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University Advisory Group

Final Report
The future of New Zealand’s university system

April 2025
 Embargoed to 5am, 2 September 2025

The University Advisory Group (UAG) was established by the Ministry of Education
in March 2024 to provide advice to the Government on the needs of the university
sector. Group members will consider challenges and aspirations of the many
components of the sector, and its structure, efficiency and effectiveness.
This document is the final report and should be read in conjunction with the interim
report. Together, the two reports provide recommendations and advice on longer-term
changes to ensure the future success of the university system in New Zealand.

Authors
Sir Peter Gluckman (chair), Alastair MacCormick (deputy chair), John Allen (until
February 2025), Arihia Bennett (until October 2024), Phil O’Reilly, Dame Paula Rebstock,
Sir David Skegg and Bella Takiari-Brame.
SSAG observers: Tracey MacIntosh, Hamish Spencer.
Project Lead: Hema Sridhar.

Copyright information

Published by the Ministry of Education, New Zealand, July 2025.

Mātauranga House, 33 Bowen Street
PO Box 1666, Thorndon
Wellington 6140, New Zealand.
www.education.govt.nz

Crown copyright © 2025

Except for the Ministry of Education’s logo, this copyright work is licensed under
the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are
free to copy, distribute and adapt the work, as long as you attribute the work to the
Ministry of Education and abide by the other licence terms. In your attribution, use the
wording ‘Ministry of Education’, not the Ministry of Education logo or the New Zealand
Government logo.

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Preamble
The University Advisory Group (UAG) provided an interim report to the Minister and Ministry as agreed on
a revised timetable in September 2024. Because the report discussed the unpublished Science System
Advisory Group (SSAG) report, which was not released until January 23, 2025, the second phase of
the UAG’s work was also delayed and the panel’s work delayed for some months. Concurrent with the
release of the SSAG report, a new Minister for Universities was appointed. It was consequently agreed
that the final report would be delivered by April 30, 2025. The Government has decided to release both
the interim and final reports together.

However, the panel decided not to revise the interim report submitted in September 2024 but to address
the outstanding issues, which are primarily related to strategic oversight, governance and fiscal matters.
We have also taken into account the responses from officials and the Minister to both our initial report
and the first SSAG report (including the subsequent decisions made by the government). This report has
benefited considerably from a third round of UAG consultations conducted after the initial report was
submitted, as well as from ongoing interactions with the SSAG, which include matters of relevance to
this report.

One important clarification is needed in relation to the interim report. Our recommendation to create a
Higher Education Council referred to a council that focused on universities alone. We are aware that the
term ‘higher education’ can be either restricted to universities or apply more broadly. The panel has come
to the view that the Council should consider the university sector alone. We will now term this entity the
‘New Zealand Universities Council’ to avoid confusion.

We are also conscious that our report has implications for wānanga, polytechnics and independent
providers, as well as for the science and innovation sector. Our terms of reference were specific in that
we were to focus on the university sector. Thus, while there are many matters that might impact on
vocational education and on wānanga, our reports cannot do more than raise more generic issues, while
being conscious of consequential effects on other components of the education system. Issues related
to the student loans scheme were defined as being out of scope.1

The UAG also sought submissions from the public in three separate rounds of consultations in May
2024, August 2024, and February 2025 to inform the two reports. We received many substantive
and valuable contributions. Importantly, the university sector has many stakeholders – the university
community itself, comprising councils, academic leaders and administrators, academics, research staff,
professional staff, students, employers, government agencies, the science and innovation community,
broader community groups and iwi, hapū and whānau. We have met with many of these stakeholders
individually and collectively over the last year. The UAG or some of its members also met with a wide
variety of other stakeholders, including Universities New Zealand (through monthly engagements
with the chancellors, vice-chancellors and research leads), NZQA, students’ representatives,
representatives of the Tertiary Education Union, government officials, Crown Research Institutes (CRIs),
iwi representatives and the private sector. The panel consulted internationally with university system
experts, senior officials and higher education experts in Australia, Singapore, Denmark, Norway, Israel,
the UK, Ireland and the OECD.

1 The panel’s terms of reference and ministerial advice also excluded it from considering the question of a third medical school.
However, the panel’s view is that such substantive matters should be considered as part of a strategic consideration of the whole
university system. It is an example of a potential decsion that has major ramifications well beyond simply the supply of health
professionals. It is of concern this appears to have been a matter for consideration primarily by the Ministry of Health.

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Our task has been to provide the government with a set of recommendations for how this critical set of
institutions should evolve in a complex world. In our view their contributions will be more critical than
ever for New Zealand’s future development, but the challenges they face both internally and externally
lead to the need for significant change.

What follows in this report must be read in conjunction with the UAG interim report, which focused
primarily on the higher-level issues within the sector and critically on the value proposition of universities
in a liberal democracy. In the current broader geopolitical context, the importance of universities' roles to
a vibrant and pluralistic democratic future cannot be overstated.

Sir Peter Gluckman

UAG Chair
April 2025

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Contents

Preamble 3
Recommendations 8
Executive Summary 15
Introduction 19
The New Zealand university system 21
Institutional and governance matters 25
The Ministry of Education 25
The Tertiary Education Commission (TEC) 25
UAG conclusion 26
A New Zealand Universities Council (NZUC) 27
NZUC membership 27
NZUC functions 28
NZUC staff 30
Relationships 30
Monitoring and intervention 30
A Universities Act 31
Defining a university 31
Universities New Zealand 31
University governance 32
University councils 33
Council membership 33
Chancellor 35
Vice-Chancellor 36
Induction and governance education 36
Academic governance 37
Qualifications and qualification approval 38
Size and scope of the New Zealand university system 40
The demographic and student realities 42
International students 42
Domestic and international partnerships 43
The academic portfolio 44
The universities and lifelong education 45
The impact of AI 46

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Quality Assurance 47
Faculty 47
Student wellbeing and other student matters 48
Equity 49
Funding 50
University finances 50
Revenues 53
Operating Expenditures 54
Non-capital investment 55
The funding of New Zealand’s universities 56
The investment plan system 56
Vote Tertiary Education Funding for the Universities 57
Research overheads. 60
Accountability and compliance 61
Funding for Equity 62
The Performance-Based Research fund (PBRF) 62
Centres of Research Excellence 66
Capital Expenditure 68
Final remarks 72
Acknowledgements 74

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Recommendations
Noting that:
• The
 New Zealand universities have served the nation well, but they face significant
challenges and uncertainties.
• There
 is a strong rationale to treat the eight universities as a system and to support greater
differentiation between them.
• The
 lack of effective policy consideration of the universities as a system operating in the
national interest is a fundamental weakness.
• There
 needs to be a closer match between strategic policies for the university system and
the funding made available by the Crown: greater investment will likely be needed to ensure
New Zealand’s universities retain their reputation and quality and meet New Zealand’s
future needs.
• It
 is misleading to see the tertiary education sector as a unitary entity. The university
component is functionally and operationally distinct and thus requires distinctive policy
consideration.
• UAG
 applauds the decision of government to recognise that the strategic and operational
issues for universities are distinctive and to separate ministerial responsibility for
universities from other components of the tertiary education sector.

A strategic approach
1. Develop
 a National University Strategy, and fund and administer the eight universities as a
distinct system.
2. As
 the highest priority establish a New Zealand Universities Council (NZUC) to (a) set strategy
and expectations on the system, (b) provide high-level oversight and policy advice, (c) allocate
Crown funding, and (d) monitor performance for the universities that is administratively separate
from the rest of the tertiary education sector.
3. Preparatory
 to the establishment of NZUC, which would require legislative change, at an early date:
a. The
 Minister for Universities should appoint a Ministerial Advisory Committee that could
offer advice in relation to some of the functions proposed for NZUC and advise on the
establishment of the new entity.
b. Planning
 should commence for NZUC to transform from a Ministerial Advisory Committee
to a government agency that will provide strategic oversight for the university sector,
assume responsibility for the current functions of TEC in relation to the universities and
provide the policy advice for universities that is currently the responsibility of the Ministry
of Education.
4. The
 NZUC (and the prior Ministerial Advisory Committee) should have nine members
comprising:
Seven appointed members being:
i. Chair.
ii. Three
 senior academics in New Zealand universities who do not hold university
administrative roles.

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iii. Three independent persons of distinguished standing who understand the university and
research sectors.
and two ex officio members being:
iv. The Secretary of Education or nominee.
v. A member of the Board of the proposed National Research Council.
Members
 should be appointed by the Minister for Universities after consultation with Universities
New Zealand (UNZ), subject to:
a. The
 Chair will not be in the employment of a New Zealand university or a member of a
university council.
b. A minimum of one member to be expert in economics or finance.
c. A minimum of one member to be Māori.
d. All
 members to be appointed in their personal capacities and, amongst their
characteristics, to have national and international connectivity, and understandings of
universities and research.
e. Appointments to NZUC should be for terms of five years.
f. Consideration
 should be given to making the NZUC chair an executive role that is full or
part time.
5. The New Zealand Universities Council’s statutory functions should include:
a. Advising
 the Minister for Universities on the development of a New Zealand University
Strategy to be incorporated alongside other components in the Tertiary Education Strategy
(TES) as the core policy document underpinning university education, research and
innovation.
b. Assuming
 strategic oversight of the evolution of a high-quality but more differentiated
system, with focus on:
i. the national interest
ii. the objectives of whole system
iii. high-level objectives and performance measures agreed with each university
c. Complying
 with government policies including those in regard to the Te Tiriti/Treaty of
Waitangi.
d. Advancing research and innovation in the universities.
e. Promoting
 closer relationships between universities and the research system, in particular
the public research organisations.
f. Allocating government funding for universities from the relevant appropriations.
g. Monitoring performance of the universities and advising on Interventions.
h. Preparing nominations for Ministerial appointments to university councils.
i. Receiving
 and exercising the delegation from NZQA for the approval of university
qualifications, with the power to delegate qualification approval to the universities subject
to their compliance with the proposed Code for University Qualifications.
j. In collaboration with UNZ, exercising oversight of university self-audit processes.

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6. To
 the greatest extent possible, the regulatory structure for universities should be based on
shared codes that are developed and regularly reviewed by NZUC and UNZ, with responsibility
for overall performance lying with the university councils. The list of codes should include:
a. University Governance Protocol
b. Financial Management
c. Academic Governance
d. Quality Assurance
e. Qualifications
f. Pastoral Care and Student Welfare
7. Compliance
 with the codes should be based principally on self-audit by the universities, with the
self-audit process and outcomes quality assured by NZUC.

Legislation and regulation

8. As
 the opportunity arises in the legislative programme, the government should consider
consolidating all legislation relating to universities into a new Universities Act.
9. The Education and Training Act (2020) should be amended to:
a. rename the Vice-Chancellors Committee as Universities New Zealand.
b. amend
 the functions of Universities New Zealand to reflect the broader roles envisaged for
it in this report, which include the generation of codes and protocols for the governance
and academic administration of universities and, in conjunction with NZUC, the monitoring
of self-compliance.
10. The
 ETA should be amended to insert provision for monitoring governance, with scaled
interventions. Codes for monitoring governance and intervention should be developed by NZUC
in consultation with UNZ.

University governance
11. The
 Education and Training Act (2020) should be amended to fix the size of a university council
at 14 members with membership comprising:
a. 4 members appointed by the Minister
b. The vice-chancellor
 member of the permanent academic staff elected by the permanent members of the
c. 1
academic staff2 of the university
d. 1
 member of the permanent general staff elected by the permanent members of the
general staff of the university
e. 2
 members of the permanent academic staff elected by the senate or academic
committee3 from among its members not holding full-time senior university administrative
positions.
f. 1 student enrolled in the university elected by the students of the university

2 Permanent academic staff should be defined to include academic researchers paid on research grants or contracts of 3 years or
longer or who are employed for three years or more on research grants or contracts.
3 In this report we use the terms senate and academic committee interchangeably.

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g. 1 member who is Māori appointed by council after consultation with local iwi
h. 3 members appointed by council
12. The provisions for Ministerial appointments to university councils should be amended to:
a. require
 NZUC to nominate one or more candidates for appointment to each vacancy,
having regard to the criteria in the Act and the University Governance Protocol, and having
consulted the relevant council.
b. Enable
 the Minister to choose which member to appoint from nominations put forward by
NZUC but not substitute another person.
13. The chancellor should be elected or re-elected only after prior consultation with NZUC.
14. The
 University Governance Protocol should contain a section on the role and duties of the
chancellor and their significance for the leadership of council.
15. Councils
 must formally consult confidentially with the academic community via a senate
advisory group on the appointment or reappointment of a vice-chancellor.
16. UNZ
 and NZUC should expand support for governance through induction and other education
programmes.

Academic governance
17. Schedule
 11 to the Education and Training Act 2020 should be amended so the academic
committee (senate) membership comprises academic staff, the university librarian and
students.
18. 
The NZUC and UNZ should ensure the Code of Academic Governance sets out the principles and
practice of good academic governance.
19. The
 Code of Academic Governance should include guidance for the constitution and terms of
reference to be adopted by councils for the senate.
20. 
The senate constitution should include provision for a clear majority of its members not to hold
senior academic leadership roles in the university.
21. Provision
 should be made in the Code of Academic Governance for senate’s membership to be
expanded to include all professorial staff in exceptional circumstances.

Qualification approval
22. Legislation
 should be amended so that approvals for university qualifications are delegated by
NZQA to NZUC which in turn delegates this power to the universities with minimal constraints.
23.  he Committee on University Academic Programmes (CUAP) process should be replaced with a
T
requirement of universities to satisfy NZUC and UNZ that independent external peer review has
been undertaken.
24. UNZ
 should establish a committee charged with developing the Qualifications Code and
reaching agreement on:
 system that enables students to enrol in more than one university for study leading to
a. a
undergraduate, graduate and research degree qualifications without barriers to cross-
enrolment and at no additional cost to the student.
b. improved cross-crediting for undergraduate degrees between institutions.

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25. In
 general, research degrees4 should be restricted to universities and wānanga, with other tertiary
providers approved to offer research degrees only in exceptional circumstances.

Size and scope of the New Zealand university system

26. The
 NZUC should regularly review the size and scope of the university system, and each
university should consider where course-specific entry limitations based on academic standards
should apply so as to advance their standing.
27. Standards
 for the University Entrance qualification should be set by UNZ and where entry
standards and limitations exist, appropriate pathways or support for educationally disadvantaged
students must exist.
28. Universities should not become overdependent on international student revenues.
29. The Universities should seek to further collaborate:
a. to improve access of students at the undergraduate and course-based masters’ levels.
b. to build effective critical masses of scholars for advanced studies and research.
30. As
 a means to lift performance and quality, New Zealand’s universities should consider seeking
formal international partnerships with world-renowned universities in the disciplines where they
seek to excel.

The academic portfolio

31. Universities
 should be careful to restrict compulsory courses to those required by vocational
bodies or to where there is strong disciplinary and pedagogical justification.
32. Universities
 should expand their graduate degree and diploma programmes, especially in areas
where they have existing disciplinary strength, and find ways to enhance the provision of micro-
credentials.
33. The
 qualification approval regulations and the caps on tuition fees should be reviewed to ensure
they are not constraining the development of micro-credentials in universities.
34. It
 needs to be recognised that while the future is not yet clear, the probability is that AI will
drastically change the shape and role of many educational institutions including universities.
Strategic oversight will be needed to ensure that government and institutional governance is able
and ready to adapt as circumstances demand.
35. We
 recommend a system-wide approach to the development of AI for teaching. Government
and universities must be ready to seize technological opportunities to enhance teaching and
research.

Faculty, students and equity

36. University
 councils and administrations should give more attention to the negative impacts of
the expansion of centralised university systems and services on staff welfare and morale and the
mitigation of these effects.
37. Universities
 should create more opportunities for staff to broaden their experience by
secondments, rotations, exchanges or part-time appointments in industry and in public service.

4 Research degrees are masters’ levels degrees and doctorates where a large component of credit for qualification is based on
research activity examined by means of a thesis or extended dissertation.

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38. Universities
 should be free to take actions they see fit to address concerns about educational
disadvantage.
39. Learner success should be included in the Code for Academic Governance.
40. The
 separate submission of Learner Success Plans and Disability Action Plans should be
discontinued, and sections for learner success and disability action instead included in the
universities’ Investment/Strategic Plans.

Funding
41. There
 needs to be a closer alignment between strategic policies for the university system and
the funding made available by the Crown. Greater investment will likely be needed to ensure New
Zealand’s universities retain their reputation and quality and meet New Zealand’s future needs.
42. The
 investment planning system should be changed to align with the funding cycle so review
dates and funding periods have the same three-year cycle for all universities.
43. University strategic plans should be used as comprehensive investment plans.
44. Under
 the provisions of s419 of the ETA the UAG recommends that the Minister for Universities
issue a distinct set of Determinations of Design of Funding Mechanisms for Universities,
including a Mechanism for Delivery at Level 7 (degree) and above on the New Zealand
Qualifications and Credentials Framework.
45. Once
 the NZUC is established, the allocation of funding to universities and their oversight and
accountability should transfer from TEC to NZUC.
46. The design of the funding mechanism should include flexibility for NZUC to adjust funding rates.
47. The
 NZUC should reserve funds for new developments and to incentivise activities in the
national interest.
48. Tuition fees in general should follow movements in course costs and inflation rates.
49. To
 provide universities with greater revenue stability, consideration should be given to smoothing
out funding allocations by adopting techniques such as grants for multiple years and basing
them on input data smoothed with weighted averages calculated over several years using both
enrolment history and projections.
50. In so far as is possible, simplify reporting and accountability measures to align with the
investment plan and reduce duplicative reporting against different frameworks.

The Performance-Based Research fund (PBRF)

51. The
 PBRF should be continued and the name of the PBRF should be changed to the Research
Intensity Component for Universities (RICU) and focused solely on incentivising research
intensity.
52. Individual
 portfolio assessment should be abandoned and the PBRF calculated on the basis of
research degree completions, research income and citation rates of the institution noting that
any significant changes from the current allocations should not be abrupt.
53. NZUC
 should consider a dashboard approach to assist its strategic analysis and review of the
system.

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Centres of Research Excellence (CoRE)

54. The CoRE Scheme should continue but be enhanced.
55. CoREs should focus on new areas and clusters of activity rather than rewarding well-performing
existing activities. These new areas should be investigator-led and align with New Zealand’s
overall priorities.
56. 
CoREs should continue to include the collaborative requirement of extending across universities
and other research active entities.
57. CoREs should be funded for a maximum of one six-year cycle followed by a possible six-year
renewal. CoREs that are terminated after one round should get reduced two-year transitional
funding.
58. CoRE review processes should distinguish new applicants from renewing applicants.

Capital expenditure
59. All
 capital projects over $75 million should have business cases and their sources of funding
approved by the NZUC.
60. 
Universities should be required to comply with Cabinet rules and Treasury processes for the
management of large capital projects.
61. 
Universities should continue to seek approval for debt financing and the divestment of
significant assets (>$15million), but this approval should be given by the NZUC rather than from
the Secretary of Education as is presently required.

Interactions between the university sector and

the research and innovation sector
62. There
 should be cross-appointments between NZUC and the proposed National Research
Council, and both should be represented on the proposed Research Infrastructure Advisory
Committee.
63. Universities and PROs should increase the number of joint and cross appointments of research-
active staff.

