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It is among a raft of changes proposed to the university's Code of Student Conduct.
But the student community is not happy and led by the Otago University Students' Association it is pushing back.
The changes to the Code of Student Conduct, if accepted, would allow the university's proctor to impose a daily fine on students in flats littered with rubbish to a degree it had "an adverse effect on the visual amenity of that place or property".
Otago University said a group led by the vice-chancellor, and which included Otago University Students' Association, had put forward the recommended changes.
But the association's president Michaela Waite-Harvey said that was not the full story.
"These recommendations have been put forward through the vice-chancellor. That committee just exists to get perspective, that perspective isn't particularly taken into account and just because we sit on that committee doesn't mean we have endorsed it or we have created these," she said.
"We voiced our opposition in those committee meetings and we are voicing our opinion and our opposition through our submission."
The recommendation marked a departure in how the university dealt with students, and put them squarely and inappropriately in students' homes, she said.
"This is an issue between tenants and landlords, tenants and property managers. The DCC [Dunedin City Council] themselves, if they can't even have the power to issue notices on private property how can the university think that it should have the right to do that."
The Code of Student Conduct stated its intent was to promote the safety and well-being of the university community.
But Waite-Harvey questioned how fining students for mess at their own flats had any relevance to that.
"We don't necessarily see this rubbish section that's being added as something that is going to foster the well-being of students. We see it as something that's being introduced as a mechanism for the university to protect its reputation and that's something that they haven't made transparent or clear in the policy and we think that's actually quite deceitful."
The association was also concerned the policy was vague.
It did not address what would happen in the case of mixed flats of students and workers, nor whether all students in all areas of Dunedin were subject to it.
Waite-Harvey suspected it would lead to the most notorious student haunts - such as Castle and Hyde streets - being targeted.
Students spoken to by RNZ were almost unanimous in their opposition and did not believe the university had any right to make judgements - and issue monetary penalties - in their homes.
In a statement, the university's proctor Dave Scott said it would only be used as a last resort.
"The vast majority of our students do the right thing when it comes to rubbish. For those who do not, the process is firstly one of engagement and education where we work closely with students to seek the desired outcomes," he said.
"Barriers to keeping up to date with rubbish expectations have been removed where able. For example, the university has two trailers which students are free to use, they come with brooms and shovels. The trailer can be taken to a local transfer station (where we encourage recycling) and can be emptied for free.
"Currently, there is no specific consequence for not doing the right thing when it comes to rubbish and that is what we are seeking with the proposal - essentially a last-resort option for students who are not doing the right thing."
University of Otago Registrar Chris Stoddart said the policy set a minimum standard of sanitation for students' health and enjoyment.
"A proposed new provision to allow the proctor to issue a Notice to Clear Rubbish, where a student residence has a significant rubbish issue, is not about policing students for throwing the occasional piece of litter as has sometimes been portrayed. This is about situations where gross failures to deal with rubbish appropriately negatively affect others in the community."
At present, the proctor has the ability to issue a maximum fine of $500 under the code of conduct.
The University Council will consider the proposal later this year.