Posted By TEU on May 26, 2011 |

The finance minister Bill English used last week’s budget to deliver significant cuts to tertiary education.

Treasury’s latest Budget Economic and Fiscal Update now shows total spending on tertiary education falling by at least $200 million per year, or over 4 percent.

In 2010 the government invested $4.5 billion in tertiary education. In 2011 it forecasts it will spend $4.2 billion. By 2014 and 2015, this will have fallen even further to $4.145 billion. It is not just student loan funding that has been cut. Last year the government spent about $10,000 per student. Next year that will fall to about $9,700, and by 2015, it will have climbed back to $9,800. That means New Zealand will invest 2 or 3 percent less in the next generation of students than students who studied last year.

Within those cuts though, some areas have done better than others. Degree and post degree education receives a 2 percent increase in the subsidy rate from government. For other areas of tertiary and adult education, there is no inflation adjustment. In addition, as Universities New Zealand chairperson Derek McCormack noted, the 2 percent increase is less than inflation.

“We will be going backwards but not quite as fast as if we had nothing.”

Another area that benefited is private tertiary institutions, which have been awarded funding for an extra 750 student places.

One of the major cuts has been made to the student loan scheme, although most of the savings will come either from suspending inflation adjustments to the student loan repayment threshold ($19,084) until 2015 or reducing eligibility to the scheme, rather than from tracking down borrowers to make them pay back their loan more quickly.

The other area of major cuts is to industry training. The Industry Training Fund will be cut by $57.7m over four years from 2013 and its regulatory compliance/health and safety training funding will be cut by $32.9m over four years.

Other significant budget outcomes include a freeze on both the Mardsen Fund and PBRF funding, and cut to the government subsidy for Kiwisaver employers, which will put financial pressure on polytechnics.


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