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Executive summary
1. This
 is the second component of the University Advisory Group’s report, and it should be read in
conjunction with the Group’s initial (interim) report.
2. The
 university sector is vital to the country’s future, whether examined through an economic or
social lens. It produces well-trained graduates who enter vocations and business, it is the largest
provider of publicly funded research, and it plays a critical role in a democracy as a critic and
conscience of society. However, the sector faces many challenges, of which the most acute are
growing fiscal pressures. But beyond that the report lists many other challenges our university
system will have to face.
3. Firstly,
 we note with concern the relative lack of strategic thinking about how the universities
are to develop and serve New Zealand into the future. The claim that it is essential that
universities are better managed within a singular system with all tertiary education institutions
is not compelling, indeed it is weakly founded. In reality, the various institutions, students and
end users see universities quite separately. This perception is rational, given the broader and
essential roles of universities discussed in our first report.
4.  are pleased the Crown has recognised this distinction by establishing a separate Minister for
We
Universities and more closely linking universities to the research, science and innovation sector
through the same minister holding the Science, Innovation and Technology portfolio. This report
builds on that decision to recommend separation of strategy (which is currently largely missing),
funding, allocation, and oversight so the universities sector can better contribute to lifting New
Zealand’s place in the world.
5. 
New Zealand must take a more strategic view of the eight universities that comprise the sector.
Unfortunately, current arrangements mean that the university sector does not receive dedicated
consideration, and the panel is firmly of the view that New Zealand must develop mechanisms
to treat the universities as a system rather than eight poorly integrated institutions. But in doing
so it must protect the principles of institutional autonomy and academic freedom that define a
university in a liberal democracy.
6. To
 achieve this, we recommend a fundamental change in how policy is developed for the sector.
We recommend the creation of a New Zealand Universities Council (NZUC) with responsibility
on behalf of the Crown for strategic policy development and oversight of the sector. The
membership and proposed terms of reference for that Council are described. The NZUC would
have amongst its functions that of recommending on the funding mechanisms and incentives to
manage the system within the available funding provided by the Crown.
7. 
University funding should be distinct from that of other components of the tertiary sector.
8. 
Until legislative change is possible, a Ministerial Advisory Committee could take on some of
the non-statutory functions of the proposed NZUC and advise on the transition. TEC should
reconstruct its operations to separate university funding and accountability from those of other
tertiary institutions. When legislative change is achieved, then those university-related functions
now conducted by TEC could be administered by the NZUC.
9. 
The panel has identified many ways the system could respond to New Zealand’s needs into the
future and address the many changes that are coming. Artificial intelligence (AI) may have major
impact on universities worldwide and fundamentally change pedagogy and who provides it. This
alone is a reason for a much more strategic oversight of the system.

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10. The
 panel notes that while the universities are somewhat differentiated, incentives should be
put in place to encourage further differentiation, so universities compete on areas of excellence
rather than the current dynamic of competing for student numbers. Information technologies
would allow the New Zealand universities to collaborate better to ensure access of students to
courses in a more differentiated system. It would also allow clusters of research excellence to
develop.
11. It
 is important that our universities continue to build their international reputation. In most cases
it means identifying areas of strength and reinforcing these. The University of Auckland must do
the same, but it is also important to New Zealand that Auckland employs strategies to ensure
that it is more highly ranked within Australasia. Limiting entry more broadly is one mechanism,
provided equity considerations are taken into account. International partnerships are one
possible mechanism.
12. The
 size of the system needs reflection; there is a case for limiting growth and encouraging
more students in alternative educational paths. The system contains some unnecessary and
expensive duplications. Demographic change will have significant effects on the system –
overall there is a falling birth rate, but the relative proportion of Māori and Pacific students will
grow over the next two decades. Universities are well positioned to respond and assist the
nation’s need for more equitable educational outcomes for all.
13. International
 students are an important element of the New Zealand university system, but given
geopolitical instability, precaution and international experience would suggest they should not
be an excessive component of the student body. The panel endorses continuation of funding
policies that give particular incentives to attract international PhD students.
14. The
 UAG identifies a number of concerns about university governance. It makes
recommendations to improve the quality of governance and to protect the distinctive nature of
universities as communities of scholars. In particular, it recommends an increase in academic
representation on council, a formal mechanism for appointment of chancellors to ensure the
skills mix is appropriate, and a mechanism to make nominations for Ministerial appointments.
15. The
 panel makes recommendations to protect and enhance academic governance, including
advising on the appointment and reappointment of vice chancellors, given their role as head of
the academic community, and to ensure that the academic voice in universities is strengthened
and protected.
16. The
 constraints on universities as a result of system growth and funding not matching costs has
led to increased instability in the academic and research workforce. Given international events, it
would be desirable to achieve more stability. The workforce is further compromised by excessive
internal bureaucracy which is related both to internal processes and requirements from TEC,
NZQA and other agencies; these can be addressed.
17. The
 student body is significantly burdened by the cost-of-living issues and by high rates of
mental morbidity in this age group. It is inevitable that student fees will remain part of the
funding of universities. The student loan scheme was outside the panel’s terms of reference.
18. Universities
 are critical to achieving equitable outcomes for all New Zealanders and universities
must continue to focus on groups including Māori and Pacific people who have been
underserved by the compulsory education system. Indeed, repeatedly in our consultations we
identified concerns over the level of preparation of students to enter university. However, the
UAG also recommends that it should be universities acting through UNZ that should determine
entry standards, not NZQA.

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19. Indeed,
 the panel believes many aspects of university process could be collectively developed
through UNZ, such as codes for student welfare, codes for academic governance and codes for
approval of academic qualifications, assured by appropriate peer review.
20. The
 panel recommends that CUAP cease and be replaced by a code for academic qualifications
developed between UNZ and NZUC, recognising that with good academic governance and given
the maturity of the universities, they should be largely responsible for their own development of
academic programmes.
21. Universities
 should be careful to restrict compulsory courses to those required by vocational
bodies or to where there is strong disciplinary and pedagogical justification.
22. The
 funding system is too focused on student volume capture, so the panel has laid out
a number of principles to inform a revised funding system for the university sector. These
principles include incentives for collaboration, provision to support needed high-cost, low-
volume courses, and provision for new developments of national need.
23. The
 role of universities in micro-credentials and in lifelong learning is rather limited in New
Zealand and has largely been taken up by independent providers both onshore and offshore.
International evidence suggests an important and growing role for research universities to offer
such services.
24. The
 panel supports continuation of the Centres of Research Excellence scheme with some
modifications to ensure refreshment.
25. The
 panel considered the PBRF system; it agreed the funding should continue but it should be
seen as core funding within the university system linked only to research intensity. PBRF would
exist as a metrics-only based system, thus simplifying it, reducing costs and allowing more
frequent adjustments. The PBRF should be renamed as the current term is a misnomer.
26. The
 panel recommends that universities’ investment plans should be aligned on a 3- to
5-year cycle to allow NZUC to take a strategic view of the whole system. Performance and
accountability measures should link directly to these investment plans, thus simplifying a
bureaucratic situation that is driving significant cost.
27. The
 NZUC should use a dashboard to evaluate the system and its components. Elements of the
dashboard could assist students in their choices.
28. Universities
 invest much in capital. The business case for capital investments should follow the
same procedures as elsewhere in Crown entities. The current approvals needed for disposal of
assets should remain, and formal business cases and approvals from NZUC should be sought
for capital expenditures over $75 million.
29. Universities,
 public research organisations, business and the policy community should look
to enhance their interactions. There are many ways they can do so including shared staff and
infrastructure. There may be opportunities for capital rationalisation over time. The parallel
SSAG report makes additional recommendations towards such greater interaction.
30. The
 UAG supports creating a more seamless boundary for commercial developments but notes
that the SSAG report emphasises that it is counterproductive to expect universities to gain
incomes from IP development.
31. Finally,
 the panel wishes to emphasise the critical value of high-quality universities to New
Zealand’s future. While internationally there has been questioning of the role and positioning
of universities, as our first report made clear, they are essential tools of a liberal democracy.
Institutional autonomy and academic freedom must be protected, but universities must also

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be conscious that they depend on social licence to have these privileges. Thus, universities
have a responsibility to continually self-reflect and consider how they conduct themselves to
ensure that their social licence is sustained and minimize the risk of political interference. As
New Zealand faces the future, the universities’ roles in producing graduates and exploitable
knowledge and acting as a critic and conscience of society must be protected.
32. But major change in how universities function is inevitable, and we need a system that is
responsive and adaptive. That has been the core driver underpinning this report.

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Introduction
1. The
 overall standing of the New Zealand universities is high, and New Zealand graduates are well
respected globally. The universities collectively are the largest providers to the public research
system. It is a sector that is now facing increasing challenges which will affect its future on
multiple fronts. To the greatest extent possible, it is important and unequivocally in the national
interest that the system is protected and supported.
2. The
 eight New Zealand universities have served New Zealand well since the University of Otago
was started in 1869. The first female graduate and only the second in the British Empire, Kate
Edgar, graduated in 1877; the first Māori graduate, Apirana Ngata, graduated in 1893; the first
PhD was awarded in 1927. The PhD degree was abandoned but reintroduced after the Second
World War when the concept of a research university became generally understood as a
strategic priority for any advanced nation. The University of New Zealand was replaced by five
autonomous universities in 1961. The system then grew with Waikato having its first students in
1964, Lincoln becoming an independent university rather than a college of Canterbury in 1990,
and AUT becoming a university in 2000, having previously been a polytechnic. Over that time,
the universities’ research intensity has grown progressively, as has the size of the student body,
particularly since policy changes across the democratic world in the 1990s encouraged more
students to enter higher education.
3. 
The universities point to fiscal pressures they are under; faculty point to increasing workloads
and expectations, some arising from growing bureaucracy; the research community point to
low levels of investment by global standards in public research; students point to the cost of
living and mental wellbeing challenges they face; and employers wonder about the vocational
readiness of many graduates. These are but some of the perspectives that need consideration.
4. The
 positioning of universities and their role has come under question across the democratic
world in recent times, and universities are increasingly criticised by some for going beyond their
core mission and for being too isolated from the communities they serve. Their social licence to
operate under the principles of institutional autonomy and academic freedom is being put at risk,
and overt and problematic political interference has occurred in some jurisdictions.
5.  we discuss, the future holds more uncertainty and challenges. Indeed, technology may
As
change the whole profile of higher education. Yet even while the positioning of universities may
become more questioned by some, the importance of this sector to national development is
unquestionable.
6. This
 report focuses on the steps the panel sees as desirable so the universities can optimally
contribute to national interests by developing future workforces and citizens, growing our
social, economic, environmental and geopolitical wellbeing, and performing their critical role in
sustaining a healthy democracy.
7. 
Changes are needed in the strategic management and oversight of the sector so that it is treated
more as a system than as eight potentially competing entities. Smarter and increased support
from the Crown will be necessary over time for the system to optimally contribute to our national
standing and global competitiveness.
8. 
Across the democratic world, universities are facing challenges and change. What have been
relatively stable organisations over the period since the Second World War are now confronting
multiple realities. While the focus varies, across jurisdictions the major factors that affect the
sector include:

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a. Governments
 are increasingly seeing universities in a utilitarian mindset and are focused
on graduate outcomes and transfer of knowledge to the private sector. These views place
the broader and essential roles of universities at risk.
b. Universities
 face fiscal issues as costs have risen faster than inflation and above levels
that governments appear willing to fund.
c. As
 universities become more vocationally focused, the importance of broader university
education focused on critical thinking is placed at risk.
d. Research
 income in many institutions and some disciplines is placed at risk by the
declining and more utilitarian focus of public research funding.5
e. Universities
 have become more complex organisations with growing managerial
complexity and cost, and less academic satisfaction. Concerns about university
governance and oversight are growing.
f. Technologies
 (especially AI) and the experiences of distance learning emerging after the
pandemic are impacting on what universities do and what students expect. The campus
experience is in many cases no longer given as much priority by students. Fundamental
changes will be needed in pedagogy. These developments may lead to very different
choices as to how students seek their post-compulsory education.
g. Issues
 of mental health in young people are impacting on the university community.
h. As
 birth rates continue to fall significantly, universities face challenges in attracting
students from a decreasing pool that might be addressed either by changing entry
standards or by strategic change.6 However, although New Zealand has an ageing
population, there is an opportunity for the universities to reap the demographic dividends of
a young age profile amongst Māori and Pacific.
i. The
 value of some forms of university education is questioned by some commentators
(and this is exacerbated by issues of student fees), with a greater proportion of students in
the future potentially choosing alternative paths to career development.
j. Employers
 are expressing more concern over the quality and employment readiness of
graduates and the utility of the university qualification.
k. Micro-credentials
 and lifelong learning have been provided variably by universities and are
now being provided by a much broader range of providers.
l. International
 education is too often seen as an income stream by institutions and would
benefit from more focus on quality for these students.
m. There is growing recognition of the multiple actual and probable impacts of artificial
intelligence on learners, teaching and knowledge production.

n. While rankings are an important part of evaluating aspects of university quality, they can
also distort the focus of institutional leadership away from the many other components of
providing a high-performance institution with multiple functions.

5 The SSAG has made specific reference to the need to support discovery research and research in the social sciences and
humanities, and it discussed how criteria can be employed to avoid blunt political decision-making over fundable research domains.
The panel strongly supports the protection of social sciences and humanities as core components of a research university’s profile.
6 While the population is ageing, a growing proportion of young people of the age to enter university will be either Māori or Pacific –
reaching ~40% of the entry cohort by 2040. Māori and Pacific populations have a younger age structure. Māori and Pacific peoples
have a relatively high percentage of their population under 15 years of age. In 2023, 29.6% of Māori and 30.7% of Pacific peoples
were aged 0–14 years old.

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o. In
 some countries, universities have become the subject of political attack. The value of
research and broad disciplinary engagement has been questioned, and the global research
endeavour is compromised.
p. The
 role of universities as critics and consciences of society is put at risk in such
circumstances.
q. Debate
 about the role of free speech in a liberal democracy has emerged and been linked
to matters of academic freedom and the role of universities.7
r. There is a potential for there to be loss of social licence for universities to have both
institutional autonomy and academic freedom protected, due to perceptions held by some
politicians and sectors of the public.
9. To
 a greater or lesser extent, New Zealand universities are affected by many of these changes,
and this and the interim report confront these issues. What is clear is that our universities will
have to adapt to these real and perceived challenges. It would be unfortunate if the Crown does
not ensure these adaptations are made in the national interest.

The New Zealand university system

10. New
 Zealand has eight institutions recognised as universities.8 They are all Crown entities, but
they are given a greater autonomy than many other Crown entities. This autonomy is reflected
in their governance, the commitment to institutional autonomy and academic freedom – all
concepts that depend to some extent on having social licence which is seen as inherent, given
the important broader roles of universities in a liberal democracy.
11. But, as discussed in our interim report and above, universities have multiple roles and face
multiple challenges both now and into the future. This review must focus on advising on what
a robust university sector serving New Zealand’s national interests should look like. Our overall
conclusion is that strategically driven change is inevitable. The changes should reflect both the
special character of universities with their institutional autonomy and the reality that the Crown
has a vital interest in how the system as a whole performs for the national interest.
12. New Zealand is a small, geographically complex country with most of the population living
in seven urban centres, all of which have university campuses and, in some cases, multiple
campuses and universities. Demographic predictions suggest most future population growth will
be north of Taupo.
13. The financial incentives currently imposed upon universities by the Crown mean they are
compelled to compete to maximise their student numbers. This funding arrangement, combined
with the high level of institutional autonomy and lack of strategic Crown oversight, has led
to investments designed to maximise student numbers rather than maximise the quality of
education – despite quality mattering greatly to staff, students, employers and the nation. This
volume funding strategy may not be optimal in terms of meeting the national interest or that of
stakeholders including students and employers.
14. There has been inadequate consideration of what the nation’s needs are and of how the system
and its components should focus on high quality in disciplines of national importance. The
current system leads to inefficiency as well as less than optimal effectiveness. The current
approach to strategic management of the sector is insufficient. Our earlier report makes the

7 The panel notes these matters are subject of a Bill currently before the New Zealand parliament.
8 The term ‘university’ is protected in New Zealand’s legislation.

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strong case for this gap to be remedied, preferably by forming a New Zealand Universities
Council (NZUC)9 which would have responsibility for providing strategic oversight, allocating
funding and providing quality assurance over the whole system.
15. 
Because of legislative needs and consequent impacts on the Ministry of Education and the
Tertiary Education Commission (TEC), an interim solution might be the establishment of a
Ministerial Advisory Council and reorganisation within TEC to serve universities distinctly from
other parts of the system.
16. The
 objectives of the NZUC would be to ensure the university system meets its objectives
through (a) promoting collaboration (rather than competition) between the institutions for
student access; (b) enhancing the quality of the research and teaching through greater
differentiation of the current eight institutions; (c) oversight on the overall performance of
the system and its components; and (d) advising on any reconstruction of the range of public
universities, including providing advice in the event of any proposal coming forward for
additional public or private universities.
17. The NZUC would achieve changes in the system in multiple ways, including:
• Coordinated
 review of university investment plans, which would be linked to accountability
measures and reporting.

• Smart contracting, including the use of appropriate incentives in teaching and research.

• Overseeing university governance.

• Ensuring coordinated developments with the research and innovation system and with the
vocational training sector.

• Providing advice on investment in new initiatives and capital expenditure.
18. 
Except where the qualifications options are limited to provision by few or one institution(s)
(e.g. medicine, dentistry, engineering, architecture, veterinary), many students choose their
undergraduate institution based on issues of a personal nature such as closeness to (or
distance from) family, student culture and facilities, and cost. For these reasons, it is important
that the civic universities provide a broad range of courses. But digital techniques will make the
potential for cooperation more possible and more efficient, provided course cross accreditation
is made easier.10
19. At
 the graduate level, differentiation of programme offerings becomes essential for reasons of
quality and efficiency, especially where practicums and research are involved. Quality is more
likely to be assured where a critical mass of academics and researchers are co-located. If that
cannot be achieved in one institution, collaboration in graduate training, as has been developed
in many areas in Norway, offers a solution.
20. Graduate
 students should be encouraged to make their choices based on quality of the
offerings.
21. The
 relative lack of strategic oversight at the national level has led to some less-than-optimal
outcomes when viewed by the national lens rather than by institution. For example, there is little
logic in two universities in Auckland offering professional entry-level courses in physiotherapy,
9 Higher Education Council was the term used in the interim report but is intended to refer solely to universities.
10 There are too few examples of inter-university cooperation in undergraduate education across the New Zealand system. There
are many operational issues such as how student-associated income is dealt with, and the different course structures across
universities create academic barriers. Institutional and academic egos and the incentives to maximise student numbers are
the underlying issues. The collaborations between Otago and Victoria are an early and important example of collaborations in
disciplines with low volumes.

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which is an intensive practicum-based programme. Similarly, there are no compelling reasons

for Wellington to have two expensive campuses of two different universities offering numerous
overlapping courses.
22. Remodelling other aspects of the tertiary sector might make the university system more efficient
and better able to meet societal needs. One limitation is the state of the polytechnic sector.
The current Education and Training Act 2020 (ETA) has obscured the distinction between
universities and polytechnics. The ETA could usefully be made clearer so that universities
undertake the primary responsibility for postgraduate and research-based education and
training.11 International experience shows that excellent undergraduate education is possible in a
scholarship-informed rather than in a research-intensive environment. But however education is
provided, its quality depends on multiple factors including the staff-student ratio, the pedagogic
approach (which can vary enormously), the size of the student body, the quality of faculty and
the selectivity of the institution.
23. 
Universities have multiple roles that are distinct from the rest of the tertiary sector. The lack of
a distinct funding stream from the Crown to universities limits policies being formed that are
specific to the sector. Such policies could consider their broader roles beyond the education of
students.
24. 
Despite our reservations over university rankings, they are informative and widely used globally.
Auckland is clearly different to the other seven universities in its size, range of offerings and
international ranking. There is a national need for at least one university to be of sufficient
standing and reputation to reduce ‘brain drain’ to offshore, even at the undergraduate level. As
mentioned in our initial report, it is worrisome that Auckland does not have a higher ranking
in Australasia, and there is anecdotal evidence that high school students with high academic
standing are preferring Australian to New Zealand universities (acknowledging there are also
other reasons for doing so).
25. 
Regarding differentiation, AUT and Lincoln have clearly defined and differentiating strategies.
The other five universities all have recognised or potential domains of excellence that need to
be reinforced and promoted. And there will be emergent areas where it is logical that decisions
as to location are needed; not every institute should duplicate its offerings. Rather, we need to
ensure centres of depth and excellence in needed areas, and access at the undergraduate level
can be assured in other ways (e.g. virtually).
26.  deeper issue is what should be the volume of students within the university system (see
A
below). Quality protection and open entry are antithetical, but there are underlying issues of
equity. There has also been a tendency to qualification inflation by some vocational sectors,
which have their own regulatory frameworks: that may be unnecessary. Universities should focus
on areas that require education in a research-active environment; this is not the case in every
vocation, especially those requiring a three-year education or less.
27. 
These issues are just examples of where a lack of strategic thinking in how the sector operates
for New Zealand’s interests is obvious. And even when individual institutions are examined
(which is largely beyond our brief), they too make decisions that may lead to short term
advantage in fiscal terms (and respond to current incentives) but may not be either in their own
long-term interests or that of the nation.

