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Tertiary Education Institutions

Tertiary Education Institutions
Tertiary Education Institutions   .

Asset profile

Tertiary Education Institutions (TEIs) are treated as equity accounted investment in the Crown accounts that reflects the equity that the Crown holds in:

  • eight universities
  • 18 institutes of technology and polytechnics (ITPs), and
  • three wananga.

The TEIs are Crown entities, with approximately half of their revenue coming from government funding and the remainder coming largely from student fees and research income. Most TEI capital expenditure is not funded by the government.

Figure 4.55 - TEI asset profile
Figure 4.55 - TEI asset profile  .
Source:  Tertiary Education Commission

TEIs collectively own or manage property, plant and equipment with a book valuation of around $8.1 billion.[29]The majority of these assets are held by universities ($6.3 billion) followed by ITPs ($1.7 billion) and wananga ($0.1 billion).

The net book value of assets owned or managed by TEIs is forecast to increase to around $10.4 billion in 2021. This increase is due to a large capital programme over the next ten years to refurbish and replace existing buildings.


As an equity investment, the performance of TEIs can be measured by examining the return they generate on net assets. In addition to this, the capital intensiveness of the TEIs is measured through the value of PP&E per equivalent full time student (EFTS).

Return on net assets

Three-year average and annual forecast returns on net assets are forecast to improve steadily from just over 7% in 2012 to just over 8% by 2021.[30] This is due to a forecast increase in revenue from international students and greater research income.

Figure 4.56 - Return on net assets
Figure 4.56  - Return on net assets  .
Source:  Tertiary Education Commission


The value of PP&E per EFTS was $33,901 in 2012 and is expected to increase to $42,991 in 2021. This anticipated increase reflects TEIs resolving a backlog of deferred maintenance as well as a capital expenditure programme aimed at repairing and replacing existing assets, with small amounts aimed at increasing capacity and improving the functionality of the assets to meet changing teaching and research needs.

Figure 4.57 - PP&E per equivalent full time student
Figure 4.57 - PP&E per equivalent full time student  .
Source:  Tertiary Education Commission

Opportunities and challenges

Since 2010 there has been a significant improvement in the level of centrally held information about TEI asset management capability. In early 2013 all universities and ITPs were asked to obtain assessments of their asset management capability from an independent asset management specialist. These assessments produced tailored improvement plans that outlined steps that those TEIs could take to improve value for money from assets and planned capital expenditure. The Tertiary Education Commission will monitor TEIs' progress implementing recommendations from these reports over the next several years.

Figure 4.58 - Capital expenditure and required borrowing facilities
Figure 4.58 - Capital expenditure and required borrowing facilities  .
Source:  Tertiary Education Commission

Over the short to medium term, TEIs are expected to make significant capital investment. Many TEIs forecast that to undertake planned capital expenditure they may require new debt facilities to maintain adequate levels of liquidity. This will require careful management.[31]


  • [29]TEIs report on a calendar financial year.
  • [30]Return on net assets calculated on the basis of operating surplus/deficit before interest (expense and revenue), tax, depreciation, amortisation and one-off abnormal items (also known as EBITDA) measured against total net assets.
[31]Information on affordability and debt is indicative only. It does not take into account the treasury decisions of TEIs regarding concurrently held long-term debt and has not been moderated by confidence ratings in the quality of forecasts provided by different TEIs.
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