In New Zealand, only Government Ministers and enthusiastic backbenchers ever really use the official title of the Budget which, for the record, was “Building Our Future” this year.  For opposition politicians and media commentators, there is a desperate annual race to come up with an alternative and usually negative label which really sticks.

In reality, this rarely happens, with the obvious exceptions of the Black Budget, the Mother of All Budgets and, to a lesser extent, the Chewing Gum Budget.  In 2011, words like responsible, careful, sensible and sustainable were used by supporters while terms like cuts, slash and visionless were trotted out by critics.

In terms of tertiary education, ITI believes the Budget was generally positive, particularly given the tight economic conditions which led many in the sector to reasonably expect a zero Budget this year.  Sensible and sustainable are fair descriptors in this context.

From ITI’s perspective, we particularly welcomed the following Budget announcements:

• 750 additional places in PTEs – this was a hugely positive announcement demonstrating the Government’s growing confidence in high-performing private providers.
• 2% increase in funding for degree and post-graduate qualifications – the decision to target the funding increase to degree courses and higher will not suit all providers but it does reflect the Government’s strategic commitment to higher level qualifications.
• Allowing up to 4% increases in fees – the Government continues to slowly loosen – but not release – the restraints on student fees.  Providers will have to think carefully about their fee levels but this decision gives them much-needed flexibility and breathing room.
• $10m extra for the new Education NZ – Although this Crown Entity has not yet been formally established, it already has sizable challenges ahead.  This funding boost will help it get off to a flying start.
• Youth Guarantee expanded to 7,500 – As widely predicted, Youth Training and Youth Guarantee are being merged and expanded.  ITI is supportive of the policy direction and believes PTEs have a strong role to play for young people who are not succeeding at school.  However, there are tensions in this area, particularly for small providers, and at least one very large provider is known to be unhappy with the proposed changes.

Our major concern was the decision to align the post-graduate funding rates for the entire sector excluding only PTEs.  As a result, there will be a 9.5% differential.  ITI asked the Minister for Tertiary Education, Hon Steven Joyce, about this at his candid post-Budget Briefing.

The Minister said there were still issues around the overall funding differential between public and private providers and his officials were working through those.  He wanted that bundle of issues resolved before considering aligning the post-graduate funding rates.  He felt the PTE sector would benefit more from additional places this year instead.  We look forward to working with the Minister and his officials on this issue.

For Budget 2010, we got a credible 6 out of ten predictions correct, 1 partially correct and 3 wrong (including one where we were actually delighted to be incorrect).  For Budget 2011, the final scorecard was four correct, two partially correct and one wrong (though we hope it will happen very shortly outside the Budget process).

Here is how our predictions fared this year:

• A modest but welcome increase in Government SAC funding for the PTE sector – Correct.  The announcement was even better than we expected and included an additional 750 PTE places.
• Expansion of the Youth Guarantee scheme – Correct.  The scheme is being expanded to cover 7,500 young people.
• Confirmation that PTEs will be able to offer level 1 and level 2 courses. – Partially correct.  This was not announced in the Budget but we expect it to be finalised shortly.
• Some level of restriction on the ability of older students to access allowances and/or loans. – Correct.  People over-55 years of age will have restricted access to loans.
• Additional support for providers affected by the Christchurch earthquake. – Partially correct.  There was a broader package of recovery measures in the Budget and a trades training boost for Canterbury.
• A small funding boost for the new Education NZ Crown Entity. – Correct.  This was also higher than we expected.
• A fix for the GST issue with travel payments for a number of trainees. – Incorrect.  This issue remains on-going even though the fiscal costs are small.

In the circumstances, we believe the PTE sector should be quietly pleased with the announcements in Budget 2011.

ITI is a recognised peak body representing a diverse range of high-quality private providers around New Zealand.

Best Budget Review Stuart Middleton wrote a great piece, with a theme of “we don’t know how lucky we are”. More seriously, he calls for some perspective from those in education who often complain that funding is never enough. He suggests a focus instead on what is good in the budget, especially given the context of so little new money being allocated. It’s well worth a read, especially since this week is the time for more considered review of the budget, whereas Budget day was a time for hurried media releases that fit into a simple narrative.