11 See ETA 2020 clause 268 (2)(d)(i)(B) and 315.

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Recommendations
1. Develop
 a new National University Strategy, and fund and administer the eight universities
as a distinct system.
2. As
 the highest priority establish a New Zealand Universities Council (NZUC) to (a) set
strategy and expectations on the system, (b) provide high-level oversight and policy
advice, (c) allocate Crown funding, and (d) monitor performance for the universities that is
separated from the rest of the tertiary education sector.
3. Preparatory
 to the establishment of NZUC, which would require legislative change, at an
early date:
a. the
 Minister for Universities should appoint a Ministerial Advisory Committee that
could offer advice in relation to some of the functions proposed for NZUC and advise
on the establishment of the new entity.
b. Planning
 should commence for NZUC to transform from a Ministerial Advisory
Committee to a government agency that will provide strategic oversight for the
university sector, assume responsibility for the current functions of TEC in relation
to the universities and provide the policy advice for universities that is currently the
responsibility of the Ministry of Education.

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Institutional and governance matters

28. The
 current legislation requires the Minister for Universities and the Minister for Vocational
Education and Skills to issue the Government’s Tertiary Education Strategy (TES).12 The TES
is revised periodically, although the current version provides little effective guidance for the
university sector.
29. 
Acting through the education agencies within the public service, the Ministers implement
the policies of the government of the day for the tertiary education sector. The Ministry of
Education and the Tertiary Education Commission are the principal agencies of government for
the universities. The appointment of a separate Minister for Universities is welcomed but to be
fully effective will require separation of functions and agencies as recommended elsewhere in
this report.

The Ministry of Education

30. The
 Ministry of Education has responsibility for tertiary education policy advice. This places the
tertiary education policy group and its policy formation in an all-of-education setting. In recent
years, necessarily in response to successive governments’ priorities, the tertiary policy group
has focused on reforms for institutes of technology and polytechnics, and wānanga, with less
attention being given to university issues. As our interim report highlights, we see an urgent need
for greater policy development focused on universities. We made very specific recommendations
related to addressing this gap, which we now reinforce in this second report.

The Tertiary Education Commission (TEC)

31. The
 Tertiary Education Commission allocates government funding and monitors the
performance, principally the investment plans, of New Zealand’s tertiary education sector. The
chief executive of the TEC is responsible for advising the Minister on the viability (primarily the
financial viability) of tertiary educational institutions including universities.
32. The
 Education and Training Act (ETA) sets out the funding process, the requirements for
financial monitoring and the forms of intervention when needed. Funding is determined through
an investment system prescribed in the ETA. When allocating funding to providers, the TEC is
required to give effect to the TES and utilise funding mechanisms issued by the Minister.
33. From
 the TES and a broad range of sources of intelligence about the demand and supply of
university teaching and research, the TEC annually develops and publishes investment guidance,
setting out priorities and what it expects to see in providers’ investment plans.
34. TEC
 staff, having assessed the investment plans, recommend grant funding allocations for
approval by the TEC Board. The TEC can decide whether or not to fund new programmes,
although providers have autonomy in their internal resourcing decisions.

12 Tertiary education strategy [ETA s.7(1)]

The Minister must, by notice in the Gazette, issue a tertiary education strategy that sets out the Government’s—
a) long-term strategic direction for tertiary education, which must include—
i) economic goals:
ii) social goals:
iii) environmental goals:
b) the development aspirations of Māori and other population groups; and
c) current and medium-term priorities for tertiary education.

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35. The
 funding process is relatively uniform across the entire sector. Given this vanilla methodology,
it is unsurprising that TEC has organised itself with a single Delivery Directorate that administers
funding and monitoring across the tertiary sector. This includes eight universities, 15
polytechnics, three wānanga and about 200 private training establishments, for education and
training both on campus and in the workplace. The processes used for universities, wānanga
and polytechnics are broadly similar.
36. TEC
 has also absorbed the former government agency, Careers NZ, and taken on an all-of-
government responsibility for New Zealand’s careers system, providing advice and coordination
of agencies providing careers services. TEC responsibilities include the development of the
national careers strategy and the careers information platform.
37. The
 eight universities receive approximately half of TEC grant funding that is allocated to the
tertiary sector via the budget for teaching and research. From the university perspective, this
funding provides 37-48% of their annual revenue.13

UAG conclusion
38. There
 is a need to distinguish the universities from the other components of the tertiary sector
in policy development, funding and oversight. Their needs are distinct, and it is misleading to
suggest that they are closely integrated with other components of post-primary education. Their
missions are distinct. The Government has recognised this distinction in establishing a separate
minister who, as we have previously recommended is also minister for science, innovation and
technology, a forerunner perhaps of an integrated ministry. Our report builds off that decision
and the compelling logic behind it to separate strategic and policy development in the sector, its
oversight and funding.
39. The
 New Zealand’s Tertiary Education Strategy (TES) is intended to drive the TEC’s decision-
making and provider investment plans. It is not clear that it does so effectively or with sufficient
granularity. The TES is comparatively very high level and focussed on setting out high-level
shared goals for the sector. It does not provide a clear sense of the Government’s specific
aspirations for the tertiary sector, let alone for universities (e.g. a vision for what the sector
will look like in the future) or any detailed direction on the priorities that it expects the TEC or
providers to pursue.
40. The
 UAG has identified that the university system has insufficient strategic oversight, leading to
a lack of:
a. appropriate differentiation and collaboration in the sector
b. focus on long-term issues and trends, including demographic trends, affecting the sector
c. proactive work to identify and address New Zealand’s future skills needs
d. focus
 on the role that university education can play in strengthening civic participation and
in improving New Zealand’s economic productivity
41. The
 SSAG has also identified the need for greater integration and linkages between the university
system and the rest of the research, science and innovation system, possibly cemented by
overlapping appointments to peak bodies and reducing the operational barriers that impede
greater collaboration. The UAG agrees with this conclusion.

13 This includes all teaching and research funding through Vote Tertiary Education. It does not include funding through research
grants via MBIE. The differing numbers in places in this report reflect whether we are discussing total Vote Education Funding or the
differing elements within it; DQ7+, PBRF, CoRES.

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42. The
 UAG has concluded that the current arrangements for the government funding and
administration of the eight universities can be improved in a number of ways. In the next
sections we focus on system changes that could enhance strategic oversight and build
university cooperation in funding and decision-making for the universities. They include
proposals designed to diminish the regulatory burden by relying more on mutually agreed codes
and, for compliance by the universities, to promote a significant shift towards self-audit.
43. The
 UAG has noted that appointments to the TEC Board of Commissioners properly reflect the
multiple facets of tertiary education as well as membership diversity. This may be appropriate
given current policy settings and the TEC’s current mandate. But the thrust of this report implies
a greater distinction for the policy settings and strategic oversight of universities. The current
TEC model is not well suited for the future, and we conclude that fundamental change is needed.
44. By
 way of contrast, the former University Grants Committee, disestablished in the 1989 reforms,
focused on the universities and was valued by the universities for its membership structure,
which included three active senior university academics, and the appointment process. All
eight members, including the UGC Chairman, were appointed by the Minister from a panel of
nominations agreed by a conference of all university chancellors and vice-chancellors.
45. The
 UAG concludes that a strong case exists for establishing a separate agency to provide
strategic oversight and policy advice for the university sector and to allocate government funding
for the universities. To this end, in its interim report, the UAG recommended:

“That urgency is given to addressing gaps in effective strategic governance and policy
development in the university sector. The UAG recommends establishing a Higher Education
Council [renamed in this report New Zealand Universities Council] to undertake those roles and
to develop the appropriate oversight and funding mechanisms for the sector.”

After
 further considering a range of indicative structural options for strengthening strategic
direction for the universities, UAG strongly reaffirms that recommendation, with a name change
to reflect a focus on the university sector alone.

A New Zealand Universities Council (NZUC)

46. Here
 we outline in more detail the purpose, functions and membership of a New Zealand
Universities Council (NZUC), which will be a Crown entity responsible to the Minister for
Universities.

NZUC membership
47. The
 UAG envisages a small council of seven appointed members appointed in their personal
capacities, plus two ex officio members. Collectively the group will have a deep understanding
of the purpose and operations of universities; their value to New Zealand and its communities,
including Māori and immigrant communities; and their international connections that are so
vital to New Zealand. They will be aware of the international best standards and practices for
research universities, and of trends in university education and research. For these aims to
be realised, it is essential for the membership to include active senior academics from the
universities who are familiar with the universities’ major issues and opportunities and hold to
the international values for university autonomy and academic freedom. These values, which
extend to freedom from political interference in teaching and research, are enshrined in the ETA.
It must also have external members with experience in strategic oversight of complex systems.

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Expertise in economics and finance will be valuable. It would also enhance the committee’s
capability to have an international member familiar with the New Zealand system, most likely
from Australia.
48. The NZUC must have regard to broader educational policy which is best met through the
Secretary of Education being an ex officio appointment. The goal of the reforms underway is to
bring the university and research systems closer together. Universities as a group are the largest
recipients of public research funding and provide much of the nation’s core research capacity.
The SSAG has recommended the establishment of a National Research Council (NRC) and a
cross appointment between the NZUC and NRC seems logical.
Recommendation
4. The NZUC (and the prior Ministerial Advisory Committee) should have nine members
comprising:
Seven appointed members being:
i. Chair.
ii. Three senior academics in New Zealand universities who do not hold university
administrative roles.
iii. Three independent persons of distinguished standing who understand the university
and research sectors.
and two ex officio members being:
iv. The Secretary of Education (ex officio) or nominee.
v. A member of the Board of the proposed National Research Council.
 Members shall be appointed by the Minister for Universities after consultation with
Universities New Zealand (UNZ), subject to:
a. The Chair will not be in the employment of a New Zealand university or a member of a
university council.
b. A minimum of one member to be expert in economics or finance.
c. A minimum of one member to be Māori.
d. All members to be appointed in their personal capacities. and, amongst their
characteristics, to have national and international connectivity, and understandings of
universities and research.
e. Appointments to NZUC should be for terms of five years.
f. Consideration should be given to making the NZUC chair an executive role that is full
or part time.

NZUC functions
49. Establishment
 of the New Zealand Universities Council must await legislative change. The
Council’s principal functions should be defined in statute and are suggested in Recommendation
5. However, in undertaking its responsibilities NZUC must have due regard to international
developments in higher education, domestic developments in education and other elements of
tertiary education, the evolution of the research and innovation sector with which it is expected
to have close liaison and, importantly, understandings of workforce needs as seen by both
government and the private sector.

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Recommendation
5. The New Zealand Universities Council’s statutory functions should include:
a. Advising
 the Minister for Universities on the development of a New Zealand University
Strategy to be incorporated alongside other components in the Tertiary Education
Strategy (TES) as the core policy document underpinning university education,
research and innovation.
b. Assuming
 strategic oversight of the evolution of a quality but more differentiated
system, with focus on:
i. the national interest
ii. the objectives of whole system
iii. high-level objectives and performance measures agreed with each university
c. Complying
 with government policies including those in regard to the Te Tiriti/Treaty of
Waitangi.
d. Advancing research and innovation in the universities.
e. Promoting
 closer relationships between universities and the research system, in
particular the Public Research Organisations.
f. Allocating government funding for universities from the relevant appropriations.
g. Monitoring performance of the universities and advising on Interventions.
h. Preparing nominations for Ministerial appointments to university councils.
i. Receiving
 and exercising the delegation from NZQA for the approval of university
qualifications, with the power to delegate qualification approval to the universities
subject to their compliance with the proposed Code for University Qualifications.
j. In collaboration with UNZ, exercising oversight of university self-audit processes.
50. While
 undertaking the above functions the New Zealand Universities Council must respect the
institutional autonomy of the eight universities and in general avoid extending its roles beyond
strategy, funding and oversight. However, its oversight function requires it to have comfort as
to university governance, academic governance, financial management, qualifications, quality
assurance, and student support and welfare. The panel concludes this would be best achieved
by codes to cover these and perhaps other issues, the codes being jointly developed by the
universities collectively via Universities New Zealand (UNZ), in partnership with the NZUC. In
general, the universities should be responsible through their Councils for self-compliance with
NZUC being assured on the processes of self-audit.
Recommendations
6. To
 the greatest extent possible, the regulatory structure for universities should be based on
shared codes, developed and regularly reviewed by NZUC and UNZ, with responsibility for
overall performance lying with the university councils. The list of codes should include:
a. University Governance Protocol14
b. Financial Management

14 Meredith Edwards: Review of New Zealand Tertiary Education Institution Governance, Ministry of Education, May 2003.
Recommendations 1-3.

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c. Academic Governance15
d. Quality Assurance
e. Qualifications
f. Pastoral Care and Student Welfare
7. Compliance
 with the codes should be based principally on self-audit by the universities,
with the self-audit process and outcomes quality assured by NZUC.
In subsequent sections the UAG amplifies on these recommendations and functions.
51. The
 Ministerial Advisory Group, proposed for the interim until NZUC is established, will offer
advice on these matters to the Minister but not exercise the funding, monitoring and other
functions that currently lie with TEC or other government entities.

NZUC staff
52. In
 the system being proposed, it is envisaged that NZUC will be supported by a small staff. It is
further envisaged that added responsibility will be devolved to the universities and Universities
New Zealand (UNZ). For the interim, the Ministerial Advisory Group can be serviced from within
the resources of the Ministry of Education and the TEC.

Relationships
53. NZUC
 will be expected to work in close cooperation with the universities and Universities
New Zealand. It will form close relationships with other government agencies that have
responsibilities in the tertiary sector, notably TEC, NZQA and Education New Zealand. This
will ensure appropriate relationships are protected or developed with other classes of tertiary
educational providers.
54. 
The TEC in its current form and structure could not take on the roles suggested for the NZUC.
If our recommendation for a separate funding stream for universities is accepted, it would
be a matter for later consideration of how administrative and accountability functions were
distributed between NZUC and a restructured TEC, but logic would suggest that this role
ultimately lies with the NZUC.
55. It
 will be of crucial value to university research for NZUC to establish and maintain close
relationships with the proposed PMSTIAC. Possible mechanisms include membership cross-
representation and formal linkages between their support staff.
56. Both
 domestically and internationally, NZUC can promote greater cooperation between
universities and the public and private sectors. A particular challenge is identifying future
workforce needs and adjusting signals within the system to try and match these.

Monitoring and intervention

57. Parliament,
 recognising that the Crown makes substantial investments in the funding of tertiary
institutions and stands as the funder of last resort, has inserted in the Education and Training
Act sections for the monitoring of TEI financial performance and for scaled interventions to
remedy defects in performance. As is discussed elsewhere in this report, the panel suggests that
the criteria and processes for intervention require better definition.

15 Edwards op.cit.: Recommendation 7 proposed the formation of an Association of TEI Chancellors and Chairs. The UAG considers
the intent of this recommendation can be achieved through the restructure it proposes for Universities New Zealand.

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58. From
 their foundation, the growth and development of New Zealand universities have benefitted
greatly from good governance and leadership, leading to international recognition for the quality
of university research and education in New Zealand. The UAG also notes that the history of
our tertiary institutions shows there is a significant risk that performance and reputation can
be negatively impacted when an institution’s governance falls short of the standards for good
governance. This risk is not confined to the financial risks, for which there are explicit monitoring
and intervention provisions in the ETA.
59. The
 UAG has concluded the financial performance provisions in the ETA can be supplemented
by clauses enabling monitoring and scaled interventions for institutional governance, and that
the exercise of all these provisions be safeguarded by codes for monitoring and intervention.
60. In
 a subsequent section, the UAG makes recommendations aimed at reducing the overall
compliance burdens that universities currently associate with monitoring and intervention.

A Universities Act
61. The
 Education and Training Act 2020 is overly complex, with sections relevant to universities
scattered throughout. For university staff or other persons involved in university governance who
are required to be familiar with the legislation, it is a morass.
Recommendation
8. As
 the opportunity arises in the legislative programme, the government should consider
consolidating all legislation relating to universities into a new Universities Act.

Defining a university
62. The
 Education and Training Act 2022 has a rather limited definition of a university. While the
future cannot be foreseen, given the shape of New Zealand’s tertiary sector, a more robust
definition might be desirable given other actors might wish to enter New Zealand. This is not
to say the sector should not evolve, but we believe that the definition of a university and the
protection of the term likely needs strengthening, as do the processes of approval. This is not
urgent, but we see it as desirable the next time the Act is revised, and a number of our other
recommendations do suggest the need for legislative revision, particularly if a New Zealand
Universities Council is to be established.
63. The
 role of TEC does need to be considered in any legislative review. The factors driving this
need are outlined elsewhere in this report.

Universities New Zealand

64. In this report the UAG proposes considerably wider roles for Universities New Zealand and
increased participation in its affairs by the chancellors and university councils. The changes are
designed to promote greater collaboration between the universities and encourage the system
to assume increased responsibility. They are also intended to reduce burden of compliance for
the universities by increasing autonomy in governance and administration.
65. In
 recognition of the significance of the proposed changes, the UAG proposes that in the
ETA the name of the New Zealand Vice-Chancellors Committee is changed to “Universities
New Zealand”. This change acknowledges that “Universities New Zealand” has become well-
established as the organisation’s brand, with good public recognition.

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66. In
 Recommendation 22, the UAG proposes that NZUC receive and exercise full delegation from
NZQA for the approval of university qualifications. NZUC would be given the power to delegate
qualification approval to the universities subject to their compliance with the proposed Code
for University Qualifications. A consequence of this recommendation is removal of the NZQA
delegation of qualifications approval to the Vice-Chancellors Committee by deletion of ETA
s.312(b).
Recommendations
9. The Education and Training Act (2020) should be amended to:
a. rename the Vice-Chancellors Committee as Universities New Zealand.
b. a
 mend the functions of Universities New Zealand to reflect the broader roles
envisaged for it in this report, which include the generation of codes and protocols for
the governance16 and academic administration of universities and, in conjunction with
NZUC, the monitoring of self-compliance.
10. The
 ETA should be amended to insert provision for monitoring governance, with scaled
interventions. Codes for monitoring governance and intervention should be developed by
NZUC in consultation with UNZ.17

University governance
67. The
 quality of the governance of universities by councils and of the academic and administrative
leadership is pivotal to high performance of the universities. Councils and the vice-chancellor
have a joint responsibility to ensure the university is a vibrant community of scholars serving the
needs of teaching, research, outreach and engagement.
68. The
 UAG received feedback from submissions and from its university visits that governance
arrangements could be improved. In particular that:
• University
 council membership and appointment processes could be reviewed to ensure
the appropriate mix of skills-based and stakeholder membership for a modern university in
our distinctive national context.
• The
 roles and responsibilities of the council and chancellor could be clarified and/or
strengthened to ensure appropriate levels of accountability both to the institutions they
govern and to central government.
• The
 role and remit of the academic committee (or senate) could be clarified and/or
strengthened to ensure there is appropriate academic input into relevant matters.
69. The
 UAG has had discussions with offshore university governance experts in the UK, Australia
and Ireland, and referred to the comprehensive Review of New Zealand Tertiary Institution
Governance (2003) by Professor Meredith Edwards.18 While many recommendations in that
report have been implemented, the UAG considers there are others remaining to be implemented
that will materially assist to provide more clarity, consistency and accountability for councils and

16 The UAG is aware that there are many precedents available, both in New Zealand and internationally, to assist NZUC and UNZ
work with the universities to generate codes and protocols. The New Zealand Institute of Directors is an excellent source for good
governance practice.
17 International examples of such clauses can be found in Government of Ireland: Higher Education Authority Act 2022; and Ireland
HEA: Governance Oversight – Higher Education Institutions.
18 Association of Tertiary Education Management. (n.d.). Review of New Zealand tertiary education institution governance. ATEM
eKnowledge Repository. https://www.atem.org.au/eknowledge-repository/command/download_file/id/44/filename/Review_of_NZ_
Tertiary_Education_Institution_Governance.pdf

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academic committees. The UAG makes recommendations to effectively implement principles

and processes recommended by Professor Edwards.

University councils
70. While
 the duties and roles of university councils will continue to be defined in the Act, the
University Governance Protocol will be able to expand and clarify them to encompass all aspects of
governance for the universities. The council holds full responsibility for the performance of its university.

