In a challenging year for New Zealand’s tertiary education sector, three of the nation’s prominent universities—Massey, Victoria, and Otago—are expected to see the elimination of close to 600 jobs by the end of this year. The universities’ plans for staff reductions, which include a mix of voluntary and forced redundancies, have sparked protests from both staff and students. Despite a government injection of $128 million in extra funding for 2024 and 2025 to support universities facing financial strains, the additional funds have not been sufficient to avert the anticipated job cuts.
The financial woes leading to these measures stem from a series of difficult years for university enrollments. While falling domestic enrollments affected various universities, the declines were notably pronounced at Victoria, Massey, and Otago. Unlike other institutions, these three universities did not experience a compensatory rise in foreign enrollments. Tertiary Education Commission figures indicate commonalities among Massey, Victoria, and Otago, revealing a higher staff-to-student ratio compared to pre-pandemic levels. Additionally, staff costs constituted 56 percent of expenditure at these universities in 2022, slightly higher than the 51-53 percent range observed at Auckland, Canterbury, and Waikato.
Massey University, in particular, faced a significant decline in enrollments, losing around 2000 full-time equivalent students last year and experiencing a further drop this year. The Albany campus was severely impacted, with student numbers plummeting to nearly 3000 full-time equivalents in 2022, a decrease of 2000 compared to 2019. Seeking over 200 redundancies across its three campuses, Massey is undergoing regulatory changes to facilitate the easier discontinuation of courses with low enrollments.
Otago University, New Zealand’s second-largest university, forecasted a full-year deficit of $19.8 million, following a loss of nearly $15 million in the previous year. The university has accepted 118 redundancy applications but anticipates additional staff reductions in its ongoing effort to shed several hundred full-time equivalents by the end of 2025, aiming to reduce operating costs by $61.5 million.
Victoria University, in response to the government’s additional funding, revised its redundancy plans and decided to cut 229 jobs while creating 34 new positions. Despite these efforts, 75 staff opted for voluntary redundancy, and a further 65 were expected to be made redundant. The university is divesting student flats, land, and offices with a combined market value likely exceeding $16 million. Furthermore, Victoria University will discontinue certain courses, including Greek, Latin, Italian, geophysics, geographic information science, and physical geography.
The financial challenges faced by these universities can be traced back to a root issue: government funding has failed to keep pace with rising costs. Last year, Massey University reported an operating deficit of $25 million, while Otago University anticipated a deficit of nearly $54 million. Victoria University, having incurred a deficit of $25 million in the previous year, is projecting a shortfall ranging from $30 million to $34 million from its university-only operations this year.
Despite universities sharing some common characteristics, an industry observer notes a resemblance to the situation faced by polytechnics in previous years, where cross-subsidization of loss-making courses with profits from others is no longer a viable solution. University leaders argue that the core issue lies in inadequate government funding to cover escalating costs, echoing concerns that have persisted over recent years.
As the affected universities navigate these financial challenges and implement workforce reductions, the tertiary education sector in New Zealand grapples with the broader implications of balancing financial sustainability with academic offerings. The outcome of these measures will not only impact the affected institutions but will also reverberate throughout the nation’s higher education landscape.