Best Budget Initiative The Youth Guarantee initiatives really do have the potential to improve secondary-tertiary transitions. The PPTA worked this out on Friday, arguing that they might be competing more with tertiary education providers and didn’t like that idea. One good example of that competitive change is with Youth Training. Youth Training will change as it is merged with Youth Guarantee, shifting from a second-chance programme where schools can pass people across who are not succeeding in school, towards a pathway to higher Youth Guarantee study. Youth Training has never been a prestige programme (unlike Modern Apprenticeships, for example), but by inclusion in Youth Guarantee, the pathway may be perceived to, and really have, more potential. Schools have good reason to be worried as good alternative pathways emerge to senior secondary school – to be fair, current Youth Training providers should be worried too. That said, there will be a focus on collaboration as much as competition through the new networks of Youth Guarantee leaders and the other major youth initiative: trades academies.

Nice Win Congrats to the PTEs for finally getting extra EFTS after 8 or 9 years of being held static.

Biggest Question Mark Buried in the youth initiatives was extra money to fund new vocational qualifications pathways at senior secondary level. It will be interesting to see if and how that will work. Since it’s all a bit secret squirrel, I won’t comment until I see details.

Biggest Fail Treasury forgot to put up Vote Tertiary Education details on their website on Budget day – the fixed it overnight, although the lack of demand for it probably reinforced the belief that nobody reads all these documents anyway!

Cheeky Play The Government has booked savings of $34m capex and $29m opex (both over four years) from lower students’ association fees after the VSM bill is passed. The MSD figures (p.74) suggest the figures are higher but I may well be missing something offset somewhere else. Anyway, it seems like the saving will be $17m pa (MSD), which begs the question of whether institutions will be able to fund some services (or students’ associations) out of a higher student services levy, or whether the Minister will block that by setting tough regulations under the new provisions in the Bill currently going through the House.

Budget Change with Most Political Potential As we all should know by now, the only thing the wider public cares about in tertiary education when it comes to elections is student support, so that’s where I’ll look. Student support has been a political non-issue since after the 2005 election because interest-free loans have largely been seen as (a) a good idea and (b) a very good deal for students. The only issue has been whether National would keep interest-free loans rather than any new initiative. So, when we look at the various student support changes, will any of them make the election limelight? No.

I suspect that the various student support changes have enough commonsense behind them that the critics will get no major momentum. Freezing the repayment threshold has had very little criticism and makes up nearly half of the savings. Constraints on aviation training, those in payment arrears and on claiming investment losses against repayments all seem straightforward. The cuts for over 55s (living costs) and for part time students (course costs) have some potential for political support, but I really wonder where the constituency is for them. Over 55s make up 2% of loan recipients and I suspect a much lower proportion of living costs borrowing (I bet many are part-time), as well as a very small proportion of student representatives. And only 40% of part-time students use loans, compared to 80% of full-time students, and they are less likely to get involved in political issues because they are less engaged with tertiary education. And putting aside all of that, how worried will the general public be about all this? I can’t see student support being a major election issue, unless interest on student loans goes on the table, and that seems unlikely.

The Someone Else is Worse Off Award Universities may feel their funding increase adjustment is not enough, but sub-degree provision got no increase, while industry training got cut. But I’d say the worse off will be the government agencies, which will need to find their share of the $330m backoffice savings sought in the core state sector and fund KiwiSaver contributions too.

You see, the Institute of Professional Legal Studies (IPLS) runs Profs courses, the place where graduates of four-year long university degrees go to learn how to be a lawyer, picking up the skills in 13 weeks. IPLS is also an Other Tertiary Education Provider (OTEP), a grouping of miscellaneous organisations with anomalous funding arrangements that usually pre-date 1990. These OTEPS have been funded at the rate of public providers, rather than the private providers which get 9.5% less (why is another post topic), but starting from next year, OTEPs are to get the same rates as private providers.

I am sure there will be great concern amongst the community for this funding cut to the law profession. But there is a glimmer of hope. The IPLS is a committee of the NZ Council on Legal Education (a statutory body) and, while it used to be the only player in the market for training unemployable university law graduates, it now has competition. IPLS competes with the NZ College of Law (owned by the NSW Law Society), which had more enrolments than IPLS last year, even though the NZ College of Law was operating on the lower private provider rate. So obviously it is possible to survive, nay thrive, on that lower rate, which might give you some solace as you think of the plight of lawyers this weekend.

Hold on, if we can give lawyers professional skills for 9.5% less, could we do the same for academic skills in the previous four years…?

