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Productivity Commission report fails NZ

Universities New Zealand media release

Productivity Commission report fails NZ

Tuesday 21 March 2017

The Productivity Commission has again failed to understand the real challenges facing New Zealand’s universities and is trying to fix what’s not broken while ignoring things that are.

Professor Stuart McCutcheon, Chair of Universities New Zealand, says, “The fundamental issue is that funding and regulations are so locked down they are now the main constraint on the ability of our universities to create the truly great universities that New Zealand needs and deserves.

“At no point in its 500-page report does the Productivity Commission acknowledge that New Zealand has what is probably the world’s most efficient and effective university system.

“Despite having the lowest funding levels per student in the developed world, all of the New Zealand universities are ranked in the top 3% of universities internationally. Our teaching is regarded as world-class and our qualifications are internationally recognised and highly regarded around the world.

“Compared to every country for which we can locate statistics, our graduates have the best qualification completion rates (84%), highest graduate employment rates (98%) and lowest under-employment rates (12%).

“Our research is also outstanding – with international citation rates at 1.4 times the average. We have struck a good balance between research intensity and teaching quality.”

The universities create huge value for New Zealand, even though our average expenditure per student is US$15,400, which is 5% below the OECD average. In comparison, in Australia it’s US$19,916, in the United Kingdom it’s US$25,700, and in the United States $27,900.

Per student, the sector spends just 77% that of Australian universities, and 61% that of Canadian universities.

Chris Whelan, the Executive Director of Universities New Zealand, says the Commission has lost sight of the real issues hindering the continued development of the sector.

“They are arguing that deregulation and opening the market up to more international competition is the key to producing a better system for students and employers.

“The reality is that our funding levels are too low to attract high quality international providers or to produce the innovative new forms of teaching that are appearing in other parts of the world. All of the universities identified previously by the Productivity Commission as demonstrating international best practice, are funded at rates at least three times that of New Zealand providers. We are not in principle opposed to competition, but we cannot be expected to compete with international providers while government continues to tie our hands with low funding levels.

“Similarly, our funding system hasn’t really changed since it was introduced in the early 1990s. Today universities are still being funded as though they were delivering in the old classroom-based model. The funding system hasn’t evolved to reflect the opportunities and challenges of today’s mix of internet-based delivery, workplace-delivered teaching, or work-integrated learning.

Chris Whelan says universities are concerned that instead of addressing these issues, the Commission has recommended an odd mixture of deregulation, heavier regulation, experimentation and pilot programmes.

“They are also proposing changes like getting rid of University Entrance and the quality system that is applied to all university qualifications.

“It’s not sensible,” says Chris Whelan. “The reason we have so few young people failing at university is because University Entrance sends a good signal that they are academically ready for university-level study. And the reason all our universities are so highly ranked internationally, and why we have such good graduate employment rates, is that we have an effective, world-class quality assurance system involving collaboration between the eight universities.

“We accept that there are always opportunities to tweak settings around things like University Entrance, or quality assurance, but getting rid of them and opening the market to international providers isn’t going to deliver better quality for students. The international evidence shows that where this has been done elsewhere you get for-profit providers setting up shop offering low quality degree programmes that usually leave students with large debts and with qualifications that employers don’t value.”

On the plus side, Universities New Zealand is pleased the Commission has taken up their recommendation for a more joined-up careers information system, enabling secondary students and their families to make better informed choices.

Universities New Zealand has also welcomed the Commission’s recognition that current funding arrangements and levels are a problem and that changes are needed if our universities are to continue delivering world-class teaching and learning to New Zealanders.

In addition, the universities are pleased that the Commission has recognised the need for a more differentiated tertiary education strategy, to reflect the different roles and objectives of the wide range of tertiary education providers.

Chris Whelan says universities look forward to contributing to further conversations about what is really constraining New Zealand’s universities from doing more to help this country and its people.

For interviews or information, contact: Hazel Dobbie, Universities New Zealand, 027 838 2313;

Background: Universities New Zealand’s submissions to the Productivity Commission are available at


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