Council membership
71. The
 following three paragraphs set out in full the current ETA provisions for the membership of
councils. If the varying terms and dates of appointment and termination are also considered, it
becomes clear that achieving the appropriate balance in membership is a recurrent problem, with
gaps in the skill mix negatively affecting the quality of governance.
72.  university must have a constitution, which currently provides for between 8 and 12 members
A
of council. The ETA19 requires three or four appointments to be made by the Minister; either
one permanent staff member elected by all the permanent academic and general staff or
one academic staff member and one general staff member appointed by election from
constituencies of permanent members of each of the academic and general staff; and one
enrolled student by election from a student constituency. A council can by statute specify how
the remaining members are to be appointed. All universities choose to make the vice-chancellor
a member of council.
73. The
 Act requires that when making appointments, the Minister and councils must ensure there is
at least one Māori member, a condition usually met by specifying that one member be appointed
after consultation with by local iwi. The Minister and councils must appoint people who:
i. have relevant knowledge, skills or experience; and
ii. are likely to be able to fulfil their individual duties to the council; and
iii. together with the other members of the council, are capable of undertaking its
responsibilities, duties and functions.
74. The Act also provides that:
An institution’s council should, as far as is reasonably practicable, reflect:
i. the ethnic and socio-economic diversity of the communities served by the institution; and
ii. the fact that approximately half the population of New Zealand is male and half the
population is female.
75. The
 UAG has considered whether the council’s size and membership mix remains appropriate.
It has concluded that it supports continuation of the ETA membership provisions in that they
provide for a broad combination of members, with representation for the university staff and
students, and the balance being independent members drawn from the community.
76. However,
 the UAG has identified the following proposals for improvement of the appointment
processes and quality of university governance. It perceives a need for the academic governance
of universities to be rejuvenated, supported and strengthened, in some cases significantly. In this
report the UAG recommends changes that extend the responsibilities of each university for its
quality assurance and qualification approval.

19 ETA clause 276 (membership of council) and 278 (matters to be considered when appointing council members).

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77. With this factor in mind, the UAG has concluded that council deliberations and decisions relating
to the core academic functions of research and knowledge transmission through teaching
and outreach would be enhanced by expanding council membership to include two additional
senior academic staff, elected by the senate from its members who do not hold a university
administrative position.20
78. The
 UAG has also considered how to relieve the difficulties in achieving balance in the selection
and nomination of council members. It proposes that all university councils have 14 members,
being two more than the current maximum of 12 prescribed in the ETA. Of these 14 members,
eight will be independent, being the four Ministerial appointments and four members appointed
under the council statute. At least one must be Maori, generally appointed by council after
consultation with local iwi.
79. Internationally,
 some university governing bodies have the same term and commencement date
for all independent members. Setting the term of office at six years, with half the appointees
rotating every three years, and permitting reappointment for a second term, would preserve
considerable continuity. If implemented the measures the panel proposes would also assist with
achieving a more balanced membership.
Recommendation
11.  he Education and Training Act (2020) should be amended to fix the size of a university
T
council at 14 members with membership comprising:
a. 4 members appointed by the Minister
b. The vice-chancellor
c. 1
 member of the permanent academic staff elected by the permanent members
of the academic staff of the university
d. 1
 member of the permanent general staff elected by the permanent members
of the general staff of the university
e. 2
 members of the permanent academic staff elected by the senate or academic
committee21 from among its members not holding full-time senior university
administrative position.
f. 1 student enrolled in the university elected by the students of the university
g. 1 member who is Māori appointed by council after consultation with local iwi
h. 3 members appointed by council
80. 
From submissions and consultation with the universities, the UAG has noted that the process
of Ministerial appointments to councils has been the cause of some dissatisfaction. In the
universities’ experience, the persons appointed do not always reflect the particular requirements
of a university council when a vacancy needs to be filled. These changes occur despite the
council having agreed with TEC a list of nominations meeting the council’s identified need for
particular attributes or skills. The appointment(s) ultimately announced by the Minister are not
always chosen from the agreed nominees. They reflect consultations at Cabinet, with caucus,
and with coalition partners if the Government is in a coalition. The appointments do not always
reflect the needs of the institution or the skillset appropriate for governance of what are complex
bodies. Indeed, we have argued strongly in Report 1 that universities should be politically neutral.

20 For clarification, a senior academic administrator could be defined as any academic who is a Deputy Vice-Chancellor, Pro Vice-
Chancellor or other Senate member holding an appointment in the central administration of the university.
21 In this report we use the terms senate and academic committee interchangeably.

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81. The
 UAG has concluded that it would be in the interests of better governance and protecting
university autonomy in the manner Parliament has enshrined in the ETA, to have (a) a more
informed review of the nominations before making an appointment and (b) a higher level of
independence from political considerations. It proposes the NZUC shall submit a nominee or
a panel of nominations to the Minister from which the Minister may select an appointee or
alternatively reject the nomination(s) and seek new nominations from NZUC.
Recommendation
12. The provisions for Ministerial appointments to councils should be amended to
a. require
 NZUC to nominate one or more candidates for appointment to each
vacancy, having regard to the criteria in the Act and the University Governance
Protocol, and having consulted the relevant council.
b. Enable the Minister to choose which member to appoint from nominations put
forward by NZUC but not substitute another person.

Chancellor
82. The chancellor is the chairperson of a university’s council, elected by the council for a term not
exceeding the remaining term of office of the nominee. The vice-chancellor, staff and student
members shall not be appointed chancellor.
83. The
 chancellor is not only a figurehead and external advocate for the university. The role of chair
demands experience and skill in good governance. The UAG has noted that some universities
prefer to select as chancellor an outstanding New Zealander who can bring their distinguished
status and connections to benefit the profile and development of the university, but that
person may not be experienced in leading and managing the governance of large, complex and
polyvalent academic organisations. While council as a whole has responsibility for the hiring
and performance of a vice-chancellor, as in any governance board, the chair has the primary
role in managing and advising the vice-chancellor. The chancellor must have the time, skills and
experience to do this.
84. There
 must also be appropriate constructive relationships and clarity of the relative roles of the
chancellor and vice-chancellor. Problems can arise when performance management is avoided.
Further, given the representative nature of university councils, it is tempting for them to engage
in operational rather than strategic and performance matters. The chair must have the skills to
focus the council membership.
85. When
 developing the University Governance Protocol, it will be important for UNZ to recognize
that it is essential for councils to be chaired by someone who has the skills and experience
necessary for the chair role in a complex public business, including that of the interface with the
vice-chancellor as both chief executive and academic head of the university.
86. Succession
 planning for the role of chancellor should commence well in advance of the end of
the chancellor’s term of office, and the appointee should have had prior exposure to the council
before taking up their role. The UAG has noted some instances of professional external search
for the next chancellor and considers this option should be included in the Protocol.
87. In
 view of the overall significance for good governance of the chancellor’s role as council chair,
the UAG considered recommending that the chancellor be appointed by the Minister on the
recommendation of NZUC, but concluded it is more important for its cohesion and effectiveness that
council continue to elect the chancellor from among its independent members. As a prudent check
on the appointment, we recommend prior consultation with NZUC is required for their endorsement.

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Recommendations
13. The chancellor should be elected or re-elected only after consultation with NZUC.
14. 
The University Governance Protocol should contain a section on the role and duties of
the chancellor and their significance for leadership of the council.

Vice-Chancellor
88. The
 vice-chancellor is both the chief executive of the university and head of the academic
staff. These are not identical roles. As chief executive, the vice-chancellor is responsible for the
operations of the institution in all respects and is the employer of all staff, including academic
staff. As the head of academic community, they are responsible for maintaining academic
freedom, academic quality and sustaining the community of scholars that comprises the
university. These roles can be in conflict and, in some jurisdictions and prior to 1989 in New
Zealand, academic staff are employed by the council, not by the vice-chancellor, to avoid the
potential conflicts or fears that can emerge when academics might be seen as criticizing
their employer. While we do not propose any changes to this dual role, it is important that
the chancellor and council must be willing to receive advice from senate and its members
independently of the vice-chancellor if concerns arise.
89. However,
 while the appointment or renewal of the vice-chancellor as chief executive is the
sole responsibility of the council, given that dual role, council must take formal advice from
the academic community before the appointment or renewal of a vice-chancellor. Because of
the sensitivity of these matters and confidentiality, the council should establish a confidential
advisory group from the senate to be consulted on the vice-chancellor’s appointment or renewal.
In the case of renewals, this group should not include direct reports to the vice-chancellor.
90. 
Although there are academic representatives on council, in the interests of maintaining the
community of scholars it would be prudent that in the event of any concerns about academic
leadership arising, councils could take soundings from senate using a similar process.
Recommendation
15.  ouncils must formally consult confidentially with the academic community via a senate
C
advisory group on the appointment or reappointment of a vice-chancellor.

Induction and governance education

91. Good
 governance practices include systematic reviews of performance, induction programmes,
and planned professional development. Enhancement of university governance and
administration practices through educational programmes is recommended as a high priority for
NZUC, UNZ and university councils.22
Recommendation
16. That UNZ and NZUC expand support for governance through induction and other
education programmes.

22 The New Zealand Institute of Directors has comprehensive resources for the governance of a wide variety of organisations.

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Academic governance
92. Good
 academic governance is essential and is at the heart of a thriving university. That the
world’s great universities have been and remain enduring institutions is inextricably connected
to the collegial processes that deeply involve academic staff, led by the professors, in their
governance.
93. Wise
 institutional leadership of New Zealand universities by their councils and vice-chancellors
would ensure that the academic voice is properly and appropriately heard and guides their
decision-making, and that overriding that advice would undermine the integrity of what ultimately
is a community of scholars.
94. The
 UAG received many submissions that worried about the state of academic governance,
given expanding central executive teams and centralised administrative systems that
impose bureaucratic constraints on academics’ time for research and outreach. The trend is
described as excessive managerialism and it has both external and internal causes. Internally,
centralisation has apparently increased not decreased the administrative burden on academic
staff. Externally, TEC and NZQA processes and other governmental requirements place a
significant burden on the institutions.
95. The
 Code of Academic Governance that we propose to be prepared by UNZ and approved by
NZUC should set the principles and practice that will lead to reviving good academic governance
and ensure it endures in New Zealand universities. It should serve as a handbook for the senate
and its committees.
96. The
 devolution of responsibility for quality assurance, and programme and course approval, will
succeed only in the presence of alert, involved and collegial academic governance.
97. The
 UAG has noted that some academic committees include general staff as full members.
The UAG considers that the pinnacle academic committee (senate) and its subcommittees
concerned with academic matters should have their membership drawn only from academic
staff, the university librarian and students, with professional administrative staff in attendance
as necessary to assist.
Recommendations
17. Schedule 11 to the Education and Training Act 2020 should be amended so the
academic committee (senate) membership comprises academic staff, the university
librarian and students.
18. NZUC and UNZ should ensure the Code of Academic Governance sets out the principles
and practice of good academic governance.
98. The
 majority of universities have recognised that, with the growth in the professoriate, including
all professors as senate members has led to an unwieldy body, potentially numbering many
hundreds. In response, some councils have reconstituted senate to be representative of the
faculties in the university while also including the senior university academic leaders.
99. The
 UAG considers that it is important for senate to enjoy a measure of independent
consideration by ensuring faculty representation that is sufficient to bring broad knowledge and
skill to the work of the committee and avoid administrative dominance.
Recommendations
19. 
The Code of Academic Governance should include guidance for the constitution and
terms of reference to be adopted by councils for the senate.

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20. 
The senate constitution should include provision for a clear majority of its members not
to hold senior academic leadership roles in the university.
100. An
 unfortunate outcome of senate restructuring to be less unwieldy has been an effective
loss of the collective voice for academic staff. This defect could be rectified in the Code for
Academic Governance by making provision23 for that voice to be heard and counted on the rare
occasions that substantial numbers of academic staff have significant concerns about the
academic leadership and direction of the university, or shaken confidence in its governance and
administration.
Recommendation
21. 
Provision is made in the Code of Academic Governance for senate’s membership to be
expanded to include all professorial staff in exceptional circumstances.

Qualifications and qualification approval

101. Internationally
 it is highly unusual for universities to be subject to the extent of oversight and
approval processes required of the Vice-Chancellors’ Committee under delegation from NZQA.
102. The
 primary needs in qualifications approval are for the Government to be assured that the
university system is of high quality, that there is a strategic understanding and oversight of
the range of programmes available within the nation’s university system, and that it evolves to
meet future national needs. This higher level for consideration of programmes is not met by
the Committee on University Academic Programmes (CUAP), which has a role that may now no
longer be needed.
103. In
 the decades since CUAP was established, New Zealand universities have developed strong
internal procedures for qualification approval and external testing of them against international
best practice. Certification by professional bodies and accreditation reviews by international
discipline bodies have become widespread.
104. Currently
 virtually every significant change in a university’s offerings goes to CUAP for approval.
In practice, CUAP does not provide a strategic analysis of need for a programme, rather it
provides a quality assurance on content. We heard both positive and negative comments on this
process. It is said to be slow and inefficient, making adaptive change difficult and opportunities
difficult to exploit. The CUAP processes are episodic and requires that every university comment
on other universities’ initiatives. This, it is claimed, inhibits healthy competition. On the other
hand, it has provided valuable peer review.
105. Good
 internal processes in any university would require that any new programme is subject to
internal and external peer review. The panel concludes that these processes could be left largely,
if not entirely, to the institution to manage and assure UNZ and NZUC that processes are in place
to do so. It may often be that international peer review is more relevant than domestic review.
106. The
 UAG has concluded that internal approval practices within the universities meet international
standards adequately enough for the universities themselves to be delegated the power to
approve their qualifications with only a minimum of oversight from NZUC. The proposed
Qualifications Code should contain broad principles governing structure and standards for
university qualifications. The existing Handbook provides a good starting point.
107. Sometimes
 CUAP approvals have been obtained before agreement has been reached over
funding. When new developments occur within current qualification structures, there should be

23 A meeting of the expanded senate would be called if, for example 30 permanent academic staff signed a notice to the chair..

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no need for CUAP or NZUC /TEC approval. If new programmes are proposed that would require
additional resources from the Crown, these should be approved in principle by NZUC/TEC prior
to their extensive development.
Recommendations
22.  egislation should be amended so that approvals for university qualification are
L
delegated by NZQA to NZUC which in turn delegates this power to the universities with
minimal constraints.
23. That the Committee on University Academic Programme (CUAP) process be replaced
with a requirement of universities to satisfy NZUC and UNZ that independent external
peer review has been undertaken.
24.  NZ should establish a committee charged with developing the Qualifications Code and
U
reaching agreement on:
a. a system that enables students to enrol in more than one university for study
leading to undergraduate, graduate and research degree qualifications without
barriers to cross-enrolment and at no additional cost to the student
b. improved cross-crediting for undergraduate degrees between institutions
108. Over
 the decades there are many examples of qualification requirements for professional
registration being upgraded. For example, undergraduate and postgraduate diploma
qualifications have been expanded by including more advanced study, changing them to degree
status. The UAG is wary of upgrades that have the same educational outcome but attract
higher DQ7+24 funding rates with the qualification being changed, for example, from bachelor’s
to master’s level. Well known examples from the past have been proposals, not approved, to
follow American practice, changing the medical qualification from the MB ChB to MD and the
law degree from LLB to JD. In this context, the UAG noted two recent instances of upwards creep
in qualifications, replacing bachelor’s degrees as the standard for qualification for admission
to health professions with new master’s degrees designed to achieve the same professional
registration. The policy implications of upwards creep in qualifications deserve broad national
consideration.
109. Research-based
 degrees (i.e. those involving theses at master’s or doctorate level) should
in general only be offered by universities, allowing other tertiary sector providers to focus on
vocational education and allowing costs for different forms of tertiary education to be better
assessed. It is not a quality experience for a student to get a research-based qualification in a
non-research-intensive institution. There would need to be some exceptions. Wānanga need
to be able to provide for research-based degrees in the matauranga knowledge-based system
and in areas where they can support advancement of Māori aspirations and priorities. Other
tertiary providers should be limited to very narrow exceptions where the depth of expertise and
critical mass can be demonstrated. Such restrictions would ensure the continuing quality of New
Zealand-based research qualifications.
Recommendation
25. I n general, research degrees be restricted to universities and wānanga, with other tertiary
providers be approved to offer research degrees only in exceptional circumstances.

24 DQ7+ is the acronym used to define the funding stream for students enrolled at universities for diplomas and degrees.

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Size and scope of the New Zealand university system

110. Over
 recent decades, all liberal democracies have encouraged a greater number of school
leavers into tertiary education with a view to the economic and social benefits that come from
it. This includes entry into institutions that are scholarship or vocationally focused, even if called
universities.
111. New
 Zealand has also seen over time greater numbers of school leavers and mature entrants
engaging with universities, wānanga, polytechnics and private providers. But direct comparisons
with other jurisdictions are hard to make given the variable definition of universities globally and
the lack of clear differentiation within the polytechnic sector, which in many other countries is
more clearly defined, even where polytechnics are called universities.
112. There
 is no agreed optimal percentage of students that should go to the different types of
tertiary education. But globally there is some questioning of whether unlimited entry to research-
intensive universities is desirable for both country and student. The value of research-based
postgraduate education as a path to employment is less clear. In New Zealand, a postgraduate
qualification does not provide a high value premium in most fields. While for some students
there would be a negative private financial return, there are many non-material benefits of
higher research-based education to a knowledge-orientated economy. There is also a risk of
qualification inflation (when those industries regulating vocations require higher qualifications
than traditionally required) and/or because institutions see that as providing a competitive
advantage to students.
113. We
 have received comment that having eight research-based universities in a country of five
million may be inefficient. We are not convinced by this argument but rather suggest that the
eight universities look to gain efficiencies and quality through collaboration and differentiation in
areas of identified strength. There may be a case, however, to reduce geographical competition
in some cities. But such analyses require much more intensive analysis and evaluation, which is
beyond our brief.
114. Clearly
 research university education is more expensive, given the broader obligations on staff,
than polytechnic education.25 More work is needed to define what might be the optimal size of
each of these sectors. Doing so is difficult, given the current uncertain state of the polytechnic
sector.
115. Other countries incentivise selected areas of research-based education, particularly in
strategically desired areas such as engineering. New Zealand universities are cross subsidising
from both low-cost courses and overseas fee-paying students to cover high-cost courses,
perhaps most evidently in veterinary science. Our largely volume-based system for funding
universities obscures some of these issues.
116. It is generally in the students’ interests that research-based degrees should be restricted to
universities, except in very specific situations such as in wānanga. This change would give
students clearer vocationally directed paths. The caveat must be that these educational paths
provide for better interchange for students between polytechnic and university educational paths
as career intentions of individual students evolve.26

25 Liberal studies colleges in the USA typically have much higher staff-student ratios and smaller class sizes, the Oxford and
Cambridge system in the UK relies much more heavily on small college-based tutorials, etc.
26 In countries such as Germany and Switzerland where the technical paths are much better developed and have higher status, the
interchange is not difficult.

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117. There
 needs to be closer examination of the qualification paths for several vocations, especially
those where there is a large workforce requirement. For example, what is the role of university
versus polytechnic training for nurses? Several caring professions and their professional bodies
are requiring university graduates when shorter forms of education may be more appropriate.
118. The
 role for universities in micro-credentials and in lifelong learning is rather limited in New
Zealand and has largely been taken up by independent providers both onshore and offshore, but
international evidence suggests an important and growing role for research universities.
119. One
 relatively compelling argument is that the easiest way for universities to advance their
standards and reputation is to limit their entry. The higher the entry standard, the more likely that
the university’s reputation is enhanced, with flow-on effects for the marketability of graduates,
the retention of high-quality faculty, and research intensity. The issue for New Zealand is
compounded by the quality of compulsory education, evidence of educational disadvantage for
some societal groups, and growing issues of youth mental wellbeing.
120. The
 highest ranked research universities internationally generally achieve that quality by limiting
student enrolment based on pre-entry academic success. The concerns regarding equity are
generally addressed in such universities by scholarship provision.27
121. Downsizing universities would be expensive (staff loss, closure, excess capital), but at the very
least consideration should be given to limiting the overall size of the system. And there are
further considerations. First, the funding model for universities would need to be considered,
perhaps shifting incentives from student volume to staff-student ratio. Second, it requires that
the polytechnic sector is of high quality and itself has some differentiation. There is much to
learn from larger systems and European systems in that regard. Third, it assumes the quality
and suitability of high school education and there are clearly issues with this. Fourth, there are
obvious equity issues that would need to be addressed.
122. Educational disadvantage and socioeconomic disadvantage are closely linked and still
disproportionately affect components of our society, especially Māori and Pacific. The
obvious response is improving the education system so that all students have the potential to
demonstrate excellence. There are many inequities in high school education provision, which
are reflected in the universities’ provision of scholarships, pathway programmes and affirmative-
action programmes for educationally disadvantaged and educationally underserved students.
Demographic realities mean that the future of New Zealand depends on today’s school cohorts,
which have a large component of young Māori and Pacific people, having opportunities to
contribute across every domain of society. The outcome for any individual is strongly influenced
by their entire education journey including that through tertiary education. This demographic
shift is a particular opportunity for universities.
123. Auckland sits in a different category of institution than the other seven universities with its
potential to be higher ranked as a comprehensive research university within Australasia and the
Asia-Pacific region. Some limitation of student volume based on entry standards to all of its
courses may be advantageous to its reputation and thus ultimately to New Zealand’s advantage.
Otago similarly has a degree of effective limitation on growth given its focus and that it is a
largely residential university. Other universities in New Zealand might see value in limiting entry
to courses they offer in several areas to sustain quality.

