$31.7 million a year to support tertiary education quality, and an update on the first four months of the Fees Free policy

  • Hon Chris Hipkins

The Government is investing $31.7 million a year to help maintain the quality of tertiary education, Education Minister Chris Hipkins announced today.


“Polytechnics, universities and other tertiary institutions will benefit from an increase of 1.6% to per-student subsidy rates from 2019, ahead of expected inflation for 2018,” Chris Hipkins said.


“The increase in tuition subsidies will help address some of the pressures faced by the sector, but is only a first step. 


“I am currently undertaking reviews of the vocational and training education system and Institutes of Technology and Polytechnics (ITPs), which includes looking at funding systems. 


“While this, and work associated with fees-free tertiary education, continues it is important that providers are able to maintain the quality of what they deliver in the meantime.


“I will also shortly be initiating consultation on the maximum amount tertiary education providers will be able to increase their fees in 2019.”


Chris Hipkins said the Government was able to reprioritise funding for the increase to tuition subsidies due to 2017 enrolments being lower than expected and the strength of the labour market.


“Tertiary education enrolments steadily declined from 2010 to 2016, and 2017 was worse than we expected but the data was not available in time for Budget 2018.


“The decline has challenged providers’ ability to maintain the quality of what they deliver to students, made worse by tuition subsidies generally decreasing in real terms since 2011 as increases were targeted by the previous government at particular fields and levels of study.


“The increase in tertiary tuition subsides will be funded from within Vote Tertiary Education baselines,” Mr Hipkins said.


“An estimated $37.0 million of tertiary funding from 2017/18 has been made available for reprioritisation.


“As announced in Budget 2018, total funding for post-school education will be $3.44 billion in 2018/19, up 11.9% from that budgeted for 2018/19 by the previous government.”


Fees Free policy – data for four months


The first, partial year, data from the Government’s first-year Fees Free policy is very encouraging, Education Minister Chris Hipkins said.


“Initial data on the up-take of fees-free tertiary education and training indicates that over 33,000 students and trainees were already receiving fees-free tertiary education up to April.


“The number will increase after the start of the second semester and due to some non-university courses starting later in the year. I will provide a further update in October.


“The impact on students’ lives is already clear. In the January to March 2018 quarter, 25,400 fewer students were borrowing to pay fees than in the same quarter in 2017. Borrowing was $151 million lower in the first three months of 2018 than during the same period in 2017.


“That’s a great start to our commitment to reduce financial barriers to New Zealanders participating in post-school education and training. 


“Signs the policy may have contributed to stabilising the past significant decline in enrolments is also pleasing,” Chris Hipkins said.


“Enrolments across tertiary providers for the majority of level 3 and above courses for the first four months of 2018 are about the same as the previous year, after a drop of about 5000 in the year to the end of 2017.”


The data on fees-free uptake is also providing better information on the number of people who are eligible to receive fees-free support.


In the meantime, the Ministry of Education has revised down its estimate of the number of people who are theoretically eligible for fees free, Chris Hipkins said.


“The Ministry’s costings were based on assumptions from data from 2016, the most up to date information at the time, and were set deliberately at the upper limit to ensure sufficient funding was provided to tertiary institutions in January 2018.  


Updated modelling following the availability of 2017 data shows that the estimated number of potentially eligible fees-free students at tertiary providers as at April 2018 is now 52,300, and potentially eligible fees-free learners in workplace-based training is 1,700, down from the combined 80,000 in the earlier estimate.


A fuller picture of uptake rates will become available as this first year of the fees-free policy is implemented.


Note: See table below for details


Number of fees-free eligible enrolments reported as at April 2018


Number of Students









Private Training Establishments (PTEs)




Industry Training Organisations (ITOs)