1. 4WD Training There is a great story at NZ4WD about the impact of the TEC ceasing funding of regulatory and health and safety training. I’m guessing that most of you don’t check that site regularly, so I’m happy to bring it to your attention. There are some great off the record comments as people explain the impact of large subsidies on the industry and how trainers are adjusting to the new situation – which is of course what they used to do for many years. In fact, it might provide some guidance to others who lose subsidies later today.
2. ITPs Expecting Cuts NZITP, which represents 14 ITPs, has low expectations for today’s Budget, expecting funding to be cut. Of course, special funds were always going to end this year, while the last Budget cut regulatory compliance/health and safety training (as in the last story). NZITP’s James Buwalda also mentions funding being held back for performance review and I’m not too sure about that. The interesting thing about today’s Budget is whether ITPs have extra cuts or new requirements on them. In any case, as James notes, ITPs had a good 2009 and should have a good 2010.
3. 319 Scholarships The Masterton Lands Trust, which I’d never heard of before, has just given out 319 $500 scholarships to students from the area.
4. Motor Apprentices The MTA Apprentice of the Year competition is getting under way. I like that the employer of last year’s winner is called “Chopper”.
5. CPIT Exploiting Staff …according to the local TEU organiser, who points out that a large surplus for 2009 was achieved in part by increasing staff:student ratios.
6. Otago CornerThe University of Otago is not planning to replace a bridge, needs 50% more space in Wellington and Christchurch over the next 20 years, and is reviewing not just the printing department but HR/payroll as well - how will they keep on reviewing departments if they cut their HR staff?
7. HSI Awards The finalists have been chosen for HSI’s Awards for Excellence in Training. The finalists in the Training Provider (Qualification Pathways) category were TREE HOUSE, NorthTec and Practical Education Institute. Unfortunately no finalists were selected in the Training Provider (Workplace Partnerships) category.
8. Learn while You Earn The Press has a story on a private trust that supports school leavers to work and study part-time at the same time. It’s an interesting model.

This post by Edwige Fava, NZAPEP President

There seems to be one constant in the life of the private tertiary education sector, a constant that has been prevalent for quite a number of years now: there is no money.

The National Government’s first Budget in 2009, arguably touted to be the most significant in the last two decades, was certainly a ‘no shock’ Budget, and it is quite likely that this year’s will be the same.  However, while last year’s Budget was focused on managing a dire economic crisis, dare I hope that the 2010 Budget will shock us for its ability to allow for innovation and strategic direction towards building what is crucially an important part of the nation’s infrastructure, and by doing so, enable a stronger economic recovery?

With this in mind, what does the New Zealand Association of Private Education Providers (NZAPEP) expect of this Budget?

We expect some relaxation of the Fee and Course Costs Maxima as well as the inclusion of PTEs in the process for exemptions and appeals.  This policy, combined with capped funding, is stifling the private sector.  PTEs exist because they are small, responsive, innovative in their dealings with students and industry, and are known for their high level of pastoral care.  In many cases PTEs deal with students who would not succeed in the larger institutions. For some, individualised attention, increased support and different learning environments are essential to their success.  Therefore, a relaxation of the policy, to allow PTEs to charge appropriate fees, is essential.

We also expect some changes to interest-free student loans.  In its current form, this policy is not affordable, and in addition, it excludes a significant number of students from tertiary education.  While student support is important, so is access to tertiary study. With an increase in the demand for tertiary education, limited financial resources must be reallocated to benefit a greater number of students.  While some shift has been flagged by Minister Joyce, a more radical re-think of this policy is required so that barriers to tertiary education are removed to enable more students to access tertiary education.

The Minister has also signaled that some extra domestic funded places will be available by releasing funds from other parts of the tertiary sector including some controls on interest-free student loans.  We expect the allocation of these extra places to include the private tertiary sector and to be on a performance basis.

Finally, NZAPEP expects a relaxation of the 103% overprovision policy.  This, driven by the financial ramifications of a free student loan policy rather than as a driver of quality, has impacted severely on the private sector. Some relaxation of this policy for educational provision deemed to be of strategic relevance and for high performing institutions will enable the private sector to offer tertiary education above its funding cap.  This is the best value for tax payer money since the only cost to the Government is the interest on student loans. Importantly, it will increase access to tertiary education at a time when New Zealand needs a more qualified and skilled worked force, and it will partially address the recent phenomenon of students being turned away from enrolling in tertiary study.

So will the Budget shock us with its ability to be innovative at a time of tight fiscal control, and will it allow for strategic investment in the nation’s infrastructure?  I sincerely hope that, at the very least, it will focus on a long term plan for tertiary education in New Zealand, one that will genuinely benefit the country.

