To market and back?: an evaluation of the Universal Tertiary Tuition Allowance policy of funding tertiary education in New Zealand

Abstract

In 1999, New Zealand introduced reforms to its public financing system for tertiary education, aimed at increasing choice, improving equality of opportunity, encouraging greater quality and responsiveness by tertiary institutions, and ensuring affordability for the government. The funding reform (known as the 'Universal Tertiary Tuition Allowance' or 'UTTA') removed the quantitative limit on the number of student places the government would fund, and permitted private education providers to access public tuition subsidies on similar terms to public institutions. The 'demand-driven' funding policy attracted enthusiastic support and fervent criticism. This thesis evaluates UTTA against the predictions of its supporters and critics, and identifies key policy implications for jurisdictions considering similar tertiary education reforms. The thesis places UTTA in its policy and historical context, by exploring the rationales for government financing of tertiary education and then outlining the social and economic factors that led to reform in New Zealand's policies. The immediate motivations for reform are then examined in detail, along with the effects predicted by the policy's enthusiasts and opponents. Next, the actual experience of UTTA is assessed through an analysis of statistics, official papers, news reports and interviews with tertiary institution managers and other stakeholders. UTTA is found to have been spectacularly successful in expanding learner choice and improving equality of opportunity, but less obviously effective against the goal of improved quality. The policy failed to meet the 'affordability' test, with the government ultimately abandoning UTTA in the face of fiscal pressure. The levels of innovation, responsiveness and competition experienced differed among institutions, suggesting that institutional management ability is a key factor in making 'quasi-market' policies work, and that the impacts of such policies will necessarily vary for different types of institutions. The use by several institutions of 'zero-fees' policies to increase enrolments raised interesting questions about the role of price in participation. Jurisdictions considering similar reforms should ensure that the necessary political willpower is present, put in place equality of opportunity policies in compulsory education, develop mechanisms to assure the public that they are receiving value for their spend, introduce effective quality tests, and have in place steps to monitor and manage the performance of funded institutions. Finally, the thesis points to the importance of context as a key factor in the final outcomes of UTTA.