Tag Archives: government

Nov 3 2011

Commercial Ventures and the Public purse – #5 – Canterbury University Seeks Bailout As Intake Falls


Canterbury University is pleading for at least another $150 million from the Government as it faces losing almost 20,000 students and $346m in revenue in the next eight years. Based on a report they’ve prepared along with Deloitte which  forecasts a cumulative drop in fulltime equivalent students of 19,400 from this year to 2019 and a reduction in revenue over that time of $346m

A 65-page document detailing the business case for support asks the Government for $130m in operating support, $25m for capital costs and a  yet-to-be-determined sum for building remediation not covered by insurance, but the amount could be between $20m and $70m.

The February earthquake caused it to lose hundreds of domestic and international students -  About 15,500 fulltime equivalent students are enrolled at the university.

It already has 1200 fewer domestic students and 420 international students  than 2010. Of those about 800 were first-year students and 80 per cent of them would have continued to a second year of study. More than 25 per cent of the first-year student intake either discontinued or  did not complete their enrolment this year.

Here’s the thing - the university is therefore  asking for $1,000 per student to prevent it’s decline in standards, 1,600 less students is extrapolated over 8 years to be 20,000 students. Somehow. As a concession the university will shed around 300 jobs over 3 years from the 3,000 staff it currently has, that’s 3-4% a year over 3 years.

Each Student, using the figures provided, generate income to the University of $18,200 each, per student, and they have staff to student ratio of 1-5

“In exchange for the government money, the university was proposing to make  savings of $134m, double its borrowings to $100m, and reduce its capital  expenditure by $20m to $45m annually from next year to 2019. The savings would include a 3 to 4 per cent reduction in staff numbers for each of the next three years. The university has about 3000 staff.”

The university has a good reputation and it has a strong balance sheet with about $90m in the bank. It’s not up against any wall and it’s not sinking into oblivion.

So – change the name from ABC university to ABC corporation – and you’ll see why this isn’t really something that I would be in favour of. The user pays education system that we’re all familiar with appears to not want to cut it’s cloth to suit, but wants to have a Rolls Royce facility. I can’t imagine a scenario where a corporation with the same staffing ratio’s would be able to go cap in had to the Govt and ask for a bail-out. (Of course I ignore finance and insurance companies, of course!)

Am I in favour of reducing the scope of the offering to suit the amount of revenue, you bet I am. Should the taxpayer fund what is essentially a corporation into maintaining what is an impossible scenario – even they recognise some truths “ The university had started many initiatives to attract students, including  increasing recreational areas on site. It was also spending millions of dollars
on additional scholarships. Vice-Chancellor Rod Carr was visiting several countries to get the message  across to potential international students that the university was fully open
and safe after the earthquakes “

So spend a few more millions, after all in for 346million in for the lot! I’m confident the world will not end for the University, I’m sure that student X overseas does not want to come to a city of rubble to live, in over-priced short availability accommodation, unless of course they’re on a scholarship, but that’s not generating income is it, that’s filling seats to tick a box to maintain existing funding for the public purse.

Do I think that there are too many staff? what do you think, in a normal corporation I would imagine that a ratio of 1-10 managers to staff is more normal, it’s possibly even more.

I’m therefore a little perplexed by the timing, the amount they are asking for, the reasons given, and the blind way in which it ignores some truths about their plight and situation.

via Canterbury University Seeks Bailout As Intake Falls… | Stuff.co.nz.

Oct 20 2011

A Commercial venture and the public purse. #2


Here’s a thing.  We’re all familiar with a user pays model. You want something, a goods or service, then you should be expected to pay.

Seems the Police are considering charging the organisers of future big commercial
events, such as the Rugby World Cup, large concerts and the Wellington sevens, for policing.

These Events soak up significant police resources, which leave other areas short-staffed.

And it’s free!!. So you can organise the biggest commercial money spinner, and the police will show up, en masse, gratis. Courtesy the tax payer.

That’s not at all right by any definition of right.

*Crying ensues* The cost of recovery would therefore be included in the cost of the ticket. Which will add-on a dollar or two to the ticket price, depending of course on the number of people and the amount of police you had turning up.

Of course being how we’re all super scared and all about mitigating problems the real issue is the over-enforcement and the over-policing of events where heavy-handed appears to be the approach, why not use a sledge-hammer to crack a nut.

Jul 23 2011

On politics- CGT


It’s nearing election time, and so we move into the silly season. The government of the day announced the election date ages ago, it’s to be in November (isn’t it?) and after the RWC.

There is always a lot go “the government” aren’t doing enough of this or that stories, there are a few of ‘ra ra’ stories where the government appears to have got something right.

There are circumstances where the government of the day have to either be the nail or the hammer as the situation falls.

The big battleground then appears to be Capital Gains Tax. Well that’s what the opposition party would have you believe anyway. The big plan is to recover the economy by taxing capital gains made on the sale of primarily property. It’s a bit like death/estate duties, but works every time you sell a house.

Not your family house, but all the other houses you have. Because we’ve all got more than one house.

The value will be decided on day 1. Thats the line in the sand. Then if you sell it you will pay a tax on the difference between the value on day one and the day you sell it. On your other houses, not your family house that is, and we’re all about selling our other houses.

Couple of problems with this that seem obvious to me. I don’t have other houses. So I’m in favor of this tax.

The other problem is that it relies on a growth market in housing to return anywhere near any dollars in tax, and we’re not really poised for another big boom in house prices. Oh not never in Christchurch they’re exempt from this tax, besides which it’s not on the family home.

So realising  your investment will cost you a small matter of a tax, it’s not going to depress the house prices, and will inflate pricing if people do what I would do, and that’s top up your ask price by the amount of tax you’ll pay to be a zero sum game. Just a thought.