The money, which will increase domestic tuition fee subsidies, is in addition to the 5% funding increase announced in the 2023 budget.
The government will also launch a review of the country’s higher education funding system.
Education minister Jan Tinetti said the decision had been made as tertiary institutions were experiencing “unexpectedly large” declines in domestic enrolments and increased cost pressures, as well as below-covid level international enrolments.
“The government has heard the concerns of the sector,” Tinetti said. “When we began our budget process universities and other degree providers were forecasting enrolment increases. The opposite has occurred, and it is clear that there is a need for additional support.”
Sector body Universities New Zealand welcomed the announcement with chief executive Chris Whelan describing the move as “extraordinarily helpful”. However he warned that it “won’t solve all our problems”.
“It will reduce or even remove the need for some of the more significant cuts that universities have been forced to consider,” Whelan said.
“International numbers vary significantly between universities”
Earlier this year, New Zealand’s institutions reported mixed recovery following the country’s borders reopening in July 2022. At the beginning of March 2023 there were nearly 34,000 international student visa holders in the country, compared to 125,000 in 2018.
“International numbers vary significantly between universities,” Whelan told The PIE News. “Some kept their student numbers at pre-covid levels throughout the period when borders were closed by teaching them online and promising to get them to New Zealand when borders reopened.
“Other universities were not as well placed to deliver online and stopped taking new students,” he added. “These universities will take time to rebuild pipelines and they are the universities particularly affected by the financial pressures that the sector is navigating.”
Grant McPherson, CEO of Education New Zealand, said in May that recovery was “variable at best” across the education sector.
“Budgets are tight,” he wrote in a statement. “We need to focus our limited resources to where they have the greatest impact, and we need to be aligned as one with the sector.”
Universities New Zealand also welcomed the review of the higher education funding system, noting that fees and subsidies since 1991 had increased at around half the rate of inflation.
“That was survivable when the proportion of young people going to university was growing,” said Whelan. “But that’s no longer the case and the funding system is increasingly forcing universities to invest in keeping the lights on.”
Institutions including the Victoria University of Wellington and Otago University had previously proposed staff cuts to cope with financial deficits.
In an open letter, the vice-chancellors of both institutions said that “chronic underfunding” was “increasingly threatening” the stability of universities. They said that universities need to be funded in line with inflation.
Whelan called for a funding system that “allows universities to better meet the needs of this country now and for the future”.
“That means a system that supports more equitable access to university for people traditionally underrepresented at university,” he added. “That means ways of teaching and curriculum that better meets the needs of both graduates and their employers.”