Education Minister Anne Tolley has knocked back a call by universities for the Government to lift its cap on student fees.
Mrs Tolley also today signalled the Government was unlikely to agree to the kind of large funding increases universities were seeking in the current economic circumstances.
The New Zealand Vice-Chancellors' Committee (NZVCC) yesterday released a nine-point plan which it said would address underfunding and help drive the economy.
It called for a $230 million a year funding boost from the new government, to address what it said was years of underfunding.
If that was not possible the committee wanted the current cap on university fees, which restricts increases to 5 percent a year, lifted so more revenue could be generated from students.
But Mrs Tolley said the fee cap was part of National's election policy.
"That's still our position of course, so we won't be able to meet that demand," she said on Radio New Zealand.
She would not publicly commit to anything in the universities' nine-point plan and highlighted the fact the economy was in recession with government debt projected to grow over the next few years.
"I think it's a very good opportunity now for us to sit down and talk through what it is that we both want to achieve and how we are able to do that, remembering the very difficult economic times that we are in."
The vice-chancellors said the $230 million boost, on top of the $1.15 billion annual funding universities already received, was the amount they had lost out on in real terms in the last decade.
Auckland University chancellor Hugh Fletcher said universities should be able to set different fees for their courses.
A law degree should cost more than a history degree because lawyers would be higher earners in their lifetime. The students would decide if they wanted to pay for a more expensive course at a particular university.
He said the OECD acknowledged universities were a major driver of economic competitiveness and spending more on them got "more bang for buck".
Mr Fletcher said many universities' facilities were grossly outdated.
He described Auckland Medical School conditions as "Dickensian" and Australian schools were a more attractive option for students and staff.
The committee also called for an overhaul of complex funding rules and compliance costs which were wasting money on paperwork and more funding for research.
