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Efficiency of New Zealand universities and the impact of the performance based research fund

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Abstract

The Performance Based Research Fund (PBRF) system introduced to the New Zealand tertiary sector in 2003 will reallocate some public funding to universities from a student enrolments basis to criteria partially based on the past research output performance of the universities. This paper uses the PBRF research quality scores as input to an analysis of the overall cost efficiency of the eight NZ universities. We find that performance differs markedly across the sector. We find that total research output could be increased by reallocating funding between the universities, but that the actual PBRF funding system will realise only a small proportion of the potential improvements. We raise concerns about the long-run implications of the new policy regime.

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