New Zealand recently became the darling of a certain wing of the post-secondary world when it’s new Labour Government, led by Jacinda Arden, translated a second-place finish in the 2017 election into government (via some deft coalition negotiations) and proceeded to implement a free-tuition plan.

Tuition-free universities aren’t new to New Zealand; in fact the whole country was more or less tuition free until 1991.  It was in that year that a former Labour government (of an unusually pro-market, privatizing bent – the party has changed quite a bit since then) introduced fees and then, a year later, a system of income contingent loans to help pay for it all.  Since then, fees policy in New Zealand has roughly mirrored Canada’s, with very significant annual rises in the 1990s followed by much slower growth after about 2000 (difference: their tuition growth rate picked up a bit after 2010 while ours didn’t).  The figure below shows average arts/humanities tuition at New Zealand universities since 1993.

Figure 1: Average arts/humanities tuition, New Zealand Universities, 1993-2017

Source: Using data from Universities New Zealand, and a set of quite jury-rigged institutional weights, I derived this average from the listed Arts/Humanities fees from Auckland, Waikato, Massey, Victoria, Canterbury and Otago.  Best I could do.

Now, what the Ardern government has done isn’t exactly free tuition.  Because Labour needed to avoid being seen as spendthrift, their manifesto commitment was to implement this gradually: in year one, first-year tuition would be free, in year four, this would be extended to second-year and in year seven (i.e.. 2023) it would cover the final year of studies (New Zealand, like Australia and Europe, has three-year bachelor’s degrees).  The more cynical might view this less as fiscal responsibility than as a recurring electoral bribe; the election cycle in New Zealand is also every three years, so each extra year only kicks in if Labour gets re-elected.

What made the fiscal responsibility pledge even funnier was the fact that in fact the government had no plans whatsoever to compensate universities for the freeze.  They were ordered on extremely short notice (Labour took power in late October, the new university year starts in February) to implement the no-fees policy, but come the May budget, the increase in the budget for universities was…zero, or effectively about a 1.5% cut after inflation.  Now after a month or so of intense university kvetching, the government in fact managed to “find” (behind the sofa cushions, apparently) enough money to cover inflation on the government part of the equation.  But there’s still no compensation for the lost student income.  So, students – and in New Zealand as elsewhere that means predominantly kids from upper-middle class families – win, while institutions lose.

(When writing this section I was relying on Govt of NZ budget documents, which are not the most easily understandable things in the world. A reader in NZ has kindly written to me to point out that in fact the institutions were compensated through a separate transfer. It’s still a regressive subsidy, but institutions did not lose apart from not initially being compensated for inflation. I apologize for the error.)

Some were, of course, immediately alert to the question of whether this has had any effect on access.  The answer is that enrolments didn’t really increase, but that’s not really a fair assessment because the decision to make tuition free happened so close to the application date.  The effects of tuition reductions – even radical ones – should logically take a couple of years to show up because the access effect is more about changing expectations than it is about simply putting more money in people’s pockets.

More interesting will be any evidence that comes in from this on issues like retention and students’ ability to focus on their studies.  In the New Zealand press the pro-free fees line has largely been framed in terms of students being too stressed by the need to finance their studies to study properly, and so free fees will – so it is proclaimed – usher in a new era in which students will be able to study properly.  I am skeptical: the re-enrolment rate of full-time bachelor’s level students is already 86% and unlikely to rise much further.  As for time spent on studies and time spent working?  Well, according to the New Zealand Union of Students’ Association 60% of students in New Zealand work regularly during term for an average of 13 hours a week (slightly lower than in Canada, FWIW).  Let’s check back in a year or two and see what’s changed.  My guess is it won’t move at all: students will still work and still be stressed, but their standard of living will be higher.

That’s not a terrible outcome, of course, but also one that probably could be achieved without providing free tuition for all or reducing university incomes/expenditures.  In any case, good policy or not, New Zealand is an interesting experiment that will generate lots of data about the efficacy of free tuition for years to come.