Warning city needs to diversify

John Christie
John Christie
The Dunedin economy will be hit hard if student numbers and research income at the University of Otago continue to fall, Otago Chamber of Commerce chief executive John Christie says.

Otago University has said it was facing an "uncertain" financial future, with "very little significant growth in student numbers" expected in the near future.

The university was forced to reduce the operating budgets of academic divisions for this year by $2.6 million (1%) after declines in student numbers and research funding.

Mr Christie said the financial difficulty the university was facing could have a "widespread" effect on Dunedin, which he said was too reliant on the tertiary sector.

"If student numbers decrease, then that starts affecting landlords who have got investment properties, it affects the cafes and bars and other providers of services to students, it potentially affects the number of people working in the university and therefore employment in the city," he said.

The "concerning" indications from the university highlighted the city's vulnerability to decreases in student numbers and government funding into tertiary education, he said.

"The increase in student numbers over the past 20 years has masked the decline in other sectors, so our population has remained reasonably static ... and yet our numbers of students have increased quite significantly."

It showed the city could not take growth at the university for granted and needed to grow other sectors, he said.

"We have to realise that the fortunes of Dunedin can't ... [rely] on how well the university is doing in terms of student numbers; we need to be more resilient than having a reliance on one sector."

Dunedin Mayor Dave Cull, who is also a member of the university council, was confident the university was in a strong enough financial position to weather the challenges ahead.

"Clearly, if the worst came to the worst, it would be bad for the city but I think the university is extremely well run," Mr Cull said.

He agreed with Mr Christie the city was too reliant on the university.

"That puts us at risk because if the economy is such that the central government is reducing spending - and [at the moment] it is signalling it will hold spending - there is less money coming into Dunedin."

The "uncertain future" the university was facing was "one of the reasons" why the city needed to diversify its economy, but this had been needed for some time.

The need for diversification had been identified in the council's draft economic development strategy, he said.

Colliers Real Estate commercial property specialist Pete Gale said having little or negative growth in student numbers would put more pressure on landlords who owned poorer-quality student flats.

However, demand for quality student flats would probably stay high given the university's focus on attracting quality students.

- vaughan.elder@odt.co.nz

 

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