Vacancies and delays in appointing staff have contributed to a healthy operating surplus for the University of Otago.
But vacancies sometimes indicated the university was having difficulty attracting academic staff and that was a concern, vice-chancellor Prof Sir David Skegg told a university council meeting yesterday.
New Zealand universities were competing for staff with overseas institutions, particularly those in Australia, and vacancies which took time to fill showed New Zealand salaries were "not competitive worldwide", he said.
"We cannot allow the salary gap between New Zealand and Australia, which is very wide already, to grow."
Australian universities could also offer new staff a more attractive superannuation scheme and more research funding, he said.
Academics wanting to progress their research did not want to go somewhere "their career was going to wither on the vine" because they could not access funding for equipment or research projects, he said.
At the end of September, the university's operating surplus was $30.05 million - $6 million ahead of budget - a report to the council meeting said.
Salary savings and delays in appointing academic and general staff across the university had contributed $3.3 million to that result, it said.
The forecast operating surplus for 2010 was $19.46 million.
Spending on academic salaries was expected to be $1.55 million, or 0.8%, less than the full-year budget.
Not being able to fill all academic vacancies as quickly as it would like "was a problem which was not going to go away", Prof Skegg said.
It would be exacerbated by the Government's decision to abolish the tripartite adjustment fund next year, costing Otago $5.3 million, he said.
The fund was established to enable New Zealand universities to increase salaries and remain internationally competitive.
