Financial resourcing of tertiary education

Statistics relating to the funding and resourcing of tertiary education in New Zealand, including tuition subsidies and tuition fees.

Financial performance of tertiary education institutionsUpdated: May 2023

Statistics relating to the financial performance of tertiary education institutions, including universities, institutes of technology and polytechnics, and wānanga can be found on the Tertiary Education Commission website.

Financial resourcesUpdated: August 2024

This section explains the different ways that Government expenditure on tertiary education can be defined and calculated. Then, other sources of income for tertiary education organisations (TEOs) are outlined. Finally, links to sources of expenditure data are provided.

What is counted as tertiary education expenditure?

What is treated as Government expenditure on tertiary education depends on how wide the scope of expenditure is. There are two main areas of Government expenditure on tertiary education:

  • through ‘Vote Tertiary Education’ (mostly by the Tertiary Education Commission (TEC))
  • through the ‘student support system’ (mostly by the Ministry of Social Development).

Spending via Vote Tertiary Education is included in all reporting on Government expenditure on tertiary education. Vote Tertiary Education includes spending on tuition subsides (for both provider-based and workplace based tertiary education), fees free payments, the Performance-Based Research Fund, Centres of Research Excellence, as well as a number of other smaller items. In the 2023/24 fiscal year, estimated actual spending on Vote Tertiary Education by the government was $3,991 million, and is budgeted to be $3,927 million for 2024/25.

There is expenditure in other Votes which can fit under the broad area of tertiary education. The largest of these areas relates to student support and in particular student allowances (Vote Social Development) and expenditure on student loans (Vote Social Development and Vote Revenue).

In 2023/24, estimated actual expenditure on student allowances by the government was $529 million. In terms of student loans, expenditure can be counted and reported in several ways. These include:

  • the gross amount of new lending ($1,430 million estimated actual for 2023/24)
  • the write down on new lending, which reflects the financial cost to the Government of student loans being interest-free and that some of the loans may not be paid back ($539 million estimated actual for 2023/24)
  • the write down plus or minus actuarial adjustments, which includes the write down on new lending but also reflects changes to the value of the student loan scheme in general. Conditions can change which leads to adjustments in the value of the scheme. There are two types, ‘expected repayment adjustments’ and ‘discount rate adjustments’.  The first comes from a reassessment of the repayments that are expected from borrowers, and the second is caused by discount rate changes. This is sometimes used in reporting of government accounts for accounting purposes. In the BEFU 24 documents the former is forecast to be plus $377 million for 2023/24, and the latter to be also a positive amount, $121 million.

The Core Crown Expenses, which are reported as part of the Economic and Fiscal Update processes by the Treasury, uses the initial write down on new lending and selected items of the impairment of student loans in reporting expenditure by the Government on student loans, alongside selected areas of expenditure under Vote Tertiary Education.

The impairment on the value of the Student Loan Scheme can lead to large swings in expenditure and loses some of the relationship with student numbers. So, sometimes only the write down on new lending is used to measure student loan expenditure as it has a closer relationship to student volume.

In international reporting by the OECD, the way student support is defined means that the gross amount of new lending in a year is used to represent student loan expenditure.

Another area which might be included in tertiary education expenditure is funding on research contracts from Vote Business, Science and Innovation. Research funding to tertiary institutions such as via the Marsden Fund and Health Research Council may sometimes be considered ’tertiary education expenditure’.

What is the difference between operating and capital expenditure?

Operating expenditure includes items that cover the day-to-day operating costs of the Government. In tertiary education, this includes items such as spending on tuition subsidies and student allowances. Capital expenditure includes spending on assets that will increase the value of the Crown’s balance sheet. In general, tertiary education organisations are responsible for funding their own capital expenditure. In recent years, Government capital expenditure under Vote Tertiary Education has been largely limited to support for Canterbury-based public tertiary institutions to rebuild earthquake-damaged facilities, with other capital expenditure relating to financial support for polytechnics and IT systems for government agencies.

Student loan payments are capital expenditure, reflecting that they are a debt to be repaid to the Crown. The write-down and impairment of student loan lending are operating expenditure, reflecting that the full ‘real’ value the loans will not be repaid.

What is the difference between fiscal year and calendar year reporting?

The Government’s expenditure on tertiary education can be calculated and presented a number of different ways, depending on the purpose of the reporting. For the Budget process and annual reporting by Government agencies, expenditure is reported in fiscal years from 1 July to 30 June. However, for the allocation process to TEOs via the Tertiary Education Commission (TEC), it is generally reported in calendar years which aligns with academic years for TEOs.

What is the difference between appropriations, actuals, and allocations?

An appropriation[1]is defined as:

“a legislative provision that permits amounts of expenses or capital expenditure to be incurred for activities that fall within the defined scope of the provision”.[2]

In the Budget process, the government appropriates future expenditure for defined areas across Vote Tertiary Education. However, the value of each appropriation may not reflect the final amount actually spent. There may be items where actual spending did not reach the amount appropriated. It may also be that further funding is needed to be appropriated if spending exceeds the original appropriated amount and is reported in Supplementary Estimates process (it is technically illegal for the Government to spend more than is appropriated). The final actual amount spent for past years are reported as part of the Budget process and via annual reporting by government agencies.

An allocation is the amount that the TEC agrees they will fund TEOs from the various appropriations in Vote Tertiary Education. This is usually allocated on a calendar year basis. Note that allocations can then be further adjusted by the TEC following recoveries and performance adjustments.

    As well as receiving income from government, tertiary institutions can source income from private sources such as student fees. In 2022, around 54% of public tertiary institution income was sourced from government funding allocated by the TEC, 22% sourced from student fees and charges, with the remainder from other sources.

      For expenditure based around how government expenditure is managed through the annual Budget process, see:

      For expenditure based around how the TEC allocates and manages funding to TEOs, see:

      For expenditure on student loans and allowances, see:

      For international comparisons on tertiary expenditure, see:

        For a breakdown of the sources of income (including student tuition fees) and expenditure for public tertiary institutions, see: