Budget documents show the Treasury warned the Government against tertiary education moves worth nearly $200 million over four years.
The Treasury opposed Budget increases to funding for private tertiary institutions, science and engineering courses and tertiary institutions' research.
Radio New Zealand's education correspondent says the Treasury advised against increasing science subsidies by 2% because it said there is no shortage of science graduates.
It agreed there are not enough engineering graduates, but said an 8.8% subsidy increase would not address the main problem of school-leavers lacking the physics and maths required to study the subject.
The Treasury also opposed increasing the Performance Based Research Fund by $100 million over four years because institutions might not use it for research.
It also wanted higher rates of funding for private institutions deferred until the Government is back in surplus.
The Labour Party and Tertiary Education Union say the Government is making the wrong choices for tertiary education.
Labour says the Government is tinkering with tertiary education policy, while the union says the Government's choices could have unintended consequences.
But Tertiary Education Minister Steven Joyce disagrees, saying the Treasury did not want to raise tertiary spending at all and the increased spending will lift quality and enrolments.