University Education A Critical Investment

Media Release 9 September 2009

University Education A Critical Investment

International developments have once again demonstrated that university education is a critical investment for economies, individuals and societies at large, according to the body which represents the New Zealand university system.

Derek McCormack, Deputy Chair of the New Zealand Vice-Chancellors’ Committee, says the release of the OECD report Education at a Glance 2009 and the passing yesterday of Australian legislation increasing investment in university education send a clear message about where New Zealand tertiary education policy needs to head.

The OECD report states that Government budgets and the overall economy reap an advantage from higher numbers of graduates. ” Growing advantages for the better educated and likely continuing high levels of unemployment as economies move out of recession will provide more and more young people with strong incentives to stay on in education. Governments need to take account of this in planning education policies.”

Mr McCormack says that message is backed by the move which will see Australian universities funded for every student they teach by 2012. “They are moving away from a system of rationed places at the very time New Zealand universities are struggling to balance increasing demand in the face of a capped enrolment funding system.”

A key finding in the OECD report is the average net public return across OECD countries from providing a male student with a university education. After factoring in all the direct and indirect costs, the return is almost US$52,000, nearly twice the average amount of money originally invested.

For female students, the average net public return is lower because of their lower subsequent earnings. “But overall, the figures provide a powerful incentive to expand higher education in most countries through both public and private financing,” the report says.

“Going to university pays dividends in later life through higher salaries, better health and less vulnerability to unemployment,” the OECD analysis shows. “In most countries, the difference in pay levels between people who have degrees and people who don’t is continuing to grow.”

Mr McCormack says the Australian legislation allows universities to decide how many places they will offer in approved courses, with the government funding all places offered to those students. The Bill also makes provision for an historic increase to the indexation of government university funding.

“The NZVCC has long argued for true indexation of university funding in this country to compensate the institutions for annual cost increases which exceed the consumer price index. Our university system is under considerable pressure to maintain its international quality in the face of enrolment and cost pressures and what is required is increased investment for greater economic return.”

Mr McCormack pointed to the words of OECD Secretary-General Angel Gurria: “Education has always been a critical investment for the future, for individuals, for economies and for societies at large - in today’s economic environment, the incentives for individuals to invest time and money in education are higher than ever.”

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