27 This can drive debate about preferential entry and affirmative action.

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124. The
 universities are best placed to make academic judgement as to entry standard for their
institutions. We therefore recommend that UNZ should be the agency to collectively set the
standard for the University Entrance qualification and this should be the minimum entry entrance
standard for school leavers in all universities. However individual universities might set higher
entry standards for some or all courses.

The demographic and student realities

125. As
 pointed out in our initial report, major demographic changes will affect the university sector.
Birth rates are declining, and the ethnic and cultural mix of students is changing. The risk is the
universities will spend considerable resource in trying to maintain the status quo from a static or
even decreasing pool of school leavers by competing in a tightening domestic market. However,
unlike other countries with ageing populations, New Zealand has a distinctive opportunity due to
the younger age structure of the Māori and Pacific population. Moreover, this critical sector for
future leadership, including research leadership, is more likely to be committed to remain in New
Zealand.
126. Sadly,
 the compulsory education sector is being slow to adjust and address the manifest issues
in terms of student achievement, especially for those of lower socioeconomic background.
127. The
 mental health issues discussed in our first report combine with educational
underachievement to put unrealistic challenges on universities.
128. Indeed,
 a significant part of the growing costs on universities, in particular the growth of non-
academic staff numbers associated with managerial and compliance processes that has been
the subject of public comment and controversy, is a direct consequence of this added burden.
Recommendations
26.  he NZUC should regularly review the size and scope of the university system, and each
T
university should consider where course-specific entry limitations based on academic
standards should apply so as to advance their standing.
27. Standards for university entrance should be set by UNZ and where entry standards and
limitations exist, appropriate pathways or support for educationally disadvantaged
students must exist.

International students
129. The
 role of international students has been the subject of much international discussion and
controversy in recent times. Both the UK and Australia have effectively constrained or reversed
the growth of international students, for non-academic reasons. Generally, the university
sector has become financially dependent on overseas fee-paying students. In some overseas
institutions, the proportion of international undergraduate students is much higher than in any
New Zealand institution. All the New Zealand universities put effort into attracting international
students as a revenue stream. In practice the three universities with Auckland campuses and
Waikato attract the bulk of these students.
130. But
 the value of these students is more than revenue – it helps New Zealand’s position in
the world. The current model recognises the particular value of attracting research graduate
students in that international PhD students are treated fiscally as if they were domestic PhD
students. The panel applauds this recognition by the Crown. It highlights the reality that New
Zealand universities play a key role in New Zealand’s broader international strategy.

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131. But
 history has also shown that externalities and the broader geostrategic environment can acutely
affect international student numbers, with adverse consequences. The approach taken to date
by the New Zealand universities is to be applauded, but it would be a prudent component of risk
management if the universities avoided becoming overdependent on international student revenue.
132. Higher
 entry standards that limit institutional size might have short-term effects on international
student volumes, but it is likely that the ensuing enhanced reputation and rankings would be
attractive and valuable to New Zealand’s interests.28
Recommendation
28. Universities should not become overdependent on international student revenues.

Domestic and international partnerships

133. A
 recurrent theme in our report is the need for our eight universities to seek efficiency and quality
through partnerships, both domestic and international.
134. The
 growing use of online approaches to teaching offers opportunities and competition. To a
limited extent some cooperation already exists in low-volume courses where critical academic
mass is limited in any one centre. But the potential is much greater and would allow students
in one centre to also receive instruction from leading academics in other centres. This form of
cooperation has been developed extensively overseas, for example in Norway at the graduate
level. Some level of virtual critical mass can be created and potentially allows students in one
centre to receive access to academics and sub-domains of disciplines that they otherwise would
not have. There are practical and financial issues to resolve, but UNZ should be encouraged to
do. The financial model we propose would provide incentives to make this happen.
135. In
 emergent areas or disciplines such as synthetic biology, AI or quantum computing, such
a solution might ensure we have the capability in the future to take advantage of these
technologies.
136. The
 restructuring of the CRIs into PROs, which is now underway, offers additional choices for
greater student exposure, research degree opportunities and greater integration between these
two components of the research system.
Recommendation
29. The universities should further collaborate to:
a. improve
 access of students at the undergraduate and course-based masters’
levels
b. build effective critical masses of scholars for advanced studies and research
137. Reputation
 also matters to academics, students and vice-chancellors. Universities and
international students rightly or wrongly look to various ranking systems, both globally and by
discipline, to indicate the institution’s quality. Other small, advanced economies (most notably
Singapore) and a number of developing countries (e.g. Rwanda) have used international
strategic partnerships with leading universities in defined disciplines to accelerate their standing
and give students exposure to a broader range of instructors (and potential opportunities) and
provide a broader set of potential collaborators. These must be strategically driven partnerships
but in an increasingly digitally connected world could offer broad advantage to New Zealand.

28 History shows the value of attracting high-quality international students. The Colombo plan of the 1960s attracted many high-
quality students to New Zealand from Asia, and many of those became civic and political leaders upon return to their countries of
origin. New Zealand was able to benefit from these relationships for many decades.

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Recommendation
30. As a means to lift performance and quality, New Zealand’s universities should consider
seeking formal international partnerships with world-renowned universities in the
disciplines where they seek to excel.

The academic portfolio

138. At
 the heart of a university is the range of disciplines taught. Most teaching and research occur
within clusters of academic units or departments termed faculties or schools. These are also
the structures around which internal budgeting is allocated and managed. In turn these faculties
largely reflect the shape of the qualifications offered. Hence the generic basic degrees such
as a BA, BCom or BSc, the vocational bachelor’s degrees such as MB ChB, BPharm or LLB.
Postgraduate master’s and doctoral programmes generally follow the same disciplinary or
domain boundaries. Some students undertake conjoint degrees (e.g. two bachelor’s degrees
in parallel, with some cross-accreditation). Research-intensive degrees occur at master’s and
doctoral levels.
139. There
 are several trends in academe that will likely require changes within the portfolio of
each university. An increasing number of vocationally focused students may not seek a
traditional three-year degree. Technology may mean that some students have partial education
from international sources. Universities globally are increasingly involved in providing micro-
credentials, especially where retraining, or lifelong learning is the driver.
140. As
 governments expect universities to become more outward facing, they expect students and
researchers to be more engaged with society and with industry. This engagement can include so-
called co-operative education (or co-op programmes) whereby students get credit for activities
undertaken in the private sector, and it may be that DQ7+ rates need to take this modality into
account.29
141. Increasingly,
 intellectual innovation occurs at the margins and interfaces between such units.
Many students now want training that crosses disciplinary boundaries, and that may not be met
by the traditional conjoint degree. How academic programmes develop is primarily for each
university to consider. The panel would merely note that internal administrative structures can
inhibit developments, especially when academic programmes cross faculties.
142. T
 here is growing demand for researchers and academics who have capacities in
transdisciplinary methods of research and analysis – this is a distinct group of methodologies
involving end-users as stakeholders, be they business, policy, NGO, community or iwi groups,
alongside academics. Transdisciplinary research is seen by OECD and others30,31 as central
to addressing many of the ‘wicked’ problems in social and environmental spaces. Thus,
universities globally are looking to produce scholars and graduates trained and skilled in these
methodologies. It is generally accepted that this focus is not one for the undergraduate but
should be built on in graduate research-based education. Transdisciplinarity, as particularly
developed by the CoREs in their research, has played a major role in engaging Māori
communities more in the life of universities and in their research.

29 A somewhat related issue is the cost to students in some vocational training courses when placements disrupt domestic
arrangements.
30 OECD. (2020). Addressing societal challenges using transdisciplinary research. OECD Science, Technology and Industry Policy
Papers, No. 88. OECD Publishing. https://doi.org/10.1787/0ca0ca45-en
31 International Science Council. (2023). Looking at the future of transdisciplinary research. ISC Centre for Science Futures. https://
council.science/publications/future-transdisciplinary-research/

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143. However,
 the promotion of transdisciplinarity raises the question of how to give a broader
underpinning to undergraduates, and universities are looking to how to address that question.
144. In
 turn this question raises the issue of what in non-vocational courses should be considered as
core competencies. For example, should all science graduates have some exposure to scientific
ethics? These are academic questions that are better dealt with by the universities themselves
but require adaptive thinking within funding structures and course approval structures. When
core courses are introduced, the rationale for doing so must be qualification and pedagogically
based. This has become a matter of some controversy within academic communities in several
New Zealand universities.
Recommendation
31. Universities should be careful to restrict compulsory courses to those required by
vocational bodies or to where there is strong disciplinary and pedagogical justification.

The universities and lifelong education

145. The
 universities will need agility to respond increasingly quickly to changes in employment.
The AI revolution that is gathering speed will make many people in white-collar and blue-collar
jobs who already hold degrees that specifically prepared them for those jobs, and who have
never before contemplated that their work would be taken over by AI agents, suddenly finding
themselves needing upskilling and retraining. Many will look to the universities to assist them
with learning new knowledge and skills to fit them for alternative employment.
146. Courses
 for lifelong education have not always fitted easily with the cadence of universities,
with their structured qualifications, mainly degrees, serving as the cornerstone of university
education. There is evidence that New Zealand’s universities are expanding their capability to
deliver education for mature students in many forms, from micro-credentials and short courses
to graduate diplomas and degrees, using multiple modes of delivery. This education can be
scheduled day or night, weekdays or weekends and for durations that are concentrated in time
or spread out over weeks, months, or even years. By growing online and distance education
offerings, universities can meet the needs of students who prefer to study anytime, anywhere.
147. Regulators
 of qualifications and their processes will need to be considerably more flexible to
adapt to constant change and to give providers the agility they will need to respond to changes
in demand. Experimentation should be encouraged in every aspect of lifelong learning.
148. The
 proportion of the New Zealand population with master’s degrees is well below the OECD
average.32 This area for expansion sits well with the universities and existing degree structures
for master’s degrees and graduate diplomas that are fully taught within the university or come in
new formats, for example, a mix of on-campus courses integrated with commercial, industrial or
professional experience.
149. Investment
 in lifelong learning could help universities to diversify their income streams. However,
the UAG has noted that micro-credentials are subject to qualification approval regulations that
may be inhibiting their development and promotion in universities. Another constraint is the
cap on the tuition fee that universities can charge for a micro-credential course, which may be
unrealistically low for some disciplines, especially in professional fields.

32 The OECD adult educational attainment distribution data for 2023 shows that in New Zealand 5.9% of the working age population
has a master’s degree, compared with the OECD average of 14.7%. Note that this discrepancy is in part a function of the New
Zealand Honours degree (level 8), which is the first postgraduate degree available, whereas in most other OECD systems, the
Master’s degree is the first postgraduate degree.

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Recommendations
32. Universities should expand their graduate degree and diploma programmes, especially
in areas where they have existing disciplinary strength, and find ways to offer more short
courses leading to micro-credentials.
33.  he qualification approval regulations and the caps on tuition fees should be reviewed to
T
ensure they are not constraining the development of micro-credentials in universities.

The impact of AI
150. AI
 is the most fundamental technological change in decades and will impact every aspect of
university activity, from how it operates to how knowledge is produced.
151. AI
 is already having profound effects on the operations of many business and professional
organisations, and the eight universities should be exploring how they can work together to
develop more efficient administrative and reporting systems. This exploration should include
UNZ, NZUC and TEC so that integrated developments occur.
152. Given
 that most students now entering university are using generative AI including large
language models and this is now a norm within society, universities will have no choice but
to accept that reality and consider how that affects teaching and assessment. Again, the
universities will need to share developments.
153. AI
 is already changing many professions and the demands for graduates in these professions
may rapidly change. Internationally, law and accounting are already being impacted, and this
will affect offerings across the system and may need system management to ensure optimal
evolution of the graduate mix.
154. There
 is now a realistic possibility that AI-based personalised education will replace many
courses as currently taught at university. International consortia of prominent universities are
forming to use AI-based education as the basis of global penetration. It is not unrealistic to
imagine that over the next decade the fiscal viability of civic universities may be compromised by
changes to the delivery of the volume-based undergraduate courses and the cross-subsidisation
that lies at the heart of their business model. This trend may further accelerate the shift away
from campus-based education (which would be unfortunate) and indeed away from traditional
undergraduate degrees and towards new forms of shorter education. It may also mean that
more New Zealand students seek offshore credentials, in this case without leaving New Zealand.
If this type of scenario evolves then universities of the future may become more focused on
courses with practicums, and the research intensity in their offerings will be even more critical. It
may reduce the volume of students going to university as school leavers.
155. The
 production and reporting of scientific knowledge is being greatly changed by AI, and this will
likely affect faculty, the research mix and the needed skills. Many staff may need upskilling in
this environment to stay competitive, and academia will need to provide short sabbaticals and
courses for staff to gain skills.
156. In
 a country that does not have the scale to be fully technologically sovereign, and one that
has been rather slow to embrace advanced digital technologies, universities must look through
multiple lenses at the potential and risks AI poses to them. The SSAG report highlights the
need to have focused centres of excellence in advanced technologies. But beyond that, the
universities need to work together to ensure the next generation of students get world-class
education, both in traditional but increasingly in new ways. Smart partnerships within and
beyond New Zealand will be needed.

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Recommendations
34. It needs to be recognised that while the future is not yet clear, the probability is that AI
will drastically change the shape and role of many educational institutions including
universities. Strategic oversight will be needed to ensure that government and
institutional governance is able and ready to adapt as circumstances demand.
35. 
The UAG recommends a system-wide approach to the development of AI for teaching.
Government and universities must be ready to seize technological opportunities to
enhance teaching and research.

Quality assurance
157. The
 UAG notes that UNZ intends to disestablish the Academic Quality Agency (AQA) for New
Zealand universities after its current round of institutional audits. This move is consistent with
the direction of travel in this report, which is to encourage the universities to take even more
individual responsibility for quality assurance through a shared Code for University Quality
Assurance and self-audit for compliance with the code. Universities New Zealand would
coordinate with the universities in the development and regular review of the shared code,
and NZUC would periodically review for each university the process of self-compliance and its
outcomes for excellence in teaching, research and knowledge transmission.
158. The
 joint publication by UNZ and AQA of the publication Academic Quality Assurance of New
Zealand Universities is a good starting point for the production of the proposed Code for New
Zealand University Quality Assurance. There are also many international codes from which to
draw precedents.33

Faculty
159. Our
 first report highlighted issues related to the state of academic faculty in New Zealand. Here
we reiterate our concerns.
160. Faculty
 face a number of burdens that could be significantly lightened. In some institutions
we became aware of high teaching loads being imposed on staff because of fiscal restraints.
This imbalance suggests fundamental issues in such institutions, which require strategic
consideration. In all institutions we heard of the burden of administration being placed on
academic staff, ironically often in the name of efficiency but frequently producing inefficiency
and low morale. An additional burden on teaching staff is that of combining online and in-person
teaching. It will take time to establish effective processes that allow staff to both teach and
research. The SSAG report raised the burden of research grant applications in an underfunded
system. University staff face the same burden when pursuing research funding, placing large real
costs on staff and the institutions. SSAG will be recommending simplified application systems.
161. Issues
 extend across the life cycle of academic staff. Many young academics have highly
precarious careers based on short-term teaching contracts or short-term fellowships and
research grants. In mid and late career, some staff burn out as researchers but must continue to
be seen as researchers rather than being able to or encouraged to focus on teaching. Changes to
the PBRF may make it easier to shift expectations for such staff between teaching and research.
162. Different
 universities have widely variable promotion and tenure criteria. Some focus their
weighting almost entirely on teaching and academic research, whereas others give some

33 An example is The UK Quality Code for Higher Education, UK Quality Agency for Higher Education 2024.

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emphasis to the “third mission” of outreach engagement, policy relationships, etc. Given that it
is important that universities are part of society and the community, university academic staff
policies should reflect these components and allow that over a career, the balance might change
between teaching, research, administration and the third mission. It can be counterproductive
if there is a very formulaic approach that treats all staff the same even though they may have
different attributes and skills.34
163. While
 employment is primarily a matter for the vice-chancellor, it is the university council
that must ensure that the university is at its heart a vibrant community of scholars. Councils
should be expected to review the employment mix within their university periodically to ensure
there are opportunities for early career academics and researchers; that very recurrent short-
term employment is avoided where possible as that makes research career and academic
development difficult; that processes exist to rebalance workloads as careers evolve; and that
efforts are made to reduce administrative burdens on academic staff.
Recommendation
36. University
 councils and administrations should give more attention to the negative
impacts of the expansion of centralised university systems and services on staff welfare
and morale and invest in mitigation of these effects.
37. Universities
 should create more opportunities for staff to broaden their experience by
secondments, rotations, exchanges or parttime appointments in industry and in public
service.

Student wellbeing and other student matters

164. A
 central role of universities is to provide research-based undergraduate and postgraduate
education to the student body, of which the largest component are school leavers directly entering
university life in late adolescence. In the socioeconomic, demographic and technological contexts
of today there are increasing challenges for these students and the universities.
165. Students
 face real cost-of-living issues. The emergence of online teaching, especially after
Covid, has meant that many students are forgoing campus life and experiences for online
learning so that they can take jobs in normal teaching hours. The combination of working and
learning produces enormous pressures. The student loan system is designed to help reduce
these pressures – but there is great temptation to earn rather than attend in person. Campus life
is an important element of the university experience, and while the trend away from it is perhaps
inevitable, it will come at a cost.
166. The
 current cohorts of adolescents are facing much higher rates of mental morbidity than past
generations. The causes are multiple but reflect the very changed world young people grow up
in. Some surveys suggest more that 30% of young people may currently have challenges to their
mental wellbeing, and this disproportionately affects some groups including Māori, Pacific and
the rainbow community, placing burdens on both them and the universities. The solutions are not
obvious but the cost to universities is large.
167. It
 is becoming clear that significant numbers of school-leaver students are poorly prepared
educationally for university, placing a burden on fellow students and faculty. This matter is
largely beyond our ability to comment, but that persistent educational disadvantage is in conflict
with the key role of universities in achieving equality of opportunity.

34 There are many examples internationally of good practice, and some universities in New Zealand have already adopted the
approach recommended.

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168. In
 recessionary times, students will tend to choose university and loans over the challenges of
seeking employment. This choice is understandable and is responsible for the upturn in student
enrolments in 2025, which is putting further fiscal pressure on the system. In many cases such
students might be better placed in alternative vocational training paths, but the lack of status for
such qualifications and the need for clearer differentiation within the polytechnic sector may be
affecting student choice.
169. As
 noted elsewhere in this report, students at the undergraduate level tend to choose their
university on a variety of social, personal and vocational grounds. But the system is small and
much promotional material from universities is largely aimed at student capture for economic
reasons rather than providing informative information about particular areas of expertise. While
not perfect, there is sufficient information for students to be provided with better indicators of
the strengths of each university – this may be a role for NZUC. The promotion of collaboration in
teaching may be a further solution to ensure all students get high-quality teaching, particularly so
postgraduate education, in both course-based and research-based programmes.
170. International
 students are a distinct cohort which are of immense value to the university
environment (as well as economically). They have distinct needs but the universities in general
service this cohort well.
171. Given
 these various factors, universities will continue to have to invest in student support
and in enhancing the value of both campus life and the online space. Collaboration between
the universities will assist the latter. The issues of mental wellbeing for this and future cohorts
require greater attention from earlier in life within the compulsory education and public
health sectors.

