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Fee maxima reference group appointed

Fee maxima reference group appointed

The government has appointed a reference group of tertiary education sector representatives to advise on the design of the new fee maxima system that will semi-regulate tuition fees from 2004.

The fee maxima system will enable the government to set the maximum tuition fee that tertiary education providers can charge students. It is intended that providers have flexibility within the maxima system to vary the fees they currently charge, provided they do not exceed the maxima. Fee maxima will replace the annual fee freeze negotiations between the government and providers that have taken place in 2000, 2001 and 2002.

Steve Maharey said the Fee Maxima Reference Group will give advice on the number of maxima to be struck, what their dollar value should be and what should be included within the maxima.

“Students will continue to contribute to the cost of their study in the future but the government wants to ensure that we can still provide them with certainty about the costs of study once the fee freeze system ends in 2004.

“It is clear that students have appreciated the certainty the fee freeze has given them over the last two years and again next year. Enrolments have continue to increase despite a demographic blip which has shrunk the number of school leavers.

“The current fee freeze system will end in December 2003. The government has accepted that tertiary education providers cannot continue to have a significant element of their income arbitrarily frozen for a fourth year.

“The Fee Maxima Reference Group will give us advice on how we can change our tutition fee policy to move smoothly into the new tertiary education integrated funding system.

“As tuition fees for 2004 will need to be set by individual providers during 2003 we intend to set the first maxima under the new system through the 2003 budget process. The advice from the Fee Maxima Reference Group on the criteria to evaluate fee maxima options will be considered through this process,” Steve Maharey said.

Contact: Michael Gibbs, Press Secretary, (04) 471 9154 or (021) 270 9115, e-mail:
Fee Maxima Reference Group membership

Sally Munro (Ministry of Education) – Chair Jonathan Blakeman (University of Auckland) Andrew Campbell (New Zealand University Students’ Association) Bruce Carlsson (Auckland College of Education) Harry Doig (Association of Polytechnics in New Zealand) Helen Kelly (Association of University Staff) Bruce Knox (Bible Colleges of New Zealand) Paul McElroy (Universal College of Learning) Nicky McLeod (Christchurch College of Education) Julie Pettett (Aotearoa Tertiary Students’ Association) Jo Scott (Association of Staff in Tertiary Education) Roy Sharp (Victoria University) Karl Smith (Te Wänanga-o-Raukawa) Rongamai Vercoe (Te Whare Wänanga o Awanuiärangi)

Terms of reference


In Budget 2002, a new Integrated Funding Framework was announced, bringing together all of the wide variety of funding mechanisms across all the diverse forms of tertiary education. While preserving the distinctive features of these various funding mechanisms, the framework is intended to provide a common overall logic that links all of them. There are three major elements within the framework: funding for teaching and learning, funding for research (including the performance-based research fund and the centres of research excellence), and the strategic development component.

Within the funding for teaching and learning, there are a number of different funding streams, including the Industry Training Fund and the Training Opportunities and Youth Training programmes. The largest fund, however, is the Student Component, which will replace the EFTS-based tuition subsidy system. Within the Student Component, per student funding will be based on cost, capital and performance. Funding rates in the (largely open-access) Student Component will be set three years in advance (a rolling funding triennium) to give providers certainty as to future funding rates.

Under the Student Component, students will continue to contribute to the cost of their study through provider-set tuition fees. Fee setting will, however, be within a semi-regulated framework as providers will only be able to charge fees up to a set maximum (fee maxima) for different subject types and (possibly) level combinations, in order to qualify for tuition subsidies. This will provide students with certainty as to the parameters of their future costs and will also allow some flexibility to providers to assist with their ongoing investment in capability development and quality improvements.

Role of the Fee Maxima Reference Group

The Ministry of Education (MOE) and the Transition Tertiary Education Commission (TTEC) are working together to provide advice to Ministers on the number and level of fee maxima for 2004 and onwards. The primary role of the fee maxima reference group will be to provide advice to the MOE and TTEC on criteria for evaluation of fee maxima options for the government to consider. In terms of this advice, the reference group should focus on the primary issues involved in developing fee maxima. These issues are related to: the number of maxima; the level of the maxima; and what should be included within the maxima.

The primary task of the reference group is to advise on: criteria against which a set of fee maxima options can be evaluated; and appropriate fee data for preparation of options.

It would also be of benefit if the group can also: identify relevant second tier issues for consideration; assist in the preparation of a set of options for government to consider; provide advice on the extent to which the options meet the identified criteria; identify what types (all study levels?, exclude some areas such as aviation or MBAs?) of study should be included within the maxima; and identify options for handling part-time students within the maxima system. The reference group should consider the likely impacts of all options on: students; providers; and the fiscal impact on the Crown.

The work of the reference group will be informed by and consistent with the direction of the tertiary reforms and the Tertiary Education Strategy 2002/07. It is not necessarily expected that the group come to a position on the exact number or level of maxima, rather that advice is given on the implications of different possible combinations of the maxima settings.

Individual members of the reference group will: contribute to discussions on the basis of their expertise and conceptual skills, bearing in mind the overall direction of the tertiary reforms; contribute to the development of advice and, by agreement, produce working papers within their field of expertise; keep an open mind and not limit their role to representing any particular organisation or sub-sector; assist in identifying particular issues, developing costing methodologies, classification, data collection and dissemination systems, etc., and investigating or modelling the implications of implementation; and canvas proposals widely within their network of contacts in the sector to identify issues around future implementation, and help develop robust approaches for managing these.

Exclusions from the scope

The scope of the Fee Maxima reference group will not include the following: Detailed consideration of operational second-order issues that will need to be addressed. It would be to the detriment of the implementation of fee maxima if these issues were to crowd-out discussion of the first tier issues. Further consultation may be required on these issues.

Issues regarding absolute and relative funding rates. Relative funding rates are being addressed by the FCR process. Absolute funding rates remain subject to budget decisions.

The level of the maxima after year one. Adjustments to the fee maxima levels, and/or methodologies for future adjustments are outside the scope of the work, as they will be subject to ongoing policy development, partly in light of the results of the FCR.

The impact of other policy work

The Funding Category Review is in the initial stages. Once the review is completed, the implementation options will include adjustments to the fee maxima or adjustments to the tuition subsidies, or both. Once the results of this review are available, the government will make decisions on how best to proceed.

The reallocation of the research top-ups from degree and post-graduate programmes with the implementation of the Performance-Based Research Fund (PBRF) will mean changes to the funding rates and over the medium term on provider income. In the absence of further adjustments, the funding rates for undergraduate degrees, taught postgraduate and research postgraduate courses will be set at the same levels as the rates as non-degree courses by 2007.


The reference group will produce detailed advice by mid December 2002. This will help to inform advice to the Ministers of Education. The advice will clearly identify the: Criteria against which possible fee maxima might be evaluated; Identify the most appropriate fee data for use in preparing options. It would also be useful if the group were to: identify relevant second tier issues for consideration; assist in the preparation of a set of options for government to consider; provide advice on the extent to which the options meet the identified criteria; identify what types (all study levels?, exclude some areas such as aviation or MBAs?) of study should be included within the maxima; and identify options for handling part-time students within the maxima system.

Timeframe for meetings

Two or three meetings are likely to be required. Dates for all meetings will be finalised at the first meeting of the working group. It is anticipated that all meetings will take place within a week of each other.

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