This post by Derek McCormack,

It’s no secret that the government is facing difficult financial times and the New Zealand Vice-Chancellors’ Committee (NZVCC) acknowledges that tough choices are needed in this year’s budget.  Indeed, universities have been making hard choices for some time now, as we work to deliver more value for money and continue to drive efficiency in our institutions, while protecting our research and research-led teaching strengths. 

University teaching and research are vital to New Zealand’s economic growth.  While we don’t expect this week’s budget to contain the level of investment needed to maximise our contribution to economic growth, we are somewhat heartened by the work the government has been doing to reduce costs around the margins and free up funds to recycle back into the sector, and look forward to hearing more about these initiatives in Thursday’s budget announcement. 

We are also encouraged by the government’s announcement last week that the budget will prioritise research, science and technology through $225 million of new spending. 

Universities are the most important research organisations in New Zealand.  We have over half the country’s research staff, have the bulk of its fundamental research capability and train nearly all its postgraduate students – the researchers and professionals of the future.  In addition, universities are at the forefront of commercialising research results.

As key players in the science and innovation system we welcome the additional funding for new initiatives to encourage links between companies and publicly-funded research organisations, promote technology transfer, support mid-career researchers and attract top science entrepreneurial talent to New Zealand.

In the Prime Minister’s speech to the Wellington Chamber of Commerce last Tuesday, he stated that “knowledge drives prosperity.” We will continue to encourage the government to lift its investment in universities to a level that allows us to fully contribute to this goal.  We will work with the government, industry and others to make sure New Zealanders enjoy the full benefits – cultural, social and economic – from this investment.

Capital investment in infrastructure like hospitals, schools and roads will not pay off without parallel investment in human capital.  Graduates from our universities staff our hospitals, schools, farms, research facilities and creative sectors, to name a few.

Every New Zealander benefits from investment in our universities.

This post by David Do and Pene Delany, NZUSA Co-Presidents,

Increased access, quality and support have long been priorities for students. They will be watching the Budget with interest, hoping these areas will be enhanced, yet cautious that these key dimensions of the tertiary system may be under threat.

Students are not alone in wanting to see a public tertiary education system that is of high quality, is genuinely accessible, sees students graduate without large debts, and that meets the needs of our society and economy. The ongoing challenge is whether government policy helps or hinders the achievement of these goals.

The current drought in Auckland and Northland provides a useful metaphor for tertiary funding. We seem to be swimming in circles around the same, shrinking, pool of water. At some point we need some rain. Will the drought be broken?

Unfortunately, the signals have been drip fed so much that what is likely to be announced will be unsurprising to many. While last year’s Budget saw cuts in funding for polytechnics, staff salaries, and student scholarships, this year’s Budget seems likely to be all about shifting money around in the same pot.

With graduation season in full swing around the country, institutions have highlighted inspirational stories of graduates who rose up through the system despite encountering many barriers. Upcoming Budget decisions need to ensure the tertiary system will continue to allow future students like them to also succeed. Unfortunately, worrying signals have already been given in the Budget areas of fees, loans, and sectoral funding.

Part time and adult students may end up caught in the proposed lifetime limit on loans, as well as those who may be staircasing or needing to do further qualifications, and new restrictions on student loans for permanent residents will see many blocked from necessary study.

Capped funding has led to some institutions moving to shut their doors to new enrolments. Students will want to know if the quality of their education can be maintained and whether essential academic and pastoral support will be continued in a tighter funding environment.

High and rising tuition fees are a barrier to education for many, and this needs to be remedied, not exacerbated. Rumoured relaxing of the current fee maxima policy is therefore particularly concerning, and is neither a fair nor appropriate solution to the problem of historic under funding in the sector, and more creative and sustainable policies are needed.

The message of ‘no more new money’ and therefore no increase in overall funding to the sector has been made loud and clear by this government. The challenge, they say, is to simply do more with less. However, the simple fact is that you can’t always make something out of nothing, and there’s a limit to how much one can ‘sweat the business’ at an institutional level.

What puzzles students is how calls for restraint and lowering public expectations help deliver the government’s vision for a world-leading education system offering “greater prosperity, security and opportunity for all New Zealanders”. The Government says it wants to close the gap with Australia – but when it comes to investing in tertiary education we continue to fall behind.

We can only hope that beyond this Budget, the Government will increase investment and move away from reactionary and short sighted policies to a well resourced system delivering quality education, contributing to a sustained economic improvement and recovery for all.