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Commentary on Issues of Higher Education and Research November 2017 | Issue 7

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Commentary on Issues of Higher Education and Research November 2017 | Issue 7 Commentary on issues of higher education and research November 2017 | Issue 7 International Rankings: Key findings • NZ universities have some of the lowest levels Income versus Quality in of income per Equivalent Full-Time Student (EFTS) globally, yet achieve comparatively good rankings New Zealand and Australia • All NZ universities are ranked in the top Universities compete in a global market for students, and an important 500 (QS) compared with 58% of Australian determinant of students’ university choice is the perception of universities • When comparing NZ vs Australian QS500 institutional quality. While the robustness of university rankings is universities: debated,¹ they are nonetheless the only readily available, internationally ○ Domestic tuition income per domestic comparable measures of university quality.² EFTS is lower for the NZ universities by International Rankings: Income versus US$3,054 (27%). The gap is driven by higher Australian domestic fee income In general, higher rankings are associated with The Australian universities are our nearest Quality in New Zealand and Australia and government tuition income (in that higher income per student (Figure 1), presumably competitors for international students, and order) Universitiesbecause well-resourced compete in a globaluniversities market are for better students, andindeed one of thefor Newimportant Zealand’s determinants best domestic of students’ decisionable to invests about in where the things to study that is drivethe perception high of the qualitystudents. of the They institution. are also While the universities there is some against debate ○ Mean income per total EFTS (domestic aboutrankings the (e.g. robustness high-quality of university academics). rankings One1, they are nonethelesswhich we the most only commonly readily available compare comparative ourselves, and international) is lower by US$3,739 measuresstudy³ found of university that on average quality at universities an international climb level. 2 so it is of interest to examine rankings and (20%) for the NZ universities one rank by increasing expenditure per student income per student in the two systems, and to Inby general, 3%-7%. higher Yet, as rankings Figure are1 shows, associated New Zealandwith a higher incomeunderstand per student what drives(Figure differences1), presumably in incomebecause ○ International fee income is the main betteruniversities-resourced have universities among the are lowest better levels able ofto invest in thelevels. things that matter for achieving high rankings contributor to the difference in the level of (e.g.income high per-quality student academics). of their peerFor example, institutions. one study3 found that universities gain one position in rank by income per EFTS, but research income is increasingFew universities expenditure have aper lower student income by between per student 3% and 7%.Two Yet, comparisons as Figure 1 shows, have been New made:Zealand’s all New also a key contributor. universitiesbut higher rankinghave among than the our lowest top five levels universities, of income per studentZealand of universities their peer institutions. versus all Australian Few universities havewhich a suggestslower income that per our student university but systemhigher ranking is thanuniversities our top five rankeduniversities in the, which top 500suggests of QS; that and our the • When comparing the University of Auckland universityefficient system with respect is efficient to quality,with respect relative to quality,to cost. relativeUniversity to cost. of Auckland versus Group of Eight vs the Group of Eight universities: 5,6 universities. ○ Domestic tuition income per domestic Figure 1: QS rankings (2015) and institutional income per Equivalent Full-Time Student (EFTS, 2013) for all EFTS is lower by US$3,774 (33%) for Figureuniversities 1: University ranked ranking in the top (2015) 400 and in the institutional world. Black income diamonds per Equivalent represent Full-Time the New StudentZealand (EFTS,universities 2013) for Auckland, with both government tuition thethat global were top ranked 400 inQS-ranked the top 400 universities. in 2015.4 Black diamonds represent the New Zealand universities⁴ funding and domestic fee income being higher in Australia ○ The University of Auckland’s income per total EFTS is lower by US$7,416 (34%) than the mean income of the Group of Eight universities and it ranks lower by 18 places in the QS rankings ○ International fee income accounts for half the higher level of income per EFTS in the Group of Eight universities ○ “Other income” (investment income, donations and bequests, non-government grants, and other non-course fees and charges) and research income also make significant contributions to the higher income per EFTS in the Group of Eight universities. The Australian universities are our nearest competitors for international students, and indeed for New Zealand’s best domestic students. They are also the universities against which we most commonly compare ourselves. It is therefore of interest to examine rankings and income per student in the two systems, and specifically to understand what drives differences in income levels. 