New Zealand universities have failed to rank in Time Higher Education's most prestigious 100 universities after dropping to 200 from a previous rank of 150. The world university rankings list was recently released with five Australian universities making it to the Top 100.

The rankings revealed that universities in the U.S. and UK are consistently rated high by top scholars. Asian universities were also making their way to the top. In contrast, New Zealand universities have never been in the top 100.

University of Auckland, the highest-rated New Zealand university, dropped from the rankings from 150 to 200. Vice Chancellor Stuart McCutcheon said it was of concern that New Zealand universities were slipping from the world rankings.

Mr McCutcheon said the level of investment made by countries to their universities often correlates with world rankings. He added that universities in New Zealand were operating under a low income or cost per student. This may indicate a problem with resources.

He compared New Zealand universities with Australian universities which have higher government funding. Australian universities also charge higher student fees. Funding in research is also high with support from the industry as well as philanthropy.

Professor McCrutcheon observed the rankings reflect the number of international students attracted to study in New Zealand.

Raymond Huo, Labour party spokesman for Export Education, said New Zealand is competing with Australia, Canada, UK and U.S. in attracting overseas students. The education sector has added $2.6 billion annually to New Zealand's economy which also contributes to job creation and development of business and cultural links.

Mr Huo warned that if overseas student numbers drop for the year, the education sector will significantly feel the impact.

Tertiary Education Minister Steven Joyce remarked that universities need to face the challenges of expanding research links, attracting more international students and making more investments.

The New Zealand government has increased its funding to universities by 16.5 per cent in the last four years, according to Mr Huo. He reported that the universities in the country have an annual income of almost $500 million. The figure is higher in 2012 than in 2008.

The number of international students enrolling in New Zealand universities has declined in the last few years due to the impact of the global financial crisis and earthquakes in Christchurch.

Aside from the University of Auckland, Times Higher Education mentioned University of Canterbury, University of Otago, Massey University and University of Waikato in the top 50 within disciplines.