Summary

This report synthesises the inputs, outputs and outcomes of the Government's tertiary education expenditure over the period 2004-2013 in the five largest tertiary education funds. In total, these funds distributed over $4 billion to providers and students in 2013.

Student Achievement Component (SAC) ($2,018 million in 2013)

The SAC has exhibited increased efficiency over the last 10 years, as measured by the percentage of study load completed successfully. The largest gains in efficiency occurred when the Government increased its focus on performance by introducing the Education Performance Indicators (EPIs) and performance-linked funding. The gains were largest in the polytechnic, wānanga and private training establishment (PTE) subsectors, with universities having started from a higher base. The level of efficiency stabilised in 2012 and 2013.

Returns for provider-based qualifications have been maintained over time, although the impact of the Global Financial Crisis resulted in a slight drop in real earnings for new graduates. The higher employment rate of tertiary graduates compared with people with school qualifications and those with no qualifications was maintained between 2004 and 2013.

Industry training ($138 million in 2013)¹

2004 and 2013, industry training exhibited a period of substantial growth and then contraction in the number of trainees. The expansion in industry training during 2006 and 2009 was associated with a drop in efficiency in terms of the rate of successful credit attainment. Since 2010, the number of delivered Standard Training Measures (STMs) and the amount of Government expenditure on industry training have decreased significantly. This decline coincided with Tertiary Education Commission's operational review² of industry training and the onset of the Global Financial Crisis. Although the volume of industry training declined, the credit attainment rates improved, reflecting a smaller but more efficient system of training.

Student loans and student allowances ($1,599 million allocated to student loans (new lending) and $553 million allocated to student allowances in 2013)

After almost doubling between 2004 and 2012, expenditure on student allowances decreased in 2013, as eligibility changes impacted on the number of recipients. Government expenditure on student loans increased slightly in 2013, despite the number of borrowers falling slightly as a result of falling participation in tertiary education. Modelling of the behaviour of school leavers shows that, after controlling for school achievement, the relative access rate to tertiary education for school leavers from less affluent areas has been maintained.

Performance-Based Research Fund (PBRF) ($262.5 million in 2013)

The introduction of the PBRF has been associated with an increase in the rate of citation of research from New Zealand universities. In addition, the volume of research degree completions and the rate of qualification completion have been improving. Since 2007, the base funding per point on all three PBRF components (Quality Evaluation, research degree completions and external research income) has declined in real terms. However, phased increases in the PBRF now taking place should help to offset this trend.

Footnotes

1. The time frame analysed in this report does not capture the impact of the industry training policy review of 2013/14.
2. This tightened performance requirements, so that funding was removed for those who were not achieving credits.