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Could a temporary funding freeze by New Zealand govt be good for the education industry?



At least four of New Zealand’s Universities announced a move to cut varsity admissions, blocking out thousands of students. This came as a response to a funding freeze by government for tertiary education and an increase in the amount of enrolments given the increasing unemployment experienced in the last two years. The government intensified its austerity measures thus compelling the working class to pay for the overall impacts of economic recession via drastic spending cuts. In 2009, the government had announced a withdrawal of about $NZ500 million in inflation related funding increases from the tertiary segment, and another $NZ22.4 million from its yearly contribution to university staff salary increases.


Meanwhile, a Christchurch preschool will lose around $40,000 in funding as a direct consequence of the governments budget cuts. The school, in Papanui, is considering cuts in its spending to cope with the $40,000 loss from its $567,000 yearly budget. The government plans to cut extra funding for ECE providers with over 80% of registered teachers beginning next February, 2011 and is expected to bring the funding into line with the government’s 2012 target of 80% registered teachers. However, the ECE centers will find it hard to make cuts to meet the shortfall and focus will be on ways to save money.


New Zealand’s education minister assured the nation that the cuts in funding would not affect the quality of learning. ECE services are independent and make their own decisions about fees but raising fees at this point would see enrolment go down. Less than half of the services have been affected by the changes to funding and it will require roughly eight months for the schools to adjust.


About $46.7 million cost adjustment over the next four years is expected to help ECE providers meet the increasing costs and reduce the need for fee hikes.  New Zealand’s largest ECE services provider, Kidicorp, however praised the cuts in the sector terming them as practical and informed. The government remained committed to its drive for 80% qualified ECE teachers by 2012 despite uproar from the ECE providers over the significant role carers play in ECE.


The New Zealand government implemented a series of cuts and funding freezes across the education sector in the country with every segment being affected. Investors in the sector will be watching to see how the overall spending cuts affect institutions and overall play in the education market sector in the country. The Government has backtracked on an $11 million funding promise for a New Zealand School of Music, throwing the $60m project into doubt as well.


May 26, 2010.

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