Equity
172. Universities
 are crucial institutions in ensuring equality of opportunity for young people.
Achieving excellence and ensuring equity outcomes are not at cross purposes. New Zealand’s
universities have recognised their obligations as agents in achieving equity of outcomes and
have used multiple initiatives to enhance access for educationally disadvantaged students.
However there remain course completion, continuation and progression gaps between
Māori, Pacific and non-Māori students, reflecting in no small part disadvantages earlier in
the educational journey. This issue has been poorly understood and has been confused and
politicised in ways that are not useful to ensuring that universities are able to draw excellent
students from the growing proportion of the entry cohort who have been underserved in the
education system – a reality that often gets aligned with ethnicity. Universities should be
congratulated for their efforts, and the panel makes no recommendation for change.
 support actions taken in the universities in professional training programmes for the
173. We
vocations to ensure the mix of graduates reflects population needs, be it on an ethnic, rural (in
the case of medicine) or disability basis.
174. The
 UAG considers learner success is a vital consideration for the equitable provision of
university education in New Zealand and proposes merging learner success into the investment
plans. Similar considerations apply to the Disability Action Plan.
Recommendations
38.  niversities should be free to take actions they see fit to address concerns about
U
educational disadvantage.

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39. Learner success should be included in the Code for Academic Governance.
40. The separate submission of Learner Success Plans and Disability Action Plans should be
discontinued and sections for learner success and disability action instead included in
the universities’ Investment/Strategic Plans.

Funding
University finances
175. All
 New Zealand universities have been individually adjusting to significant revenue decline
across the board in real terms since 2016, from government, private and international sources.
During the same period, they have experienced major cost pressures, from salary and wages,
imported inflation, and declining NZ Dollar exchange rates. Revenue declines and cost pressures
were exacerbated by the Covid crisis, from which there has been partial financial recovery. Some
of the changes from the Covid years have persisted, such as accelerated change in students’
learning behaviour to accommodate their need to work for income support; increasing adoption
of distance learning; and the continuing shifts in educational preferences towards disciplines
with employment prospects. All these factors require continuing adaptation by universities.
176. The
 continuing fiscal pressures on the universities cannot be ignored and are also present in
other jurisdictions, reflecting the need for revised policy positions on the role of the research
university sector.
177. Globally,
 government and public support for university research and teaching are being
significantly questioned and challenged across many liberal advanced economies. The impact
of policy changes and funding constraints is seen in continental Europe, the UK and Australia as
well as in the USA (although other factors are in play there as well).
178. In
 the absence of a strategic view of the whole system, the extremely constrained environment
can motivate counterproductive and undesirable behaviours. We have seen this in other
jurisdictions, and the evidence is that universities here are also making decisions that may not
be in the national interest although are logical from their own perspective. These compromises
affect the quality of some courses; drive greater career precarity and affect staff morale,
recruitment and retention; lead to the reduction in the provision of vital high-cost, low volume
courses (independent of national need); and drive curriculum provision based on student capture
rather than on pedagogical need. It has driven unnecessary competition between the universities
for domestic students and over-investment in marketing and non-core activities.
179. In
 the current climate for university education, diversification by duplication may not be a
good response to revenue decline. The UAG has noted that some universities, acting with the
high degree of autonomy to which they been accustomed since the 1989 reforms, have been
diversifying into areas which are already well provided for and not fully utilised, nationally and
even locally.
180. There
 are some fundamental questions. Are the system’s current incentives aligned to promoting
the national interest and need? Can the Crown’s purchase of services from universities be
smarter and more strategic? What should the balance be between public investment in students’
education and investment by the students themselves? This is a question to be considered in
policy choices about student fees and student loans.

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181. Universities
 each get between 32% (Lincoln University) and 43% (Auckland University of
Technology) of their overall income from the Crown through bulk funding which is comprised
of two main components: a contribution35 based on student volume and course type (which is
set for each university by TEC) and a contribution related to research intensity (the PBRF). On
top of that, universities compete for research funds either in the form of Centres of Research
Excellence funded by the TEC or in the contested research-funding mechanisms conducted
via MBIE. They also receive student fees, philanthropic donations and commercial research
contracts. Linking the largest income component to student volume incentivises the universities
to primarily compete on volume.
182. If NZUC were to conclude that aspects of university teaching and learning other than
student numbers need to be incentivised and more flexibility introduced to accommodate
or incentivise those changes, then the quantum of DQ7+ and the PBRF may need to change.
We would envisage a component from either or both of these funds could be held back to
incentivise approved collaboration to ensure student access or to encourage research student
exposure to excellence beyond a single institution. The issues of ensuring easy cross crediting
are also relevant.
183. There is evidence of increasing competition between universities for domestic student
enrolments. Some universities have been competing to hold on to local students and attract
the mobile students seeking an away-from-home campus experience elsewhere in the country.
These universities have been experiencing corresponding sharp fluctuations in their revenues,
with some experiencing financial stress from shifts in student preferences. Simultaneously,
some universities have excess capacity that was built in times of strong student demand driven
by population growth and incentivised by a funding system that has encouraged competition.
184. There is now a significant mismatch between the size of the system, what it offers and the way
it is currently funded and how the system might evolve. Hence our argument for more strategic
oversight of the system. In this report the UAG is encouraging Government and universities to
focus more on a strategy of quality improvement, to build disciplinary strength on existing bases,
without losing competitive stimulus. This strategy requires a supportive Government strategy for
its university administration and funding framework.
185. The UAG is advocating revenue protection and growth by increasing system-wide cooperation,
with more specialisation, enabling the overall system to concentrate resources, grow existing
strengths and expand into the new areas of research and development where New Zealand
is currently lagging behind international progress. Such fields include artificial intelligence,
quantum computing and synthetic biology, all vital to the current and future economy.
186. The
 nature, scope and quality of what are largely autonomous decisions by universities, through
their strategic and capital plans, and their future development in relation to national priorities
and the university system seen in its entirety, is central to the future of university development
in New Zealand.
187. In the time provided for this review and with the limited resources made available, the panel can
only recommend principles to drive the funding mechanism, but the detail requires considerable
work by officials before it can be operationalised. The recommended principles also assume a
move to a more strategic oversight of the system.

35 The vast majority of this funding comes from the Delivery at Levels 7 (degree) to 10 on the New Zealand Qualifications and
Credentials Framework funding mechanism (DQ7+) which sets 18 bands for different groups of disciplines and within each band
four weights according to the level of education. The TEC then uses that to define the teaching grant to each tertiary institution
including universities. Universities also receive a small amount of subsidy funding for sub-degree delivery.

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Income (in 2024 $millions) Funding per EFTS ($2024)

3,000 $30,000

2,500 $25,000

2,000 $20,000

1,500 $15,000

1,000 $10,000

500 $5,000

0 $0
2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024
Fees-free income (in $2024 millions)
Income from domestic student fees and charges (in $2024 millions)
Income from Government EFTS funding (in $2024 millions)
Funding per EFTS (in $2024 millions)
Figure 1: Teaching related income from government and students to the university sector 2004-2024. Government
funding used here includes EFTS Related TEC Funding ie SAC./DQ7+, Adult and Community Education and Youth
Guarantee funding, plus EFTS related non TEC Crown Funding, plus other non-research on (implementation) plan
TEC Funding. It excludes research funding and off plan funding from TEC and other non-TEC government funding.
Research funding was not fully separated from government tuition subsidy funding until 2007. To provide a fairer
comparisons with later years, income from Government EFTS funding has been estimated for the years 2004 to
2006 excluding this research component. Source: Minstry of Education.

Box 1: The 2025 student enrolment upturn

Domestic student enrolments in the universities have jumped in 2025, exceeding predictions,
and providing a challenge to the government, TEC and the universities in that the growth
exceeds the ability of the system to fund it under current provisions. With the economy
in recession, the jump in enrolments should be expected, and this upwards influence on
demand is likely to reverse as the economy recovers and students switch out of tertiary
education to take advantage of expanding employment opportunities.
The increase in enrolments can also be explained by the cohort of final-year secondary
students reaching a peak in 2028, from which projections for outer years show a long
declining trend.
In their future planning, universities will be looking for ways to accommodate this temporary
peak, while preparing for the coming decline in undergraduate domestic student numbers.

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Recommendation
41. There needs to be a closer alignment between strategic policies for the university
system and the funding made available by the Crown. Greater investment will likely be
needed to ensure New Zealand’s universities retain their reputation and quality and meet
New Zealand’s future needs.

Revenues
Teaching and learning revenues from Vote Tertiary Education
188. The
 universities receive an average of 38% of their funding from the three main components
of TEC funding: EFTS funding for teaching and learning; the PBRF to support research activity
in all disciplines; and funding for the CoREs to incentivise the universities to collectively invest
in centres of research excellence. Funding for PBRF and CoREs declined in real terms between
2016 and 2025.
189. Domestic
 student income, shown in Figure 1, declined between 2021 and 2023, increasing
again in 2024. Part of the 2024 increase was due to a time-limited funding rate increase which
will expire after 2025 unless extended by Government. The Minister permitted universities to
increase student fees by up to 2.8% in 2024 and up to 6% for 2025.
Research revenues from Vote Tertiary Education
190. PBRF
 funding has remained unchanged since 2017 (a decline in real terms of 22.3%) while
CoRE funding was last adjusted in 2016 (a decline in real terms of 23.9%). These reductions
have effects on all university research, with a more severe impact on disciplines such as the
humanities and creative arts that are expected to have a strong presence in a university system,
but which cannot easily find alternative sources for funding their research other than from
internal university decisions.36
191. Cuts
 in the value of government contract research funding have also depleted university
research revenues. The end of the National Science Challenges (NSCs) in 2023, without any
new programme emerging, left a significant hole yet to be plugged. Universities recruited to New
Zealand a number of international experts for the NSCs who work in fields highly relevant to New
Zealand, and universities note that without replacement funding, some of these researchers have
left the country, while some remaining are unlikely to be able to be supported to stay.
International student revenues
192. International
 student enrolments, measured in EFTS, have been recovering substantially towards
pre-Covid levels, especially in Auckland and Waikato. There has been a pattern shift from under-
graduate degrees to one-year master’s degrees, which will potentially result in less stable revenue
than when there is the flow-on of enrolment over three years with undergraduate programmes.
193. Globally, major shifts are taking place in demand and supply for international student places.37
Destination nations for international students are cutting back on student visas and restricting
international enrolments. Simultaneously, students’ home nations are expanding the supply of
university education. These changes are pervasive and will have significant implications for
many universities that rely on international student fees to bolster their income.

36 We note the SSAG is recommending distinct pillar for humanities and creative arts research via the proposed National Research
Council.
37 See for example University World News, 23 March 2025 Issue No 824, which contains reports that UK international students are
down 7% in the first fall in 10 years; interest in studying in the US dropped 42% in January 2025; and Indian students abroad haven
fallen by 15%, in Canada by 41%.

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194. Generally,
 Asian countries with rapidly developing economies and rising affluence in middle
classes have ambitious plans and programmes to build and enlarge their university systems
to provide the same innovative engines for development of their societies and economies as
advanced western nations.
195. China
 and India, the two countries that in recent decades have between them provided the
greater share of international students, have well-funded government programmes to build up
university research and teaching. China continues to build “100 great universities” in its drive to
match the well-established premier universities in western nations. Their climbing international
rankings confirm that Chinese universities are achieving top-rank global status for their research
and teaching. As these universities strengthen further and become more numerous, it will be
inevitable that students will be enrolling more often in their home nation.
196. Closer
 to home, the Australian government has cut back significantly on international student
visas. The major research universities in the Group of Eight that expanded their international
student numbers to as high as 50% of total enrolments are now losing some of that high-margin
revenue, which has been supporting their large research programmes.
197. When
 the councils of New Zealand universities adopt their international student strategies and
policies, they will need to continue to be wary of risks inherent in these observed trends and the
unpredictable sudden changes in the demand which can occur, such as with pandemics and
political restrictions.
Other revenues
198. Research
 grant and contract revenue is increasingly constrained as New Zealand continues to be
a relatively low public and private investor in research and development. University staff spend
a disproportionate amount of time seeking research grants and this inefficiency has a high cost.
This cost is discussed at length in the SSAG report.
199. The
 SSAG report also focuses on universities as important sources of intellectual property.
Commercialisation of IP must be supported by universities, but it is not a driver of university
income anywhere in New Zealand or, with rare exceptions internationally. Rather, universities
promote private sector-driven innovation by generating well-trained graduates and know-how,
and by enabling the exit of IP from the universities to the private sector. The SSAG report makes
clear recommendations, which are aligned with announced government policy, to promote
transfer of intellectual property to the private sector rather than universities trying to make a
return on it.
200. The
 universities receive some philanthropic support and put considerable effort into promoting
and obtaining this funding, which provides for scholarships, endowed academic and research
appointments, infrastructure and research support.

Operating expenditures
201. At
 the same time as universities have been experiencing revenue decline in real terms, they are
experiencing significant operating cost pressures. There are many sources,38 including:
• inflation and adverse exchange rates
• restructuring costs as disciplines are expanded or contracted

38 A recent survey of financial pressures on Australian universities is the KordaMentha Higher Education Annual Report, KordaMentha,
December 2024. The report’s headline is that “Australia’s higher education sector is experiencing its most significant shake-up and
greatest challenges in 30 years”, an observation that could equally apply to New Zealand’s higher education sector.

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• essential investment in systems for teaching and learning

• investment in modernised administrative systems
• expensive research infrastructure
202. The
 expansion of non-academic staff in universities is the subject of much comment in
submissions to the UAG, has been a topic for commentary,39 and has received media coverage in
many other countries. It is difficult to get a firm picture of the realities because of the way such
data are collected, and staff roles are characterised. An increasing number of academics also
appear to be diverted to administrative leadership roles. But factors that appear to be changing
the perceived distribution of staff roles and the size of the overall workforce, however it is
characterised, include:
• Growing imposition of requirements for compliance with regulations and the demands
of central government agencies
• Expansion of media communications and marketing
• Expanded university development divisions, which is understandable given the incentives
in play
• Essential support for new teaching and learning technologies, with their sophisticated
requirements for content and its presentation
• Growth in support for student welfare and accommodation
• The increasing cost of targeted programmes, and added compliance requirements, for
learning success of students likely to need more support to cope with university study
• More complex managerial processes
203. But the UAG received a substantial weight of staff submissions and comment on growing
bureaucratic practices and the centralisation of administrative decisions that many see as
excessive managerialism in a low-trust environment. This trend is claimed to have driven both
increased general staff numbers as well as putting increased burdens on academic staff. These
claims must be addressed by university councils. Academic morale is clearly affected.
204. There has been a growth in expenditure on promotion and marketing, for example in sporting
sponsorships, that may need councils to reflect on value and whether marketing is better built
around reputation and service provision.

Non-capital investment
205. A
 feature raised by more than one university is a trend for more of a university’s investment and
innovation in its administrative systems, teaching and research capability to be classified as an
operating expense rather than being capitalised and depreciated over subsequent years. There is
a widespread move of administrative systems to ‘cloud’ services. As an example, the UAG noted
that the University of Canterbury has been following a growth strategy, using cash reserves to
make substantial investments in new discipline areas with payback expected over an extended
timeframe. These investments have been categorised as operating expenses and have resulted
in substantial operating deficits for the university.

39 Kierstead, J., & Johnston, M. (2023). Blessing or bloat? Non-academic staffing in New Zealand universities in comparative
perspective. The New Zealand Initiative. https://www.nzinitiative.org.nz/reports-and-media/reports/blessing-or-bloat-non-academic-
staffing-in-new-zealand-universities-in-comparative-perspective/

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206. Other
 universities without the same level of cash reserves are not prepared to incur operating
losses to make non-capital investments, as these would result in a downgrade of the university’s
financial ratings by TEC’s Monitoring and Control Group.
207. The
 conclusion is that the combination of Accounting Standards and TEC rules for financial
compliance incentivise capital investment over non-capital investment through operating
expenditure. In general, New Zealand’s universities run small surpluses and incur large
depreciation, generating cash which cannot be applied to large operating expense investments,
as this would force an institution into deficit and a downgrade of TEC’s financial rating.
208. Treasury
 acknowledges this issue also arises for government entities and is giving consideration
to how to fund non-capital investment that is classified as an operating expense.
209. Other
 ideas put forward in submissions to the UAG for ways to overcome these issues include
equity injections and loans as a means of funding large capital and operating cost innovation,
and options for ongoing or time-limited underwrites to support high-cost, uncertain-demand
programmes in areas of high strategic value.
210. Another
 way to alleviate cost pressures, already in use for insurance, some library subscriptions
and some software, is to expand the use of joint purchasing arrangements. Libraries are a likely
fruitful area for increasing cooperation. This might extend further with common developments
in areas that use SaaS40 software (e.g. student management, people management, asset
management, learning systems, library services).

The funding of New Zealand’s universities

211. Since
 the 1989/90 reforms, the regulatory and funding system, which incentivises universities
to compete more than to collaborate, has served New Zealand well in many respects, with
expansions in the numbers of graduates and advances in the quantity and quality of research
outputs. A feature has been relatively open entry to the general faculties of the universities for
students who have achieved a university entrance qualification.
212. This
 review provides an opportunity to reconsider the regulatory and funding systems in order
to strike a more appropriate balance between incentivising healthy competition on quality rather
than volume, and collaboration for service delivery in a national system.
213. In
 earlier sections, the UAG has made recommendations for structural changes which would help
enable government agencies and the universities to increase focus on system-wide changes to
enhance specialisation and system efficiencies. The UAG has identified changes to the funding
process which should materially assist with reaching these objectives.
214. In
 following sections, the UAG also proposes some streamlining of the university funding
process to increase its efficiency and reduce compliance costs.

The investment plan system

215. The investment plan system is mandated by the ETA and implemented by TEC.
216. The
 investment planning system does not have the same horizons and review dates for all
the universities. Nor does it integrate all aspects of the Crown funding of universities (DQ7+,
PBRF, CoREs). TEC approves funding for terms varying from one to three years before a new
investment plan is required, with the effect that plans are considered individually and not
then used as an accountability and reporting framework. In this respect TEC processes are

40 SaaS: software as a service.

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less effective than they could be if the universities’ plans were considered simultaneously
and were also the basis of accountability and reporting. The UAG proposes aligning the
investment process so that all university investment plans are reviewed simultaneously and
funding approval given for identical duration, preferably three to five years. This change should
not significantly affect the administrative burden on the TEC given what they already require
annually from institutions. Improved data collection and standardisation across the system
would assist significantly.
217. There would be some risk that this change would make it easier for inappropriate lobbying or
political interference given that a synchronised system would be “up in lights”, but the upsides
of proper systems oversight and coherent understanding via the proposed NZUC to the Minister
would ensure more effective strategic planning and policy development.
Recommendation
42. The investment planning system should be changed to align the funding cycle so review
dates and funding periods have the same three-to five-year cycle for all universities.
218. NZUC
 would need to have funding flexibility to consider proposals for new developments outside
of this cycle so that the overall university system is agile enough to respond to unpredicted
changes in the demand for research and teaching programmes that cannot be accommodated
by universities utilising the flexibility they have within their block grants.
219. The
 UAG notes above that the current separation of qualification approval from funding approval
has meant that proposals for new degrees and courses can and do slip through the approval
systems of CUAP and TEC without consideration for their effect on other universities. In
Recommendations 5j and 22, the UAG proposes that the ultimate responsibility for university
qualification approval and monitoring be changed from UNZ to NZUC, and for NZUC to have the
power to delegate qualification approval to the universities subject to their compliance with the
proposed Code for University Qualifications. The UAG noted that it would have the advantage
of ensuring qualifications will not be approved without also obtaining formal prior approval that
they can be funded.
220. Submissions
 and university visits informed the UAG that the universities regard the investment
plans, which recently have had added requirements for separate learner success plans and
disability action plans, and the accompanying compliance as burdensome and unnecessarily
disconnected from their overall investment/strategic plans. These should be integrated
and aligned.
221. The
 UAG has concluded that every effort should be made to reduce the duplication of effort by
the universities in producing multiple plans.
Recommendation
43. University strategic plans should be used as comprehensive investment plans.

