Fees rise as students cop brunt of tertiary underfunding

Domestic fees were increased by 4% for the 2012 academic year at a University of Otago council meeting yesterday, after much debate about how students were bearing the brunt of under-funding to the tertiary sector.

Comments from council members sided with student concerns but, apart from student representatives Jonathan Rowe and Katie Reid, only Associate Prof Liz Slooten voted against the increase.

Otago has increased its domestic fees by the maximum amount allowed for the second year in a row.

Mr Rowe and Ms Reid questioned vice-chancellor Prof Harlene Hayne and university financial services director Grant McKenzie at length about the move.

They asked whether the fee rise was paying for the salary increases of staff members.

Mr McKenzie said the increase was the result of numerous factors that had put "significant pressure" on the university, given other ongoing cost increases.

"Staff salaries and salary-related costs are the most significant factor of these." He said the university was operating in an "income-constrained environment" with only small increases in income alongside capped government funding.

Cost increases at the university of about $14.5 million were "problematic", Mr McKenzie said.

They included about $8.9 million in academic ($3.4 million) and general ($3 million) staff salaries, plus annual promotion increases ($2.5 million).

The fee increase was expected to raise about $2 million for the university, he said.

Council member Roger Tobin said the university needed to be more mindful of the situation they were placing students in.

"We need to bear in mind that students, in most cases, are essentially borrowing from the Government to pay these fees," he said.

"The burden of tertiary education is being passed on to our young." However, asking staff to take a reduction in their salaries was "not appropriate" given the university operated in a marketplace that sought to attract high-level employees.

Prof Hayne said the university had fought very hard for extra government funding and to find new savings.

"This is not a 'you against us' situation," she said.

Chancellor John Ward said he had been involved in approached the Tertiary Education Commission, in conjunction with other vice-chancellors and chancellors, to advocate for increased government funding.

"It is a very difficult situation to get funding increases at the moment and [it] is very complex."

Mr McKenzie said the outcomes of the cost pressures would be a decline in surpluses and less funding for capital expenditure.

"This will have a detrimental impact on the university's capital works programme and may result in a number of projects having to be delayed." Ms Reid told the Otago Daily Times later she thought the university was "over-stating" the increased costs that were being used to justify the increase in fees.

"Two million dollars is absolutely nothing to a $500 million organisation like the university," she said.

The university raised its domestic student fees this year by 6.3% after approving a maximum 4% hike in 2010 alongside a further 2.3% increase to cover a GST rise.

Ms Reid said the fee rises were likely to have an effect "at the other end" when increasing debt levels sent graduating students overseas.