Salient. Victoria University Student Newspaper. Volume 38, Number 13. 12th June 1975

Money comes . . . and money goes

Money comes . . . and money goes

Drawing of a dog wearing a suit with a cigarette

Each year Students enrolled in a course of study involving more than $30.00 worth of tuition fees are obliged to pay Students' Association fees of $30.50. The contributions are made up as follows:
Students Association General Account $9.00
Publications Board $2.25
Association Trust Account $1.00
Union Maintenance Account $10.25
Union Building Fund $8.00
$30.50

The University collects the money on behalf of the Association and then pays over the the Association $12.25 (the first three items).

The purpose of the Building Fund is to provide improvements and additions to the Union and the Gym. With inflation over 12% it could seem common sense to invest the money at rates which minimise the extent to which inflation erodes the value of the fund. As the money can safely be invested for periods over six months and even up to two years.

With a fund of over $250,000 earmarked for Building purposes it would seem wise to separate this amount from the general cash float of the University. It would also seem wise to expect to receive substantial interest payments on this amount. However, history shows that the University Council does not do this. From 1972 when the Top Floor of the Union Building had finally been paid for (some of the money had been loaned by the University), the balances in the fund appeared as follows:
1973 ($) 1974 ($) 1975 ($)
Opening Balance, Jan. 1 156,361 185,028 218,225
Students' Association fees 45,653 44,796 44,800
Union receipts 3,445 3,800
Miscellaneous receipts 452 492
205,291 234,115 263,025
V.U.W. Grant 10,135 10,435 12,500
Less Building Costs (1) 31,018 26,325
185,028 218,225 275,525
Return on investment 5.80% 5.02% 4.96% (2)

(1) Building costs includes things like architects fees.

(2) For 1975 as the fees are collected in late February the $44,800 is available for investment for nine months.

Why then is the interest rate so low? The University uses and includes the money as part of the University's cash float; it has the free use of our money. Some of the money provides the cash float for the Catering Service. Some of the money has even been loaned to buy the Catering Service manager's ear.

At a recent meeting of the Union Management Committee the Vice-Principal for the University, Dr. Culliford, stated that the University was just minding the money for students. This being the case, then I feel there are good grounds for a charge of mis-management of funds.

What is the University's Investment Policy?

It appears that the University has none. It is however governed by the University Act and all it's investment must be Authorised Trustee Secured Investments. Some of their investments are 'at call', receiving 4-4½%. Some are fixed term investments receiving 7-10% per annum. These are invested with three main companies. United Dominion Company, Trustee Executors, and Devon Investment Brokers Ltd. The later company has a high powered Board of Directors including Sir Ron Scott and Chairman of the Board, the Right Honourable Member for Tamaki, Rob Muldoon.

The University's investment programme can best be seen by looking at their investments at two points in time this year.

18 April 75 19 May 75
Bank of New Zealand $223,617 $21,734
Fixed Term Investments 1,227,720 1,403,720
At Call Investments 465,000 655,000

The interest rate the University receives for it's long term investments is not good. The Students' Association own Trust, which is a Trust only by name and not a legal turst, receives rates of between 10½-12% for Authorised Trustee Secured Investments. For a sum of money the size of a Building Fund a rate of 12% per annum would not be hard to get.

It appears that the University cannot be trusted with the students' money. The longer they have control of it and pay the fund a mere pittance in lieu of interest, the less value the fund is worth. The University should separate the money from its cash float immediately and invest it wisely. Perhaps the competance they have shown in this field in the past is reason enough to suggest that they should hand the money over the the Student's Association to invest on behalf of the students to whom it rightly belongs. After all, another $15,000 of interest is no small sum.