9 Jun 2023

Majority of universities report deficit for 2022, call for government to reinvest savings

8:39 am on 9 June 2023
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Photo: 123rf

Universities had one of their worst years ever in 2022, with five of the eight institutions recording a loss.

RNZ understands the figure could get worse because Waikato was expected to confirm a deficit when it published its annual report next month.

Universities New Zealand warned this year was also looking tough and urged the government to help its members out with money saved from falling enrolments.

Annual reports showed AUT, Massey, Victoria, Canterbury and Otago made deficits last year, while Auckland and Lincoln reported surpluses.

Independent analyst Roger Smyth said it was unusual for so many universities to lose money in a single year.

"The difference between 2022 and all other years is that we've got the majority of universities recording a deficit. That's never happened in the last more than 20 years so it implies that the problems being faced by the system are system-wide," he said.

Smyth said the losses were driven by falling New Zealand and international enrolments.

International numbers were expected to recover but the outlook for domestic students was not so good.

"It's the domestic students which provide the bulk of the revenue and they are set to remain low for some time so I don't see this as being just a blip, I think that many of the institutions are having to think about how they position themselves in this new market," he said.

Education Ministry figures showed universities' domestic enrolments fell by 5000 full-time equivalents last year and forecasts indicated they would fall nearly 6000 this year to 114,000 followed by minimal growth in each of the next four years.

Universities New Zealand chief executive Chris Whelan said it was not good news and universities could not rely on international students to make up for the drop.

He said the government was saving money because it was subsidising fewer students than budgeted and that money should be used to help universities get through a tough time.

"The student numbers overall being lower than forecast means that there is some available money in the government coffers that was earmarked for those students and that is money that could actually be reapplied to help reduce the number of staff that universities are laying off and some of the changes that are going to affect our capability in the long term," Whelan said.

He said the government controlled about 80 percent of university income and it had not kept up with cost increases for many years.

Tertiary Education Union president Julie Douglas said reinvesting the savings was a good idea.

Douglas said universities were in trouble because of long-term government underfunding and in the short-term they needed a boost.

"What we're talking, or about to talk with the government about is the need for an intervention to stop the job cuts which are on the table at a number of universities at the moment so that it gives us some time for the sector to come together and have a discussion about the issue and find solutions."

She said universities would lose valuable expertise if cost-cutting went ahead as planned.

Victoria, Otago and Massey had announced cuts and AUT was expected to join them, she said.

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