Universities Boost Economic Performance

Universities Boost Economic Performance

A report by the New Zealand Institute of Economic Research (NZIER) shows that government investment in New Zealand’s universities provides a significant permanent increase to GDP.

The report entitled The Economic Value of University Investment was commissioned by Universities New Zealand – Te Pōkai Tara (Universities NZ). It models the economic impact of investing an additional $40 million in university teaching and research in each of the next five years ($200 million in total). The return from this increased investment is a permanent boost to GDP of $370 million per year by 2025.

In addition, the report concludes that higher returns can be achieved by focussing funding on increasing the number of people completing bachelors’ degrees rather than lower level sub-degree qualifications like certificates and diplomas.

“We chose to have NZIER model a short term increase in funding because this type of temporary ‘shock’ clearly illustrates the way the effects flow through the economy from a single cohort of students,” says Universities NZ Chair Derek McCormack. A permanent increase in university funding would result in even greater and increasing returns to GDP over time.

“The reality is that government funding for New Zealand’s universities has been declining in real terms year after year,” adds McCormack. “The report highlights the significant lost opportunity that is a result.”

This is the first time an analysis of this kind has been undertaken for New Zealand. The results are similar to those from Australian analysis carried out by KPMG EconTech for Universities Australia in 2009. The Australian government responded to that report with markedly increased levels of investment in their universities.

Universities NZ believes the NZIER report provides further evidence that university education and research are central to New Zealand’s long-term economic growth. Reversing the trend that sees the New Zealand universities' real income per student continuing to fall year on year - and dropping further and further behind their Australian counterparts - is an investment that would pay dividends for all New Zealanders.

“Permanent increases to our GDP of this magnitude could be a cornerstone to the government’s goal of closing the gap with Australia by 2025,” concludes McCormack. A summary of key findings from the NZIER report and the report in its entirety may be downloaded from the Universities NZ Website (www.universitiesnz.ac.nz/node/483).

ENDS

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