1 Figure 2: QS rankings and institutional income per EFTS - all New Zealand and Australian universities8 New Zealand universities versus Figure 2: QS rankings and institutional income per EFTS - all New Zealand and Australian universities⁸ Australian universities Figure 2: QS rankings and institutional income per EFTS - all New Zealand and Australian universities8 While all New Zealand universities were ranked in the top 500 of the QS ranking system in 2016, 16 (42%) of Australia’s universities were ranked outside the top 500 or not ranked at all (four universities were outside the lowest band of 700- 800). A number of Australian universities were previously polytechnics and achieved university status only in the late 1980s and 1990s. Such “newcomers” tend to rank lower than older, more established universities. This means that there was greater variation in the Australian data with respect to both income per EFTS and rank, such that mean rank of the New Zealand universities was higher than that of their Australian peers, even though mean income per student was lower ecause the lowest raned ustralian uniersities are so different to those in New Zealand, we eamine here (Figure 2).7 onl the institutions in the two sstems that ran in the to 00. Because the lowest ranked Australian universities Figure again shows the ositie relationship etween raning and income er student, aleit on a muh are so different to those in New Zealand, we narrower scale he Australian uniersities raned in the to 00 in 1 (henceforth “Australian QS500 examine here only the institutions in the two universities”) had a mean raning aout 0 laes etter than that of the New Zealand uniersities and a ecause the lowest raned ustralian uniersities are so different to those in New Zealand, we eamine here systems that rank in the top 500. mean inome er student aout 0% US $3,00) higher. onlFigure the 3: institutions QS rankings in andthe twoinstitutional sstems that income ran per in the EFTS to – 00.all New Zealand and Figure 3 again shows the positive relationship FigureAustralian 3: QS QS500 rankings universities and institutional9 income per EFTS – all New Zealand and Australian QS500 Figure again shows the ositie relationship etween raning and income er student, aleit on a muh between ranking and income per student, universities9 albeit on a much narrower scale. The Australian narrower scale he Australian uniersities raned in the to 00 in 1 (henceforth “Australian QS500 universities ranked in the top 500 in 2016 universities”) had a mean raning aout 0 laes etter than that of the New Zealand uniersities and a (henceforth “Australian QS500 universities”) mean inome er student aout 0% US $3,00) higher. had a mean ranking about 50 places better than Figure 3: QS rankings and institutional income per EFTS – all New Zealand and Australian QS500 that of the New Zealand universities and a mean universities9 income per student about 20% (US$3,700) higher. The difference in mean income per student between the New Zealand and Australian QS500 universities is analysed in Table 1. For the average domestic student, the government subsidy was a little higher (US$690) and the tuition fee income appreciably (US$2,364) higher in Australia, leading to an overall greater level of domestic tuition income per Australian domestic student of US$3,054 (27%). This difference was diluted to US$471 (US$10,309 vs $9,839) when comparisons were made on a “total EFTS” basis because the Australian 3 QS500 universities had a larger proportion of Table 1: 2015 Income sources per EFTS (domestic, international, total) for all New Zealand and international students - 28% compared to 12% Australian QS500 universities for New Zealand universities.10 They also had higher fee income per international student – US$ Income Stream All New All Australian $ difference 16,277 vs $15,819. Zealand universities Australia vs 3 universities ranked in the top New Zealand The “per total EFTS” comparison shows that the 500 of QS in 2016 US$3,739 (20%) greater average per student US$ PPP US$ PPP income in the Australian universities was accounted for largely by the greater level of Per domestic EFTS Government Tuition Funding $7,055 $7,745 $690 international fees income and research income. Domestic Fee Income $4,114 $6,478 $2,364 “Other income” was also higher for the Australian
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