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In many western countries, governments have made increasing participation rates and widening access for socially-excluded groups a policy priority for higher education. At the same time, higher education has historically been seen as a ‘public good’, with tuition costs offset by subsidies either directly to the universities or to students in the form of grants or low-interest loans. In many Asian countries, where families are accustomed to sending their children overseas or to expensive private universities at home, the fact that many western students have easy access to local universities where they pay partial or no tuition fees seems alien. The growing costs of massification, coupled with the current fiscal stress suffered by many governments after the financial crisis, means that this liberal western model is beginning to unravel. This presentation examines the case of New Zealand, where higher education policy is struggling to adjust to the new financial realities.
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Is the era of accessible, highly subsidised higher education coming to an end?
Lessons from the New Zealand policy laboratory
QS-APPLE 2010 ◊ November 18, 2010Professor Nigel Healey
Pro-Vice-Chancellor, University of Canterbury
New Zealand “policy laboratory”
Treaty of Waitangi 1840 Votes for women 1893 (1919 in UK) Old age pensions 1889 (1911 in UK) Social welfare system 1938 (1945-51 in UK) Independent central bank – Reserve Bank Act 1989 Fiscal Responsibility Act 1994
Accessible, affordable higher education for all, from 1940s onwards
Overview
Why publicly subsidise higher education? Why allow open enrolment to university? A brief history of university entry in New Zealand The performance of New Zealand universities The financial challenges post-GFC The future of open enrolment
While publicly subsidise higher education?
Investment in (higher) education increases productivity and promotes economic growth – especially in a knowledge economy
Higher education transforms the life chances of those educated – promotes social harmony
The gains to society of an educated population exceed those to the educated individuals (through higher productivity and earnings) – there are positive ‘spillover effects’
…and the orthodox policy prescriptions which follow
Countries should aim to increase overall participation rates in higher education
Policy should focus on raising the participation rates of socially disadvantaged or under-represented groups – ‘social inclusion’, ‘widening access’
Governments should provide (at below cost) or subsidise higher education to ensure optimal take-up Such support may be targeted at subjects where the positive
spillovers are highest (eg, teacher training)… …or at lower income groups who are less able/willing to fund
an investment in higher education
Why allow open-enrolment to university? (1)
“Open enrolment” means the automatic right to enter by virtue of qualifications (UE) or age
Competitive selection “rigs” entry in favour of higher socio-economic groups “Rite of passage” for middle-class children; entrenches social
inequalities Regressive redistribution of income from poor to rich “Open access is a cornerstone of our tertiary education system.
Any moves away from this will threaten participation by most of the population into tertiary education” (David Do, NZUSA Co-President)
Why allow open-enrolment to university? (2)
High school performance is a poor predictor of university performance
Take level 3 NCEA scores and award 4 for Excellent 3 for Merit 2 for Achieved Use only best 80 credits (max score 320)
Compare with Grade Point Average (GPA) at end of first year A+ = 9, C- = 1, D = 0, E = -1
NCEA scores vs first year GPA (2009) (source: Sampson & Broght, 2010)
Type II error
Type I error
A history of university enrolment in New Zealand (1)
UC accepted “unmatriculated” students since it began in 1873
University of New Zealand: “the Entrance or Matriculation Examination has been a 'standard' examination given by the University to make certain that its entrants are ready, in its opinion, to pass into the University“ (NZCER, 1935)
Government required NZ universities to admit returning servicemen after WWI without entrance examination
A history of university enrolment in New Zealand (2)
Progressive education movement 1930s-1950s C E Beeby
“the architect of our modern education system” Director of NZ Council for Education Research 1935-39 Director of Education , 1940-60
Peter Fraser Minister of Education 1935-40 Prime Minister 1940-49 “every person, whatever his level of academic ability, whether he be
rich or poor, whether he live in town or country, has a right, as a citizen, to a free education of the kind for which he is best fitted and to the fullest extent of his powers” (speech in 1939)
