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A university spokeswoman said the cancellation was "the only responsible course of action" given Covid-19 community transmission in Auckland, the alert level change in Dunedin and the social nature of the planned ceremony.
"We particularly feel for our graduands and their friends and whanau," the spokeswoman said.
University organisers said it had been a "sad decision", and for some "this will be their second graduation celebration to be cancelled this year due to Covid-19".
Affected students had been contacted and advised graduation and associated university events were cancelled.
Those who were scheduled to graduate at the Dunedin Town Hall on Saturday would now graduate in absentia.
The spokeswoman said that at this stage the university’s second planned graduation ceremony, on August 29, and associated events were still going ahead as planned.
Polytechnic chief executive Megan Gibbons said the Dunedin and Cromwell Cromwell campuses had closed for face-to-face teaching from the move to Level 2 at noon yesterday, but teaching would resume today.
This included all clinics, placements and workshops.
Given the Level 3 status in Auckland, the polytechnic’s Auckland international campus would be closed all week.
The polytechnic’s critical incident management team had recently met to deal with Covid-related issues, Dr Gibbons said.
Preparations were under way for further restrictions, if needed.
Key initial decisions included suspending all domestic travel involving public transport for polytechnic staff, students to use the NZ Covid Tracer app when on campus and students to maintain a 1m distance in shared spaces on campus, she said.