Govt Boosts Tertiary Education with $398 Million Investment in Budget 2025

In a decisive move to enhance New Zealand’s tertiary education sector, the Government has announced a substantial $398 million investment as part of Budget 2025. The funding, unveiled by Minister for Universities Dr Shane Reti and Minister for Vocational Education Penny Simmonds, is aimed at strengthening areas of study that offer the greatest value to students and support the country’s economic growth.

Strengthening Core Subsidies Across the Tertiary System

A significant portion of the funding—$213 million—will go toward a 3 percent increase in tuition and training subsidies across most tertiary subjects. This boost will be implemented across all levels of tertiary study and is expected to become permanent from 2026.

“The extra investment recognises the growing need to ensure our domestic tertiary education system can effectively meet workforce needs while also offering high-quality learning opportunities for students,” said Dr Reti. “We need to grow our domestic pipeline of skilled workers to support the growing economy.”

Incentivising Priority Areas: STEM, Education, and Health

Budget 2025 also includes a focused subsidy increase for high-demand disciplines. An additional $64 million has been earmarked for a further 1.75 percent increase in tertiary education subsidies at degree level and above in Science, Technology, Engineering, and Mathematics (STEM) subjects, Initial Teacher Education, and key health workforce areas.

This is on top of the 3 percent general increase, making the total uplift for these fields 4.75 percent. These disciplines are identified as having strong alignment with national productivity and employment growth.

“These subjects often lead to rewarding careers and contribute to productivity and growth in sectors like health, energy, infrastructure and digital technology,” noted Ms Simmonds.

Funding for Student Access and Enrolment Growth

To address anticipated enrolment demand in 2025 and 2026, $111 million has been allocated to support institutions accommodating increasing student numbers. This includes continued support for the Youth Guarantee scheme, which will see ongoing funding for an additional 175 students per year. The programme provides fees-free tertiary tuition at Levels 1–3 to help young people transition into higher-level study or employment.

Fee Flexibility for Providers to Sustain Quality

In response to inflationary pressures on tertiary institutions, the Government has proposed a maximum allowable fee increase of 6 percent for 2026. This measure is intended to help providers manage rising costs while maintaining quality standards.

“The proposed maximum rate reflects that fees have lagged behind inflation in recent years, making it harder for providers to maintain course quality,” Dr Reti explained. He confirmed that a formal consultation process would occur later this year through the New Zealand Gazette.

Revamping Vocational Education and Te Pūkenga Transition Support

The budget also focuses on the evolving vocational education sector, particularly in light of the phased dissolution of Te Pūkenga, the national polytechnic network. The redesigned system will include new Industry Skills Boards, which will receive $30 million annually for standards-setting. An additional one-off $10 million in 2025/26 will be provided to support establishment costs.

Furthermore, funding adjustments will support vocational training in key areas such as engineering, trades, and primary industries. From 2026, two years of transition funding will be available for institutes of technology and polytechnics as they regain greater operational independence.

Targeting Resources for a Resilient and Sustainable Sector

Minister Simmonds emphasized that the funding decisions are driven by strategic reprioritisation to ensure sustainability.

“In developing the Budget package, we have reprioritised funding to focus on core activities and to further support frontline tertiary education services,” she said. “Taken together, these initiatives support a sustainable tertiary education and training sector that will lift student achievement and contribute to growing the New Zealand economy.”

This major investment signals a renewed commitment to aligning education with employment needs, enhancing quality, and ensuring that students across the country are better equipped for the future of work.