A history of university enrolment in New Zealand (3)
Unmatriculated students could be admitted at the University’s discretion (“provisional admission” ) first at 30+, then 21+, finally 20+
1989 Education Act Paved the way for introduction of domestic tuition fees ($1,250 in
1991), previously nominal $300 Domestic tuition fees set at 25% of total cost of tuition Increased by average 13% pa throughout 1990s Made enrolment at 20+ a right (no university discretion) -
“driver’s test” principle”
1989 Education Act
Para. 224 2. a) a person is eligible to be enrolled as a student at any institution…if
the person is a domestic student [and] 2. b) the person holds the minimum entry qualifications for the course
determined by the council (as defined by the NZ Qualifications Authority (under para. 257)
3. Sub-para. 2. b) does not apply to a person…[who] has attained the age of 20 years
5. Where the council of an institution is satisfied that it is necessary to do so [it…] may determine the maximum number of students who may be enrolled in a particular course
9. No foreign student…shall be enrolled at an institution if the student's enrolment at the institution would have the effect that a domestic student…would not be able to be enrolled
The story so far
The case for publicly subsidised higher education turns on the positive spillovers for society of having educated, productive and engaged citizens
The case for open enrolment is that it gives everyone, regardless of social background, a chance to succeed?
So: How is New Zealand’s university system performing? And what is the problem with maintaining open enrolment?
Proportion of 25-64 year olds who have studied at tertiary level
Sourc
e:
OEC
D E
duca
tion a
t a G
lance
20
10
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 -
5
10
15
20
25
30
35
40
45
New ZealandOECD
New Zealand university participation rates by age group and ethnicity, 2009
Source
: Min
istry o
f Educa
tion
Pakeha 18-19 Pakeha 20-24 Maori 18-19 Maori 20-24 Pasifika 18-19 Pasifika 20-24 Asian 18-19 Asian 20-240.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
New Zealand university participation rates by ethnicity (% population 15 years+ enrolled)
Source
: Min
istry o
f Educa
tion
2002 2003 2004 2005 2006 2007 2008 20090.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
PakehaMaoriPasifikaAsian
So how is the university sector performing and what is the problem?
New Zealand has 4th highest tertiary participation rate in OECD (after Canada, Japan and US)
Although there are differences in participation rates between ethnic groups, rates are trending up
But growing participation and social inclusion increases the cost to the taxpayer of higher education Giving everyone a “fair go” wastes resources Post-GFC, the government’s ability to fund higher
education is significantly constrained
The cost of the NZ tertiary system ($m)
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Student loansTuition subsidiesStudent allowances
Source
: Min
istry o
f Educa
tion
Direct government funding to universities
2000 2001 2002 2003 2004 2005 2006 2007 2008$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
Total Government FundingEFTS Vote
Source
: Min
istry o
f Educa
tion
Increased funding has price and quantity dimensions
Source: Ministry of Education
2000 2001 2002 2003 2004 2005 2006 2007 2008100,000
102,000
104,000
106,000
108,000
110,000
112,000
114,000
Funded EFTS
2000 2001 2002 2003 2004 2005 2006 2007 2008$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Government Funding/EFTS
Giving everyone a “fair go” necessarily wastes resources
Although it is hard to predict in advance how an individual student will perform, with open enrolment a significant proportion will fail
Open enrolment is a “fair go” to succeed or fail Resources are genuinely wasted if:
Failing students do not learn anything They could otherwise have been working or learning a
vocational trade Their self-esteem and confidence is damaged by failing
“Ghost students” – unintended product of open enrolment, liberal progression standards and student loans
Illustrative academic progression policies
The University of Auckland Satisfactory progress: a student is required to attain a Grade
Point Average of at least 0.8 in the last two semesters in which they were enrolled.
http://www.calendar.auckland.ac.nz/regulations/academic/enrolment-and-programme.html
Victoria University of Wellington Satisfactory progress: passing at least half the number of
points attempted in the last two consecutive trimesters of study, or passing at least 36 points in the most recent trimester.
http://policy.vuw.ac.nz/Amphora!~~policy.vuw.ac.nz~POLICY~000000000900.pdf
Eight year qualification completion rates for domestic students
Source
: Min
istry o
f Educa
tion
Bachelors Graduate cert./ dip.
