The Performance Based Research Fund and the Benefits of Competition Between Universities

Abstract

Until the late 1980s competition between universities was limited and the allocation of funding by the University Grants Committee created a system that was more akin to central planning than to a competitive market. Following the advice of the Treasury the Labour government of the late 1980s and the National government of the early 1990s increasingly encouraged universities to compete for students. From 2000 onwards the Labour-led government began to question the value of competition between public institutions such as universities and to seek ways to minimise competitive duplication of courses and research programmes (Associate Minister of Education 2000; Watkin 2000). Despite the position of the Labour-led governments since 2000 competition between universities over 2000-06 has been perhaps more vigorous than it has ever been. This is because competition to attract students continues and a range of schemes such as Partnerships for Excellence Centres of Research Excellence and the Performance-Based Research Fund (PBRF) have encouraged universities to enter into vigorous competition for the limited funds available.2 The vigour of the competition is also a result of changes in the international environment. For all sectors including higher education both the level of competition and the opportunities for benefit have been increased by the declining cost of travel the improvement in standard of living of formerly low-income countries the growing importance of the service sector and the dramatic fall in the costs of communication including those relating to modes of learning.3 The government has actively promoted 'export education' as a strategy for the tertiary sector which has the effect of placing New Zealand tertiary institutions in direct competition with universities in Australia Canada the United States of America (US) the United Kingdom (UK) Europe and (increasingly) Singapore Hong Kong and Thailand. Even without export education the universities now need to compete with the best universities in Australia to retain the best domestic students in New Zealand let alone attract students from other countries.