Less than half of the savings from the scrapping of New Zealand’s “fees free” system will be returned to tertiary education, in a budget that also transfers more of the cost burden to students.

Documents from the 28 May budget reveal that the government’s decision to cancel the free tuition scheme, revealed in early May, will save it about NZ$1.04 billion (£457 million) over the next four years. The bulk of the savings will be diverted into other “public frontline services”, with just 15 per cent earmarked for tertiary education.

That money – some NZ$156 million – will be spent expanding two programmes largely oriented around vocational education: Trades Academies, which deliver technical qualifications to senior school students, and the Youth Guarantee, which provides foundation training for adolescents and young adults.

The government will also spend an extra NZ$309 million to increase the number of publicly funded places at universities and colleges, and to boost teaching subsidies by 2 per cent. Tertiary institutions will also be allowed to increase their fees by up to 6 per cent, loading an extra NZ$36 million on to the government loan scheme.

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With these combined concessions costing just over NZ$500 million, the budget changes represent a significant net loss to tertiary education, particularly universities. Meanwhile, with fees set to rise more steeply than subsidies, the balance of costs will shift more towards students.

“It’s not a terrible budget for higher education,” said University of Auckland political economist Nicolas Lewis. “We’ve had worse. But it’s certainly not a promising one [and it is] not so good for young people. Students are going to have to lump more and more of [the cost of education] on to borrowing. It’s a question of intergenerational equity.”

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Lewis, a political and economic geographer in Auckland’s School of Environment, said the NZ$284 allocated for additional tertiary places was a “positive”. But it would not be enough to meet rising demand in New Zealand’s stuttering economy.

“We have many more students attending universities when there’s nothing…for them in the job market,” he said. “It always surprises me that governments don’t allow for that.

“I would have liked to have seen a greater recognition of the work that higher education does in absorbing the unemployed.”

Finance minister Nicola Willis said the free tuition scheme had failed and the money would be put to better use. “Fees free did not increase enrolments or completion rates, especially for those from low-income backgrounds,” she told parliament.

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Policy analysts agree. A recent Auckland University of Technology found little evidence that the scheme had increased participation, improved progression outcomes or narrowed socio-economic gaps. “Scrapping the fees-free scheme may remove an expensive subsidy,” the authors noted in . “But it should not be mistaken for solving the deeper inequalities that determine who enrols in tertiary education in the first place.”

Lewis said that by removing the scheme without using the proceeds to benefit students in other ways, the government was signalling that education was unimportant. “I don’t think it sends the right message around valuing young people. I certainly don’t think it sends a message about the value of universities.”

The budget introduces no new research funding while cutting NZ$44 million from the Ministry of Business, Innovation and Employment and NZ$38 million from the tertiary education section of the Ministry of Education. It also diverts NZ$200,000 in international PhD scholarships to help pay for the ministry’s analysis of tertiary education funding.

john.ross@timeshighereducation.com