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Universities’ Budget 2022 funding doesn’t even keep up with inflation

19 May 2022 | news

Aotearoa New Zealand’s universities are disappointed that despite their potential to be the key to improving wellbeing, addressing climate change and positioning the country for post-pandemic success, Budget 2022’s tiny funding increases won’t even allow them to keep up with inflation.

Research and teaching in New Zealand’s eight universities are major contributors to almost every spending initiative in Budget 2022, yet are barely mentioned and again have not received the funding increases they need to fully serve New Zealanders, says Universities New Zealand – Te Pōkai Tara Chief Executive Chris Whelan.

“Finance Minister Grant Robertson says New Zealand’s strong economy ‘means we can invest to do the basics right’ in education. He talks about the country’s economic security depending on transitioning to a high-wage, low-emissions economy. He highlights the importance of resilience and ‘putting an intergenerational lens on investments’.

“Why then is he continuing to neglect investment in one of the best mechanisms New Zealand has to achieve these and most other priorities in Budget 2022?”

The Government directly or indirectly controls 75% of university income through Student Achievement Component (SAC) funding, the annual maximum fee movement and Crown research funding.

Although universities’ operating costs in the past 15 years have increased by more than 80%, SAC funding has increased by just over 50%. Budget 2022’s SAC increase of $29.892 million to $1,463.1 million includes a 1.2% increase from January 2022 and 2.75% from January 2023. This is well below inflation, with the consumer price index increasing 6.9% in the March 2022 quarter. Universities’ expenditure in any case exceeds inflation, because of the more expensive nature of the items they have to pay for.

“Borders may be reopening from 31 July but universities have a hard battle ahead rebuilding their international student numbers after the impacts of Covid-19. Yet the Government is reducing funding for international education from $38 million to $35 million,” says Mr Whelan.

Research-wise, universities welcome the new allocation of $40 million over the next four years to create a ribonucleic acid (RNA) development platform.

“Universities will also be here to contribute to other Budget 2022 research priorities and may receive funding to do so. But there is only a 0.1% increase forecast for our biggest and most important research funding source, the Performance-Based Research Fund, from $303.97 million to $304.17 million.”

Mr Whelan says universities also welcome the Government’s focus on better and more equitable school outcomes, building science, technology, engineering, arts and mathematics (STEAM) capability for Pacific peoples and prioritising young people’s mental wellbeing.