"A broken system with no bandaid”: Lifeline funding for universities potentially scrapped

University leaders are on tenterhooks as the Government appears to turn their back while crucial funding dries up.  

Last week, Stuff reporter Glenn McConnell revealed that the Government plans to end a $128 million lifeline funding injection that was introduced in 2023.  

Tertiary Education Union (TEU) national secretary Sandra Grey told Massive that staff and students will suffer the consequences if Government funding does not increase soon. 

This comes as universities have made massive cuts to staff and courses since 2023, including Massey themselves cutting over 500 courses last year.  

Grey’s frustration was palpable, "It’s significant in that the funding model still hasn’t been rectified — now we have a broken system with no bandaid.” 

“Without more from the Government, more comes from the student loan for most people and has a massive impact over time. That shows they know, they know, that the institutions need extra funding.” 

When the then-Labour Government announced the ‘lifeline’ funding plan across four years, the true extent of universities’ financial chaos came to public light. In 2025 universities were supposed to receive $56 million.  

That funding was set to expire in 2025, buying time for the new National Government to make changes to the funding model.  

Sector stakeholders have said losing this lifeline will force universities to consider what more to cut. 

UniversitiesNZ, which represents Aotearoa’s eight university vice-chancellors, spelled out this dire warning in a recent briefing to Dr Shane Reti, the minister for universities.  

“The sector will struggle if this $56m ceases and necessarily return to the rolling series of restructuring and cost-cutting that dominated news headlines in 2022 and 2023.” 

The briefing notes that 77% of income across the eight universities is from the Government, as opposed to fees charged for courses, which itself had been hit hard by the drop in international student numbers during the pandemic.  

Massey's enrollment numbers have been on a decline for years. It lost 12.66% of enrollment from 2019 to 2023, leaving them second to worst for NZ universities enrollment loss.  

Meanwhile, costs for the sector have far outgrown revenue. For example, in 2023 revenue growth increased from 1.8% to 7.9%, while cost growth (benchmarked from 2019) increased from 9.9% to 17.3%. 

The briefing notes continue, “In general, universities are managing their way through this, but we are particularly worried about 2026.” 

In that year, according to their projections, revenue growth will be around 2.1%, while cost growth will be 26-27%.  

UniversitiesNZ said this would mean a drop in real funding for the first time ever, forcing major cuts.  

And as the past two years have shown, universities will assess which courses generate the most revenue and divert resources to them.