Universities’ commissioned study shows increasing spend pays off for country’s GDP

According to Universities New Zealand commissioned research, an additional $40m per year invested in university education over the next five years would provide a permanent 0.12% or $370m per year increase in GDP by 2025.

The representative body for universities asked the NZ Institute of Economic Research to model the effect that extra spending would have.

By injecting a temporary ‘shock’ of extra investment, NZIER was able to see the effects as they flow through the economy, how long it takes for the effects to be felt and how long they last.

The report also concludes that higher returns can be achieved by focusing funding on increasing the number of people completing bachelors’ degrees rather than lower level sub-degree qualifications like certificates and diplomas.

“The reality is that government funding for New Zealand’s universities has been declining in real terms year after year,” says Universities NZ chairman Derek McCormack. “This report highlights the significant lost opportunity that is a result.”

This is the first of this type of analysis in New Zealand, and results are similar to those from an Australian analysis carried out across the ditch by KPMG EconTech for Universities Australia in 2009. The Australian government responded to that report with markedly increased levels of investment in their universities.

McCormack says the NZIER report is further evidence that university education and research are central to New Zealand’s long-term economic growth.

“Permanent increases to our GDP of this magnitude could be a cornerstone to the government’s goal of closing the gap with Australia by 2025,” he says.