Vote Tertiary Education Funding for the Universities

222. A
 key feature of the funding allocated by TEC from Vote Tertiary Education is that the funds to
support teaching and learning (DQ7+) and the PBRF allocations in support of research are block
grants, which give the universities full discretion over internal allocation of the funding. The UAG
strongly supports retention of the principle of block grant allocation and the operating discretion
they place in the hands of universities. It is designed to safeguard university autonomy and
academic freedom and to avoid political interference.

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223. The
 TEC monitors the use of the funds through the universities’ annual reports, which are tabled
in Parliament, data returns on student enrolments, and key performance statistics for course
completions, progression rates and qualification completion.
224. The
 largest component, DQ7+, is volume driven by student enrolments. The revenue from tuition
fees levied directly by the universities is equally volume driven. Because these two revenues
are highly responsive to student demand, at least 50% of university income fluctuates with the
economic cycle and other perturbations such as the Covid epidemic.
225. Tuition
 fees, even though they are set by university councils, are also tightly regulated, with
the Minister annually setting a maximum fee increase percentage. It is general practice for
councils to apply this maximum increase to the fees set every year. To avoid revenue falling in
real terms, the Minister should permit fees to rise in accord with inflation and to be adjusted for
cost changes. The current system of control has persisted for more than two decades and in
some cases has resulted in the tuition fee structure falling significantly behind movements in the
delivery cost of courses and degree programmes.
226. The
 formulas used to calculate each university’s DQ7+ and PBRF allocations are tightly
prescribed and unable to be changed except with Ministerial approval. A consequence of the
tight control of funding by the Minister is that the TEC has little discretion over much of the
funding it allocates to universities. The UAG has concluded that the system needs greater
flexibility to respond to a variety of pressures other than changes in student demand.
227. The
 annual Ministerial directive, Determination of Funding Mechanism: Delivery at Level 7
(degree) and above on the NZQA Qualifications and Credentials Framework, includes a funding-
rate table that is identical for all DQ7+ delivery other than work-based learning. Versions of this
table have been in use for universities, polytechnics, wānanga and PTEs since the 1989 reforms.
The rates were designed to include support enabling research activity by all staff engaged in
teaching at degree level but ignore the distinctive nature of universities which is only partially
addressed via the PBRF.
228. The
 UAG considers that the funding support for teaching and learning in the universities could
be more flexible were there to be funding mechanisms specifically for the universities, permitting
NZUC and the Minister to respond better to needs arising from both national priorities and
university priorities that are specific to their provision of teaching and learning. Separation of
university funding mechanisms from those for other tertiary providers could be an advantage for
the other sectors, allowing new models of provision to emerge in those sectors.
229. Level
 DQ7+ funding uses a table of rates per EFTS (Equivalent Full-Time Student) issued annually
by the Minister in the Funding Mechanism Determination. The table has 18 categories for study
discipline and four categories for level of study (essentially non-degree, undergraduate, taught
postgraduate and research postgraduate). The rates in the table are intended to reflect the cost
of delivery in each category, with medicine and dentistry being the highest cost and humanities,
business and law falling into the lowest cost category. Rates have not been adjusted over time
to reflect changed delivery costs, except to apply an across-the-board increase to compensate
for price inflation. But there have been cost adjustments made in some cases to reflect changed
delivery costs or to reflect government’s priorities. For example, there was an increase in
rates for computing and engineering in 2014, which was followed by significant expansion in
computing and engineering enrolments, Other examples include targeted adjustments were
made to sciences in 2015, medicine in 2017, initial teacher education in 2020, veterinary science
in 2022, te reo in 2023, medical radiation therapy in 2024.

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230. However,
 it is not clear that the rates accurately reflect delivery costs. For one example, the
rate for veterinary education may have fallen behind increasing costs of delivery. In other
subjects, the cost of delivery can decline with deployment of new teaching technologies. The
NZUC may need more flexibility to adjust rates as required. Otherwise, perverse incentives
creep into the system that encourage providers to expand higher margin subjects to enable
cross-subsidisation.
231. The
 UAG has noted that other jurisdictions (e.g. Israel) use changes in the funding rates to
incentivise universities to respond more quickly to changing requirements of the workforce,
changing needs for advanced knowledge and expertise, and other national objectives.
232. One
 purpose for giving NZUC flexibility to adjust rates might be to incentivise collaboration
or to incentivise developments in needed domains. For example, the DQ7+ might have a 5%
upside for jointly delivered programmes meeting defined criteria to support access and enhance
quality, especially at the graduate level. Only the PBRF allows for continued inter-institutional
competition to enhance research quality.
233. The
 NZUC also needs to be able to incentivise emerging new disciplines. It might for example
identify an advanced technology as requiring development of a new focus in teaching and
research, which should be done by issuing an RFP to the universities. The funding might be for a
defined period to allow staff to be recruited, courses developed, and a market created.
234. Similarly,
 if lifelong learning is to be encouraged within universities, the rates for micro-
credentials may need frequent reconsideration.
235. The
 panel also explored alternative funding systems, including the question of whether part of
the DQ7+ allocation might be compartmentalised to include a base grant to reduce year-to-year
variation. However, the panel concluded that such a change would achieve little that cannot be
achieved through a smoothed system as suggested elsewhere in this report.
Recommendations
44. 
Under the provisions of s419 of the ETA the UAG recommends that the Minister for
Universities issue a distinct set of Determinations of Design of Funding Mechanisms for
Universities, including a Mechanism for Delivery at Level 7 (degree) and above on the
New Zealand Qualifications and Credentials Framework.
45. 
Once the NZUC is established this function, and the associated funding and their
oversight and accountability, should transfer from the TEC to the NZUC.
46.  he design of the funding mechanisms should include flexibility for NZUC to adjust
T
funding rates.
47. 
The NZUC should reserve funds for new developments and to incentivise activities in the
national interest.
48. Tuition fees in general should follow movements in course costs and inflation rates.
236. PBRF
 funding is also allocated using a Ministerial directive setting a similarly tightly prescribed
formula. CoREs are funded at a fixed rate per entity. For the UAG’s recommendations for
the future of the PBRF and CoREs, see the later sections in this report dealing with these
programmes. However, the UAG believes that the NZUC should have oversight of all of these and
be able to vary investment within the overall allocation to meet New Zealand’s needs.
237. Some
 submissions and information received from the universities during site visits advocate
changes to the planning and funding cycle and process in order to smooth fluctuations in

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government support. It is argued that smoothing out revenue grants would allow the universities
lead times they need to adjust their cost structures to revenue changes. Under the current
system, as explained in the next paragraphs, university tuition revenues vary directly with swings
in student demand from year to year.
238. Within any year, TEC DQ7+ funding rules differ for upside and downside swings. With a downside
fluctuation, a university is required to refund funding if it delivers less than 99% of the approved
funding allocation.
239. On
 the upside, if a university’s enrolments exceed the projected enrolments funded by the
grant, TEC will increase the grant to fund the extra enrolments up to 102% of the original grant.
Providers can choose to take unsubsidised enrolments above this level (for whom they will
only receive domestic tuition fees), up to 105% of their approved allocation, after which point
they require TEC approval to enrol unsubsidised students. These upside constraints limit
Treasury and TEC exposure to unbudgeted increases in tuition grants and the student loan costs
associated with tuition fees.
240. The cost structure of universities includes substantial fixed costs, putting universities in a
financial category similar to other highly capital-intensive industries. In the universities, these
inflexible costs arise firstly from long-term employment of academic staff, highly specialised
in their discipline over long years of preparation to be qualified for appointment, with little
alternative employment available if their position is disestablished, and secondly from a capital-
intensive asset portfolio comprising land, buildings and equipment configured specifically to
research and teaching. These features of their cost structure make it challenging for universities
to adjust their finances in response to shifting demand and remain compliant with the norms for
profitability, liquidity and debt affordability set by TEC’s Financial Monitoring Framework (FMF).
Non-compliance with the FMF can result in graduated interventions by TEC and the Minister.
Recommendation
49. To provide universities with greater revenue stability, consideration should be given to
smoothing out funding allocations by adopting techniques such as grants for multiple
years and basing them on input data smoothed with weighted averages calculated over
several years using both enrolment history and projections.

Research overheads
241. Research
 funded by the Crown is fully funded, including indirect costs and overheads. The level
of these costs is seen as somewhat inhibitory by the private sector and was further discussed
in the SSAG report. Indeed, both the UAG and SSAG have explored whether indirect costs and
overheads can be reduced. Generally, university overhead rates are less in universities than those
in CRIs, but this difference relates to the broader set of incomes available to universities.41 But
the reality is that overheads can only be reduced by either cost reductions or by replacing that
income in some other way.
242. Other jurisdictions may constrain overheads by way of infrastructure grants. However, it is
not easy to see a way to transform the current system, and the panel therefore makes no
recommendation for change, other than periodic external review by the proposed National
Research Fund to assure the overhead rates are fairly set.

41 However, universities also receive considerable philanthropic support for research which is generally not accompanied by
overheads and which the universities effectively cross subsidise.

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Accountability and compliance

243. The
 UAG has noted that the Government’s Letter of Expectations 2025 for the TEC includes
Ministers’ expectation for “TEC to increase efforts to reduce compliance costs for providers.”
244. Many
 universities, in their submissions or during the UAG visits, expressed concern about the
compliance burdens being imposed by government and its agencies. These requirements
have steadily expanded over the decades, with the most recent example being rather intensive
government regulation of pastoral care and students’ welfare.
245. The
 UAG has focussed on possibilities for simplification of the government’s administrative
processes relating to the universities and reducing the compliance burden.
246. To
 achieve positive change by reducing the costs of compliance and focus on improvements
in university governance and management, the UAG proposes the universities be given greater
responsibility for collectively establishing codes for their performance and relying on self-
monitoring and self-audit for compliance.
247. We
 agree with Edwards that development and approval of the University Governance Protocol
should be required in the ETA (see page 25, Review of New Zealand Tertiary Education Institution
Governance).
248. Adoption
 of a Code for Pastoral Care and Student Welfare by the UNZ and approved by NZUC
would remove the need for the Education (Pastoral Care of Tertiary and International Learners)
Code of Practice 2021 to apply to universities, allowing universities to replace the current costly
and bureaucratic system for compliance with self-audit. NZUC, with UNZ, would be responsible
for monitoring the universities self-audit processes.
249. The
 recent requirements for Learner Success Plans have added further compliance costs for
universities. All parties agree that success for all learners, regardless of their demographic
group, is mission-critical and must be included in strategic plans as a high priority for the
achievement of equity and workforce development. But the universities regard the current
requirement for separate Learner Success Plans and the accompanying monitoring as imposing
excessive compliance costs. It also creates dangers of grade inflation.
250. Between
 them, the Codes for Academic Governance, Quality Assurance and Pastoral Care and
Student Welfare should set standards and processes for Learner Success and for the support of
Students with Disabilities, with compliance by self-monitoring and self-audit.
251. As
 the umbrella body for the universities, UNZ can materially assist with the development, review
and maintenance of the codes and the sharing of advances in best practice.
252. Universities
 must currently report under a number of different frameworks to TEC and others,
which adds greatly to their administrative burden without much logic. Administrators feel
strongly that the system can be made more efficient and focused and should align with
the investment plans. Their reporting burden should be lessened by following this report’s
recommendations for a clear line of accountability to the NZUC, and greater institutional self-
audit and compliance through UNZ. This change will be assisted by prioritising a review of what
data are collected by which organisation for what purpose, and to promote appropriate data
sharing where appropriate. This review would be a matter for NZUC and UNZ.
Recommendation
50. In so far as is possible, simplify reporting and accountability measures to align with the
investment plan and reduce duplicative reporting against different frameworks.

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Funding for equity

253. Over
 recent decades, New Zealand’s universities have all developed programmes to assist the
educationally disadvantaged. Long-standing examples include the schemes with preferential
entry for educationally disadvantaged or underserved groups for courses with limitations
on enrolment. The reality is however that despite these efforts there are still large course
completion, qualification completion and progression outcomes for Māori and Pacific students
likely reflecting factors that are largely beyond the universities’ ability to change: for example, the
prior education journey, the socioeconomic challenges that impact on the student’s time, etc.
The panel sees merit in these programmes continuing, especially in vocational domains such
as medicine where there is evidence that alignment of group identity is valuable for patients.
However, the panel believes the choice to do so lies with the autonomy of the institution and may
not require a separate funding stream.
254. More
 recently the universities have established focussed programmes for disadvantaged
students, notably Māori, Pacific and Students with Disabilities.

The Performance-Based Research fund (PBRF)

255. The
 PBRF is a misnomer. It is not research funding but a core funding mechanism to universities
(and other parts of the tertiary sector) that recognises that research intensity comes with
different cost structures. It was introduced in 2003 following a similar scheme in the UK, and its
general approach was initially somewhat similar. When it was introduced, its funding came partly
from diverting funding previously given to universities for graduate students. The intent was
to incentivise more intensive research. Certainly, with its introduction the number of published
papers grew. But it is unclear whether that directly related to the PBRF, because similar growth
in publication volume and quality42 occurred in other small, advanced countries which did not
have similar incentive schemes. It may simply be that the culture of universities had changed
worldwide, and academic staff performance was more of a focus.
256. Globally
 there is little use of research assessment to allocate university funding. Research
assessments are instead used primarily for strategic purposes. The UK and New Zealand
both use complex and expensive portfolio assessments, but elsewhere there is a trend
towards assessing research by using dashboards or metrics. Dashboards that can cover both
quantifiable and qualitative measures are increasingly used.43 It is desirable that the NZUC
develop a dashboard approach to assist its strategic purposes.
257. The
 purpose of the linkage needs to be clear and should determine the process of assessment.
When that process extends beyond research intensity and quality to proxies that are not agreed
upon, complexity becomes inevitable. In the UAG’s view, the PBRF should focus on supporting
the research intensity of the universities and that by frequent recalculation it can effectively
create incentives to improve research culture and create a forward focus.
258. The
 UK system (now called REF) and the New Zealand system differ somewhat. Both are used
to distribute funds to the higher education sector and rely on highly complex assessments of
research performance using portfolio assessments. The New Zealand system assesses the
research portfolio of every faculty member, whereas in the UK it is done at departmental or higher
group level. These intensive peer-reviewed assessments drive a lot of bureaucratic behaviours
within institutions and are very expensive on both faculty and administrative time. The New
Zealand process of individual assessment is seen as unnecessarily complex and expensive.
42 As measured by field weighted citation index.
43 Currently Australia is developing such an approach.

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259. There
 are two questions about the PBRF. The first is simple to answer – do we need to
incentivise the research intensity of universities? It is clear that if research intensity defines a
research university, there needs to be a funding mechanism to support that purpose. While some
jurisdictions do that simply by increasing the value of the state subsidy for teaching in research
universities compared to other institutions, this does not encourage continuous improvement.
Research is always driven by healthy inter-institutional competition and that helps ensure quality
(even while we promote cooperation in teaching).
260. The
 second question is whether complex peer-review assessments at individual or group
level are needed. The appropriate answer relates to what is the purpose of the PBRF. If it is to
incentivise research intensity and to recognise the costs of research, then a simpler system is
possible. The UK system has gone through a period when the purpose has extended beyond
funding distribution to incentives aimed at trying to change institutional culture. But when any
incentive scheme has multiple underlying purposes, it tends to become problematic.
261. There
 are issues in research culture, but these should not need complex incentives to improve.
Too many researchers have precarious appointments, there are still issues in recruiting research-
active staff from some sectors of the population, and transdisciplinary approaches are weak and
need specific funding schemes as discussed in the SSAG report and in relation to CoREs (see
below). Research infrastructure is largely discussed in the SSAG report.
262. Linking
 funding to anything other than a metrics-based approach leads to expectations of a
precision in assessment that is unrealistic. Words like ‘impact’, ‘excellence’ and ‘quality’ are
inherently subjective and mean different things in different contexts and at different times in
relationship to research funding. Trying to make a subjective process become pseudo-objective
because money is involved has created the elaborate bureaucratic processes in play. Indeed, the
UK has recently indicated their intent that the REF round after next will be metrics-based.
263. The
 burdensome assessment process means that that component of the PBRF can be
recalculated only very periodically – generally every 6-8 years. But if the major reason is to
fund universities in relation to their recent research performance, then assessment can be
replaced by metrics of research productivity, which are used anyhow in the calculation of the
PBRF distribution. Currently the individual assessment weights 55% of the PBRF, and research
degree completion and research income together make up the other 45% of the allocation. But
if the quality assessment is removed, there remains a surprisingly high correlation between
the funding that would be and that which is actually allocated in the current system. If the
assessment included other well-accepted measures of research output, such as citation
numbers, the correlation would be even higher.
264. It
 is relatively easy to have a set of metrics to reflect past research performance in a classical
sense – less so if one extends the idea of quality beyond academic measures to include impact
and future performance. The UK has over the past two rounds of the REF used the assessment
process to also include “impact”, and research “environment and culture”. But assessing impact
is an intensely subjective process using portfolio review, which itself has limitations or relies
on proxies. But there are limited proxies available. The UK experience has shown that impact
assessment in practice tends to highlight major research breakthroughs which are picked
up in bibliometrics such as citation rates, which formally or informally still dominate in the
assessment of individuals or groups. The UK is attempting to find proxies for research culture
and environment, and again the possibilities are limited.

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265. The
 desire for a future focus is met simply by recalculating funding every year (or 2–3 years)
rather than every 6–7 years, creating a continuous incentive on universities for improvement.
Indeed, if funding was more heavily weighted to PBRF rather than DQ7+, the culture to support
research would shift further.
266. A
 further issue with subjective analysis is that with only eight universities there is always a risk
of defaulting to the current state. The real granularity is achieved by the different offerings of
each university (two medical schools, two engineering schools, etc.). There has likely been grade
inflation in the PBRF assessments over time. The UK system is designed for over 100 institutions
and the context is therefore very different.
267. Is
 there any real need for the assessment component in the PBRF? The universities deny it is
needed for reviewing staff performance; indeed, they are prohibited to use it for that purpose,
and there is anecdotal evidence that individual assessment can negatively affect staff culture.
Universities with good academic governance undertake departmental reviews periodically, which
would achieve a better level of performance guarantee than individual assessments. Staff have
mixed views but generally value it only because it encourages the academic leaders to value
their research (a worrisome claim considering these institutions are defined by research). We
heard that HR administrators in the universities do not see the assessment as relevant to staff
management.
268. In
 sum, the panel believes the assessment component of the PBRF should be abandoned.
However, there is a clear need for research-weighted funding of universities, so the other
components of the PBRF should be retained, reinforced and added to by including citations as a
proxy of research performance.
269. The
 PBRF should be based solely on accessible metrics that are already collected. This would
incentivise continuous improvement and an enhanced research focus by the university. Further,
by having distinct elements within the formula, the Crown could decide to incentivise some
components further. For example, rather than considering research income as a whole, it could
be split into income from competitive grants and income from private sector and government
contracts – that would support a policy choice that further emphasised the utilitarian value of
research. Similarly, it could weight research qualifications at master's level differently to that
from PhDs if it wished to emphasise the latter.
270. While
 citation rates are problematic at an individual level, at an integrated level across an
institution with field-based weighting and using databases that include monographs and policy
reports,44 the concerns are largely washed out. Indeed, this is how university ranking systems
operate globally. There is always an issue for some disciplines such as the humanities and
creative arts where outputs are not in the form of publications. But if the intent of the PBRF is
financial, this is a minor factor. The status of humanities and creative arts is important – the
onus remains on the institution to ensure high quality research and performance in those
domains. However, databases are emerging that could provide proxies, and the system can
adjust over time to incorporate these.
271. Other
 factors could go into the calculation; for example, equity factors were to be included
in the next and currently suspended PBRF round. But if the purpose is to support research
intensity, then it is best to keep the focus on that. Other issues are best dealt with through other
mechanisms.

44 e.g. Open Alex and even Google Scholar.