Honours/PG cert./dip.
Masters Doctorates Total0%
10%
20%
30%
40%
50%
60%
70%
80%
2000-20072001-20082002-2009
Eight year qualification completion rates for all students (bachelors and above)
Source
: Min
istry o
f Educa
tion
2000-2007 2001-2008 2002-20090%
10%
20%
30%
40%
50%
60%
70%
Male DomesticFemale DomesticTotal DomesticInternational
Comparative bachelor’s degree completion rates (five years)
Denm
ark
Finla
nd
Fran
ce
Germ
any
Japa
n
New Z
eala
nd
Norway
Unite
d Kin
gdom
OECD a
vera
ge0
10
20
30
40
50
60
70
80
90
100
Completion Rates (at least 5A/5B Programme)Left Without Tertiary Qualification
Source
: OEC
D E
duca
tion a
t a G
lance
20
09
Proportion of students who leave without at least a first tertiary degree
Source: OECD Education at a Glance 2009
Italy
1
United St
ates 2
New Ze
aland
Hungary
Mex
ico
Esto
nia
United Kingd
omPolan
d
Slove
nia
Norway
Czech
Republic
1
Portuga
l
Swed
en
Icelan
d
Slova
k Rep
ublic
Switz
erlan
d 1
Austria
1
Netherl
ands
Australi
a 1
Finlan
d
Canad
a (Queb
ec)
German
y
Russian
Federa
tion
France
Belgium (F
l.)
Denmark
2Jap
an0
10
20
30
40
50
60%
OECDaverage
Constrained capacity to fund higher education: government debt projections post-GFC
Source: The Treasury's Long-term Fiscal Statement
How can the Government spend less on higher education?
Plan A: Investment Plans 2008 Set enrolment funding cap per institution Drawbacks:
With open enrolment, universities can’t prevent becoming over-enrolled
Public expenditure on student allowances and loans demand-driven and goes over-budget
Worst of all worlds – public spending still uncontrolled and universities underfunded
How else can the Government spend less on higher education?
Plan B: have you cake and eat it (2010) Retain open enrolment to give everyone a fair go, but drive
underperforming students out of the system more quickly by: Penalising institutions for exceeding their enrolment caps Penalising institutions for low course / qualification / progression
rates Denying underperforming students loans
Keep open enrolment, have fewer all-years enrolments in universities and (in principle) graduate the same number of students
Challenges for universities
If open enrolment is to be retained, universities need to fundamentally reshape infrastructure and organisational culture to ensure: Students understand the consequences of failing Weak students are identified and monitored Pro-active support is in place for those willing and able to
succeed
Such changes are a challenge to the business model Large, unsupported enrolment-level classes cross-subsidise
small advanced classes and research Staff may resist reallocation of resources towards level 100
and retention services
A final complication…
Although it appears to violate the 1989 Education Act, a simpler response by universities is to limit open enrolment by selecting on basis of high school results
Action by several universities to adopt selective enrolment creates strong prisoner’s dilemma issues…
...open enrolment universities may find standard of entrants falling, forcing them into a vicious circle (lower entrants, higher retention costs) or (more likely) to adopt selection
Conclusions
Open enrolment has been a feature of New Zealand universities since the 1920s
It has contributed to amongst the highest participation rates in the world…
…coupled with relatively low completion rates Faced with funding pressures, the Government is seeking to
reduce “waste” in higher education, but strategy may be derailed by growing use of selectivity at entry level
Will New Zealand again be a world leader in the policy laboratory?
