21 May 2015

Further $113m boost for tertiary education, skills

Budget 2015 will provide a further $112.3 million of operating funding over four years and $1 million of capital funding to invest in knowledge and skills to grow New Zealand’s economy, Tertiary Education, Skills and Employment Minister Steven Joyce says.

“We are continuing to address the relative underfunding of higher-cost disciplines such as science and agriculture to ensure that these economically important and research-rich areas attract more investment from providers to deliver more of the skills and knowledge New Zealand needs to drive economic growth.

“We are also investing more in manifesto priorities such as engineering and Māori and Pasifika trades training,” Mr Joyce says.

Budget 2015 provides:

· $85.8 million over four years for significant targeted increases in tuition rates at degree level and above, including a 7.5 per cent increase for science, a 20 per cent increase for agriculture, and increases for optometry, pharmacy and physiotherapy.

· $11.4 million over four years to increase the number of engineering graduates, including $5.2 million for more engineering places, and funding for activities to raise the profile of engineering and support more people to become engineers.

· An $8.4 million contingency to grow Māori and Pasifika Trades Training (up to 500 new learners per annum from 2016).

· $5.9 million over four years to support an increase in demand for Trainee Medical Intern Grants.

· $900,000 in operating funding over four years and $1 million of reprioritised capital funding to expand the Youth Literacy and Numeracy Assessment Tool.

Baseline funding to introduce Rate My Qualification, which allows employers to provide direct feedback to tertiary providers, and students to see what qualifications employers value.

The investment will come from funding made available by the reducing demand for tertiary education, reprioritisation within Vote Tertiary Education, continuing to target student support to those who most need it, and some additional money from the Crown.

A stronger economy with more people in paid work and a decline in the size of the population aged 18-25 are reducing demand for tertiary education over the next few years, Mr Joyce says.

“Normally when demand for tertiary education reduces, the per-student funding model means the amount of spending also reduces. However, the Government is retaining existing funding levels for tertiary education overall and reallocating some money to priority areas in this year’s Budget.”

The Government is utilising funding that would otherwise remain unused to invest in higher per-student EFTS rates, and in manifesto priorities such as engineering and Māori and Pasifika trades training.

The parental income threshold, which affects eligibility for student allowance for students aged under 24, will remain fixed at the current level until 2019. Continuing to maintain this threshold will better target assistance to those who need it most, in particular students from low-income families.

An annual maximum fee movement (AMFM) of 3 per cent for 2016 will be subject to public consultation in June. This regulates the amount by which tertiary education providers can increase their fees each year, and has previously been set at 4 per cent.

A lower AMFM will reduce fee increases for students and respond to historically low inflation, which has slowed cost increases for tertiary providers, Mr Joyce says.

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