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272. In
 Australia and in some European countries, a dashboard approach is being developed to
allow university performance to be assessed more broadly. The use of dashboards to look
more broadly at university performance is to be encouraged, but they are a strategic rather than
funding tool. These should rely on generally available data and would be an important tool for
the proposed NZUC.
273. The
 context of the PBRF in 2025 is very different to what it was when first developed. If the
primary purpose is to incentivise and reward research intensity because of its costs, then it can
be retained and fixed by using a simple metric-based funding formula that incentivises research
performance. In theory the PBRF could be done without just by changing the value of the DQ7+
to weight for university as opposed to polytechnic teaching, but the inevitable risk would be that
it takes the pressure off universities’ focus on research intensity.
274. We
 recognise wānanga and other institutions currently receive a small component of PBRF
funding. We appreciate the value to those institutions of that extra funding. But it confuses
matters. They need support on what their roles are intended to be, and research-related funding
should be designed to meet their characteristics.
Recommendations
51. 
The PBRF should be continued and the name of the PBRF should be changed to
the Research Intensity Component for Universities (RICU) and focused solely on
incentivising research intensity.
52. 
Individual portfolio assessment should be abandoned and the PBRF calculated on the
basis of research degree completions, research income and citation rates of the institution
noting that any significant changes from the current allocations should not be abrupt.
53. 
NZUC should consider a dashboard approach to assist its strategic analysis and review
of the system.

Box 2: The possible components of the RICU

Bucket 1: research completion
Research master’s completions
PhD completions
Other doctorate completions
Bucket 2 impact
Institutional Field Weighted Citation Impact (FWCI) off Google Scholar, Open Alex
or similar broad database
Bucket 3 research income
Research grants (contestable from any source, excluding CoREs)
Contract income (government agencies)
Contract income and investments (private sector)
Philanthropy for research (not teaching)

The weightings within and between each of these buckets would have to be modelled and
the new system transitioned in over perhaps three years, as by definition there will be winners
and losers in any system change. NZUC should be able to vary over time the weightings
within and between buckets.

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Centres of Research Excellence (CoREs)

275. The
 Centres of Research Excellence (CoREs) scheme was established in 2002. Their purposes
were to promote research collaboration between universities and to focus research in areas
where academic excellence or potential excellence was identified. Unlike the later established
National Science Challenges (NSCs) funded through MBIE, they were established as bottom-up,
investigator-led initiatives whereas the NSCs were established as mission-led entities. Confusing
matters further, some domains (e.g. Natural Hazards) have had funding both as CoREs and as
NSCs. While the CoREs had light governance, leaving the research strategy in the hands of the
academic community, the NSCs generally ended up with onerous management and governance,
perhaps reflecting the differing cultures of universities and CRIs.
276. CoREs
 also showed considerable initiative in promoting outreach and engagement with
stakeholders, including young people and Māori and Pacific communities.
277. In
 the first round of funding, CoREs also had an infrastructure component that assisted the hard
sciences, but that was not continued after the first round. It provided in many cases for some
needed large-scale research infrastructure. The CoREs had renewable five-year funding periods
that were later extended to eight years. Most CoREs have had multiple cycles of funding, with
some now having had five, meaning some will have had 28 years of funding in a scheme with
limited funding and high demand. This duration was not the original intent of the scheme, which
was that after a funding period of no more than two cycles, sustainability would need to be found
through other sources, but this was not how it evolved. One further advantage of the CoREs
has been that the research has not had to be fully defined at the beginning, which allows for the
innovative research and stakeholder engagement that has been a feature of successful CoREs.
278. Currently
 funding provides for up to 10 CoREs, including Ngā Pai o te Māramatanga, which has
somewhat different characteristics. CoREs funding has remained at $50m pa since Budget
2014/15, when it was increased from $30m pa to allow for the establishment for four new
CoREs. Funding per CoRE has essentially not increased since, so the effective value of a CoRE
has fallen considerably.
279. In
 the absence of NSCs, CoREs are the primary mechanism for long-term research funding.
There is an argument that the two schema should be considered alongside each other. There is
no definitive answer as to how many CoREs are desirable.
280. There
 is a wide consensus that the CoREs have added significantly to New Zealand’s academic
and research portfolio, and there is overwhelming support for their continuation. However,
there is concern that continual funding of several CoREs reflects incumbent advantage in the
assessment process, and that these indefinite renewals from a limited pool of available funding
restricts the scheme from having a dynamic nature. Irrespective of whether they continue to do
good research, it is difficult to agree that the scheme should continue to support what effectively
must become business-as-usual activity.
281. A
 further policy question is whether the focus of CoREs should be to recognise current clusters
of excellence or to produce new clusters of collaboration and excellence, especially in areas
identified as priorities. The latter appears desirable, but it would be less of an issue if CoREs
had a limited timeframe. The focus of CoREs must remain to promote research and academic
collaboration and foster new clusters of research endeavour. Mission-led research such as in the
former NSCs must have in sight translational goals to either policy or commercialisation. CoREs
too should have goals in sight, but it should be accepted that this may be a more upstream focus
including more discovery science than mission-led activity.

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282. There
 is a general consensus that there needs to be dynamic refreshment of which CoREs are
funded. In an ideal world where there was more funding, longer-term research initiatives would
be desirable in allowing high risk research to progress, but the reality is that with a small pool
of funding there needs to be a process for refreshment. It is suggested that CoREs should have
a maximum of 12 years funding through one renewal for 6 further years. Those that are not
renewed at 6 years would receive 2 years of termination funding that progressively reduces to
stop at 8 years. Those funded for the second cycle would need to plan their exit strategy as the
CoRE would not be renewed beyond 12 years. This termination phase would allow students and
fellows employed on CoRE funding to complete their training and allow the host institutions to
explore alternative funding if the work is valued by them to continue.
283. However
 given the prestige associated with the CoRE label, which is valued by the investigators,
the institutions and adds to New Zealand’s reputation, the title of CoRE may be maintained after
the end of funding (subject to ongoing reporting evaluation).
284. One
 related issue is the challenge of assessing current CoREs for renewal and new applicants
for CoREs in the same process. The former have a considerable advantage: a track record of
collaboration, resolved processes and more advanced research. Therefore, it is recommended
that separate processes are used for assessing current CoREs for renewal vs new CoREs, and
that half the CoREs funded in any 6-year cycle are new.
285. An
 issue for consideration is whether the CoRE model should be used also by MBIE in
replacing the NSCs to promote mission-led research. Currently the funding route is different.
But if research and universities are located with a singular ministry as we have previously
recommended, this difference would be a non-issue. CoREs are funded by TEC from the
Ministry of Education and are bottom-up derived, whereas the NSCs are funded through MBIE
and are mission-led. But both could use a similar RFP process, and the same assessment
processes could be used. This change would further integrate public research organisation and
academic research. It would also address concerns in both systems over the selection criteria
and assessment and stop the unnecessary duplication that has happened. The assessment
of major research grants, whether mission-led or investigator-led, and which involve multiple
actors and long-term funding, should be assessed by people with expertise in disciplinary and
transdisciplinary research.
286. The
 CoRE process has also been used to support development of Māori academics and in
particular PhD graduates through Ngā Pae o te Māramatanga, which has been funded since
the first round in 2002 and is now 23 years old. Ngā Pae o te Māramatanga has been highly
successful. It had somewhat different objectives in its early years so that it acted more like a
funding mechanism, but it is increasingly evolving as a research-focused collaboration.45 Such
equity initiatives build capacity, and there may be an argument for them to perhaps include
Pacific knowledge and to be funded on an ongoing basis separate from the CoRE scheme.
Recommendations
54. The CoRE Scheme should continue but be enhanced.
55. CoREs should focus on new areas and clusters of activity rather than rewarding well-
performing extant activities. These new areas should be investigator-led-and align with
New Zealand’s overall priorities.
56. CoREs should continue to include the collaborative requirement of extending across
universities and other research active entities.

45 Ngā Pae has an international arm with very strong research relationships with global Indigenous scholars. Currently Ngā Pae has 21
research entity partners and now has 250+ Māori affiliated researchers. This is a remarkable development from its start in 2002.

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57. 
CoREs should be funded for a maximum of one six-year cycle followed by a possible
six-year renewal. CoREs that are terminated after one round should get reduced two-year
transitional funding.
58. The review processes should distinguish new applicants from renewing applicants.

Capital expenditure
287. New
 Zealand’s universities are asset-intensive, holding capital assets valued at $11.9 billion in
2015, as illustrated in Figure 2, from the Auditor General’s report.46

District health boards

$7.2 billion

Defence Force
$5.9 billion

Housing
$21.8 billion

Schools
$15.1 billion

Tertiary education institutions

$11.9 billion

Victoria University of Wellington Auckland University of Technology

$863 million $777 million
University of Waikato
Massey University $473 million
$1.3 billion Manukau Institute of Technology
$314 million
Unitec Institute of Technology
$307 million
Christchurch Polytechnic Institute
of Technology
$307 million
University of Canterbury
$1.5 billion
All other tertiary education institutes
$2.0 billion

Otago University
$1.9 billion University of Auckland
$2.2 billion

Figure 2: Total value of assets held by tertiary education institutions and other selected sectors in 201547

46 Controller and Auditor-General. (2017). Investing in tertiary education assets: Report to Parliament. Office of the Auditor-General New
Zealand. https://oag.parliament.nz/2017/tei-assets/docs/tei-assets.pdf
47 Source: The Treasury, Financial Statements of the Government of New Zealand for the Year Ended 30 June 2015, and the annual
reports for 2015 of Housing New Zealand, the New Zealand Defence Force, the Ministry of Education, all district health boards, and
tertiary education institutions.

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288. The
 book value of the universities’ property, plant and equipment had risen to over $14 billion
by 31 December 2023. The reports to Parliament by the Auditor General, Managing public
assets (2013)48 and Investing in tertiary assets (2017), are of wide interest to government and
the universities for their insightful analyses and recommendations,49 a number of which do not
appear to have been fully implemented. The 2017 report examined a selection of business cases
prepared for capital investment projects by TEIs. The report commends the business cases as
generally of a high standard, but goes on to observe:

“However, there was little evidence of the tertiary education strategy’s aim to enhance the
effectiveness of the sector as a whole. In most of the business cases, tertiary education
institutions did not:
• take account of the investments planned or made by other tertiary education institutions; nor
• consider how to make the most of their investments by sharing or using the existing assets
of other tertiary education institutions.”

The UAG considers this observation remains valid.

289. At
 the time these OAG reports were written, the Government was providing necessary capital
injections for tertiary education institution assets damaged by the 2010/11 Canterbury
earthquakes, assets which required significant capital investment for repair and replacement. The
earthquake disaster brought added Treasury and OAG focus on capital asset management (CAM).
290. Since then, other natural disasters (e.g. Kaikoura earthquake and Cyclone Gabrielle) have
inflicted major damage on tertiary education assets. Remediation and strengthening projects
place strains on these institutions’ finances, even with insurance payouts and specific fiscal
assistance from the Crown. These stresses remain evident for universities with campus facilities
in the Canterbury and Wellington regions.
291. The significant fluctuations in domestic and international enrolments since onset of the Covid
epidemic have had a major effect in temporarily stifling university capital investment, with many
postponements of projects, deferred maintenance, defect remediation and construction of new
assets.
292. These constraints on university finances have not prevented multiple universities from approving
building projects that have comparatively high construction cost arising from their generous
architecture.
293. The UAG observes accumulating instances of a growing mismatch between national need and
how each university examines their capital programme. In the current and future climate of tight
economic conditions, there are opportunities to better coordinate university capital programmes
within a national strategy for investment in New Zealand’s university system.
294. The combined university capital plans currently indicate a desire to invest over $8 billion over the
next decade. This figure alone suggests the need for greater coordination and strategic clarity.

48 Office of the Auditor-General New Zealand. (2013). Managing public assets: A guide for public entities. https://oag.parliament.
nz/2013/managing-public-assets/docs/managing-public-assets.pdf
49 Controller and Auditor-General. (2017). Investing in tertiary education assets: Report to Parliament (page 8). Office of the Auditor-
General New Zealand:
“We recommend that the Ministry of Education, the Tertiary Education Commission, and other education agencies work with tertiary
education institutions to improve the use of, and investment in, tertiary education assets by:
1. improving business case guidance and assessment criteria to support tertiary education institutions in considering how
their business cases and asset investment proposals are affected by the investment decisions of other tertiary education
institutions; and
2. considering further types of analysis, measures, and forecasting that could improve the collective effectiveness of the
investment in tertiary education assets.”

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295. Currently
 the TEC only reviews business cases when debt funding is needed but formal
approval is required only if the business case includes increased borrowing. The UAG has
50

concluded that this requirement does not sufficiently consider the national interest in providing
university research and teaching. Further, the planning, design and management processes for
large university capital projects could benefit from:
a. Collaboration
 between universities to further specialise and better allocate resources for
major advances in the nationwide research and teaching capability in the university system
and the PROs.
b. Recognition
 of the significant differences between individual universities’ needs for capital
investment. These differences can owe their existence to external factors beyond the
control of the university.
c. Given
 the scale of the overall capital requirements of the university system relative to other
Crown investments, there is a need to use formal governmental assessment and business
case processes for large scale processes (> $75 million) to ensure long-term good value
from university capital investments.
d. A
 further issue brought to the UAG’s attention by the universities are centralised
constraints on debt financing and asset disposal, both of which are prudential matters
requiring government oversight. The panel sees no compelling argument to change the
current arrangements other than to define where decisions are made once the NZUC is
established.
Recommendations
59.  capital projects over $75 million should have business cases and their sources of
All
funding approved by the NZUC.
60. 
Universities should be required to fully comply with Cabinet rules and Treasury
processes for the management of capital projects.
61.  niversities should continue to seek approval for debt financing and the divestment of
U
significant assets (>$15million), but this should be on the approval of the NZUC rather
than the present requirement of it to be from the Secretary of Education.

Interactions between the university sector and the research

and innovation sector
296. Both
 the SSAG and UAG reviews have recommended much closer relationships between the
university and research systems, preferably within a single ministry as is the case in many
advanced countries. New Zealand stands out as an exception in having such a high proportion
of research in public research organisations. Denmark, two decades ago, merged the two
components by folding its PRO equivalents into the universities. Government has made a first
step towards a closer relationship by appointing a single Minister to cover both portfolios.
The SSAG report highlights ways to reduce high barriers related to technology transfer and
commercially focused research. There are many potential synergies to be exploited and
explored. These include:
a. Further
 integration of physical infrastructure – both campuses and high-value research
infrastructure

50 Approval is provided by the Secretary of Education on the advice of TEC.

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b. More cross or joint appointments of staff

c. More research opportunities for students within the public research sector
d. Greater cooperation on technology transfer
e. Enhanced critical mass and research cooperation in key areas
f. Development of new disciplines, especially in advanced technologies
g. Potentially combining mission-led and investigator-led large research programmes
h. Joint development of research roadmaps
i. Joint recruitment of key opinion leader researchers
j. More efficient research funding mechanisms
Recommendations
62. 
There should be cross appointments between NZUC and the proposed National Research
Foundation and both should be represented on the proposed National Infrastructure
Advisory Committee.
63. Universities and PROs should increase the number of joint and cross appointments of
research-active staff.

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Final remarks
297. The
 panel is of the view that legislative change is needed, and for multiple reasons we
recommend a separate university-focused Act. Major change is needed if the system is to
adapt to meet New Zealand’s needs into future decades. A systems approach is required, while
respecting institutional autonomy. We are firmly of the view that a NZ University Council is a
necessary step. In the interim much could be achieved through two steps: firstly, establishing a
Ministerial Advisory Committee with as many of the functions of the NZUC as is possible without
legislation, and secondly seeking TEC to reorganise to have a separate management and funding
arm for universities. Even before legislative change, much progress could be made between
the proposed Ministerial Advisory Committee, TEC and Universities NZ with the cooperation of
NZQA and the Ministry of Education.
298. Universities
 are critical institutions of liberal democracies. They are conferred special privileges
in their forms of governance and high levels of institutional autonomy, and in the protection of
academic freedom. But the social licence provided by society to universities is not unbounded.
Universities have a set of critical roles to play which both our reports have highlighted.
299. That
 social licence can be undermined if universities are not mindful of their responsibilities.
Around the democratic world, the behaviour of universities has come under the spotlight.
In general, this has occurred in part because of broader changes in the sociopolitical milieu
and in part because some universities have moved further away from focussing on their core
educational and research responsibilities to take more political positions. Of course, the very
nature of the faculty and student body has and should always create a constructive tension with
the status quo: that is core to their essential role in a democracy as a “critic and conscience of
society”, but it must not degenerate into an ideas filter.
300. U
 niversities must remember that they must serve societies that have a breadth of political
and ideological views. When they undertake actions that are perceived as manipulating those
views or of promoting a particular ideology, their social licence is threatened. Yet universities
are important and critical places of debate and contested ideas. Indeed, the very nature of the
faculty and student body empowers this role which has a fine global tradition.
301. Universities
 must not suppress the pluralism of voices in society or in their institution. This
creates a fine line, and universities may face difficulties in identifying when they cross it. But they
must be sensitive or else they risk political interference, as has been seen in several jurisdictions
overseas. Councils must be particularly alert to how the institutions position themselves. These
issues have emerged in New Zealand, as elsewhere, over the place of free speech on campus
and concerns of ideological interference with academic teaching (and thus paradoxically
ignoring the overriding imperative of academic freedom).
302. Most
 obviously these concerns have arisen over what should be made compulsory courses,
to the conflation of knowledge systems, and in how some issues of academic debate have or
have not been handled. There are red flags here given international trends. Strong academic
governance is vital to protecting academic freedom and we have emphasised that in this report.
303. Universities
 as institutions must not take ideological or political positions or speak on behalf of
a pluralistic faculty on matters which are political or ideological. The institution (as opposed to
faculty members) should only speak on matters directly affecting universities.

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304. It
 is critical for our democratic futures that we have robust high-quality universities. They are
complex entities. Their position in society is under threat both from within and the changed
contexts in which they operate. The universities must be entrepreneurial to thrive but in doing so
they must sustain, not lose, the social contract.
305. In
 writing this report the panel has consistently and repeatedly focused on protecting
institutional autonomy and academic freedom while advancing quality for the nation’s interests
through high-quality teaching and research. Improvements in outcomes are made more difficult
by the current financial circumstances.
306. Universities
 have faced growing costs in a constrained environment and the political and societal
support needed for greater investment is related to their functions and perceived quality. In a
small country like New Zealand, the panel has concluded, that without damaging institutional
autonomy, a more systems-based approach is essential and that the current deficit in strategic
policy oversight must be remedied.
307. The
 national interest requires that universities are funded appropriately to meet their multiple
objectives. This funding will always require a mix of government teaching and research support,
private sector support, likely student fees51 and philanthropy.
308. The changes proposed in the financial system for universities will help incentivise the needed
collaboration for access but competition for quality. In the time and resources available we
could not do more than identify the principles to underpin the financial changes needed, so to
operationalise these will require detailed work by officials.
309. The initial part of this report highlighted the many challenges universities face into an uncertain
future. Governance, leadership and faculty will have to be more adaptable than in the past;
universities have often been characterised as very conservative and resistant to change.
310. In a small country with eight universities, that adaptability must occur at both system and
institutional level. Cooperation will be important while respecting and desirous of that
intellectual competition that drives quality. New disciplines will emerge, others may change in
ways that fundamentally change the requirements in education. New technologies will change
how knowledge is gained, reported and shared. The student body itself is likely to change, with
greater demands for inter- and transdisciplinary education. Both academic governance and
enterprise governance will have to demonstrate the ability to respond strategically and rapidly.
311. We have been fortunate that New Zealand’s eight universities have performed well for our
society. But in the challenging times ahead we believe the system can and must do much better
in advancing the interests of the nation, the society it serves and the students it educates.
312. A knowledge-based economy and society depends on a healthy university system; a cohesive
and healthy democracy requires a university that serves all segments of society; and a university
can function well for the nation only when it is clear that it is more than a business – it is a
pluralistic community of scholars and students.

51 The issue of student fees was outside the UAG’s scope of reference. Most liberal democracies charge students recognising the
private benefit of university education. There are some European exceptions.

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Acknowledgements
We thank the many submitters across the past year whose contributions have been well digested
by the panel. In many cases there was a granularity in comment that could be revisited by officials
if recommendations are accepted. We thank Universities New Zealand for their assistance and the
cooperation of all the universities during this review. We thank academic leaders and officials in
higher education policy in UK, Ireland, Israel, Singapore and Australia for their advice and assistance.
Dr James Wilsdon and colleagues from the Research on Research Initiative (RoRI) were particularly
helpful over issues of research assessment. Officials in TEC and the Ministry of Education provided
support and research. We also wish to acknowledge the support from Koi Tū Centre for Informed
Futures, and Hema Sridhar who coordinated much of the panel’s work and assisted with the analysis
and deliberations.

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