Presumably the government and the Tertiary Education Commission have figured out a clever mechanism design solution for the problem highlighted by Walker here. In short, University funding in New Zealand will soon be linked to student grades.
Of course, the equilibrium to that game, as Paul notes, is everyone gets an A+. The more respectable institutions would take longer to reach that equilibrium, but you can only watch the dodgy places rake in the cash for giving folks an A+ for taking a free CD-Rom for so long. The only workaround I can think of is moving back to purely external assessment, with all papers being graded offshore.
The Press article notes that while funding will initially be linked to student results, it'll eventually move to being linked to graduates' eventual jobs. I wonder how they'll track that. We don't even know where most of our undergrads wind up. What do they do with the large chunk of students who head overseas for their OE after finishing University?
This could all prove interesting. If it's the simple "first grades, then whether employed (or salary on employment)", the equilibrium is grade inflation plus refusing admission to anyone with a poor statistical chance of achieving decent employment outcomes.
