Tertiary education initiatives in Budget 2005 will strengthen the quality and relevance of tertiary teaching, learning and research in New Zealand, Education Minister Trevor Mallard announced today.

"In previous budgets we have focused on putting in place the tertiary education system reforms. We are concentrating now on lifting quality and relevance throughout the sector, in line with the Statement of Tertiary Education Priorities for 2005-07," Trevor Mallard said.

The government is investing an additional $341.3 million over the next four years across the tertiary sector, including a further $44.6 million over the next four years to expand Modern Apprenticeships and industry training (see separate statement). Total spending on tertiary education in 2008-09 will be $3.19 billion, an increase of 81.5 per cent since 1999-2000.

"The new funding this year includes additional money for the Performance-Based Research Fund, which supports world-class research. Top quality research at tertiary level is vital to this country’s economic and social development and sustainable growth. The fund will increase by $75.5 million over the next four years, raising it to $193.7 million by 2008-09."

Other important elements of the tertiary education budget are:

• $132.7 million from Budget 2005 and previous budgets will go to increasing the funding rates for strategically relevant subject areas, including science, trades, technical subjects, agriculture and horticulture. The new rates, which follow a review of funding categories, are set out on www.tec.govt.nz
• Student component funding rates will increase by 2.6 per cent to reflect inflation and these rates will be rolled out for a further year to 2009. This is additional to the funding category review allocation.
• An additional $57 million over four years will improve the tertiary student support system, including $13 million for the new bonded merit scholarships (see separate statement).

Budget 2005 Tertiary Education Questions and Answers

Performance-Based Research Fund

QWhy is government increasing the amount of the Performance Based Research Fund (PBRF)?
AGovernment is committed to investing in high quality research that is relevant to New Zealand’s economic and social priorities. Quality research at the tertiary level is key to this country’s economic and social development and supports quality degree level teaching. The PBRF furthers government’s aim of improving the average quality of research in the tertiary system and this funding increase will provide additional incentives for tertiary education organisations to strive for research excellence. Additional funding for the PBRF builds on the success of the first PBRF Quality Evaluation round (2003) with further support for excellent, world-class research.

QHow much additional funding is government providing?
ABudget 2005 increases the total value of the tertiary education PBRF by $75.5 million over the next four years. The total annual value of the PBRF rises to $193.7 million by 2008/09.

QWhy do we have the PBRF?
AA strong, high-quality tertiary research sector has been identified in government’s Tertiary Education Strategy (TES) 2002-07, the recently released Statement of Tertiary Education Priorities (STEP) 2005-07, and in the Growth and Innovation Framework (GIF) as being pivotal to New Zealand’s economic and social development.

The tertiary education sector is responsible for about two thirds of the country’s research output. This research contributes to product and technological innovation, assists in better understanding social, environmental and economic problems, and supports equipping New Zealanders with 21st century skills and quality degree level teaching.

QHow is PBRF funding allocated?
AThe funding is currently allocated to eligible Tertiary Education Organisations (TEOs) by the Tertiary Education Commission (TEC), based on the 2003 Quality Evaluation results. From 2007 onwards the PBRF will be based on the 2006 Quality Evaluation results and on the number of research degrees completed at qualifying tertiary providers and through the value of external research income.

Funding Category and Student Component Increases
Q What is Student Component funding?
AStudent Component funding is the main way government funding is delivered to tertiary education institutions. Student Component funding is based on the number of equivalent fulltime students studying at the tertiary institution and is bulk funded which means it has low administration costs to both government and tertiary providers. Indicative Student Component funding rates are set three years in advance; this is known as the funding triennium. This Budget continues for a further year the current funding triennium of Student Component, ie, out to the 2008 academic year.

QWhat subjects are receiving funding increases in this year’s Budget?
ANatural and Physical Sciences, Trades and Technical, Agriculture and Horticulture, Optical Science and Osteopathy.

QHow were these subjects chosen?
AThe tertiary Funding Category Review (FCR) of 2003 examined subject areas relevant to the social and economic goals of New Zealand that were thought to have a funding discrepancy, between the funding supplied and the cost to providers of supplying the service. Tertiary education providers supplied data on the costs involved in each area being reviewed and this information was analysed.

Subject areas of greatest strategic relevance, where the difference between the revenue and costs was concluded to be a significant variance, were selected to receive an increase in the funding rate.

As a result a number of areas important to New Zealand’s growth and development with technical and scientific infrastructure requirements will now receive a funding rate increase.

QWhat do the increases in funding mean for tertiary institutions?
AThe funding increases as a result of the Funding Category Review means these courses are now funded more appropriately and ensure providers are able to maintain quality provision.

Q How much money is government providing?
AOver the next four years $132.7 million in funding set aside in this and previous budgets will now be spent on implementing the Funding Category Review.

Q There is significant additional funding for trades provision in institutes of technology and polytechnics. What about funding for Industry Training Organisations and modern apprenticeships?
AIndustry training, foundation learning and modern apprenticeships is receiving an additional $44.6m million in this Budget and has received significant additional expenditure since 1999. (see separate statement)