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Universal student allowance too high a cost

17 July 2008

Universal student allowance too high a cost

A universal allowance for tertiary students would come at too high a cost to New Zealand, says Education Forum policy advisor Norman LaRocque.

A $728 million annual universal student allowance may be a government election pledge, The Press has reported today.

The reported cost would represent more than 33 percent of what the government currently spends on tuition subsidies paid directly to tertiary education institutions (TEIs), Mr LaRocque said.

New Zealand already spends much more of its tertiary education budget on student assistance than similar countries (44 percent in New Zealand; 35 percent in Australia; 24 percent in the United Kingdom; 19 percent in Canada; 18 percent in the United States).

"Putting money into student support, rather than into funding for TEIs, would do nothing to improve the performance of the tertiary education sector in New Zealand," Mr LaRocque said.

"It would not help TEIs pay higher salaries to attract and retain top-flight academic staff, would not help universities finance cutting edge research, and would not help support university-industry research linkages aimed at making New Zealand competitive in the global economy.

"Furthermore, government spending on tertiary education relative to Gross Domestic Product (GDP), a measure of the country's ability to pay, is already above the OECD average."

In 2004, public spending on tertiary education amounted to 1.5 percent of GDP (above the OECD average of 1.3 percent), and public spending on tertiary education was 4.9 percent of total public spending - second only to Norway (5.3 percent) and well above the OECD average of 3.1 percent.

"Other, higher-performing countries understand the need for balance in the amount of money spent on student support versus direct funding of TEIs. They also understand the need for a sensible mix of public and private contributions to tertiary education to get the 'best bang' for taxpayers' money. Increasing spending to pay for a universal student allowance would come at too high a price," Mr LaRocque said.

ENDS

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