At 2.1 per cent of GDP, NZ spends more than the OECD average of 1.6 per cent of GDP on tertiary education.

OPINION: Asking what universities are for can be dangerous.

Perhaps that's why the Government has asked the Productivity Commission to do the spadework.

The commission's issues paper, issued last week ahead of a year-long investigation into the future of higher education, is full of leading questions that are sure to make university governors a little nervous.

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This is a new front in the endless war of attrition between governments, which look to tertiary education mainly for jobs training and economic advantage, and universities, which cherish their role as centres of uncompromised intellectual inquiry.

The commission will report in early 2017, meaning its recommendations will have election year implications, with higher education already in focus because it sits at the heart of Labour's emerging "future of work" programme.

Labour's policy offering of three fee-less – or "free" – years of tertiary learning throughout adulthood seeks not only to encourage lifelong learning, but also to make such investment possible.

If robots are going to take your job away, then taxpayer-funded access to training is a natural response to help the transition into new work.

However, higher learning is not just about universities. In fact, the implication in Labour's policy is that learning during adulthood is more likely to be in much shorter courses than the traditional three year degree.

Some of that could be delivered in universities, but could in many cases be taught by a polytechnic, a private training establishment or an industry training organisation.

Accordingly, the Productivity Commission is asking some hard questions about how effectively New Zealand is investing in higher education.

Put very simply, the issues paper seems to make the following argument: high levels of tertiary education aren't helping our economic performance enough, partly because our universities are too alike and reward research over teaching, when teaching is what most students are paying fees to get.

Unlike their poor cousins, the polytechs and other training organisations, teaching qualifications are not even required to teach most university courses.

The Government's motivation in ordering the inquiry is also its concern that there is "considerable inertia" in the current tertiary system. Innovation, experimentation and willingness to try new models is lacking, ministers believe.

At 2.1 per cent of GDP, New Zealand spends more than the OECD average of 1.6 per cent of GDP on tertiary education. Surely that should be helping us catch up with the stronger performance of similar countries' economies.

But it's not.

"In New Zealand, comparatively high levels of tertiary attainment in the working age population have not translated into high levels of productivity," which remains "much lower than that of Australia and the United Kingdom," the paper says.

"Differences in skill levels appear to explain little of this cross-country variation.

"New Zealand might have a well-educated population, but its education system has not produced the distribution of skills required by employers, or the labour market has done a poor job of matching people's skills (gained through education) to the requirements of jobs.

"Under these conditions, much education is 'wasted' – at least in terms of its effects on the measured economy."

That comment alone will touch a lot of raw nerves at universities, whose academic freedom and institutional autonomy are protected by law for the very good reason that governments shouldn't dictate what a country's intellectual elite spends its time thinking about.

However, those principles count for little among that large part of the population whose needs are more prosaic and boil down to getting through the week with the bills paid.

Ministers know that. Universities do too. The resulting tension is the nub of the Productivity Commission's inquiry.

- BusinessDesk