MONTREAL - McGill University is upset with the Quebec government's decision to fine the university $2 million for hiking the tuition rate of its MBA program.

The Charest government announced Monday that the top-ranked university will see its public subsidy cut by roughly $2.1 million this year after McGill raised tuition without the government's approval.

In a statement Tuesday, McGill said the increase has benefited students and the province should celebrate the change.

"Rather than celebrate the dramatic progress and success McGill has achieved in a short period of time with its renewed and self-funded MBA, the government has imposed a significant fine against one of its own universities," the statement said.

"This action puts an arbitrary, elective and unprecedented exercise of authority of government as a priority over demonstrated quality and program performance."

Quebec has the lowest tuition rates in Canada and a decade-long freeze on fee hikes, but McGill has been pushing back.

Last September, McGill began charging $29,500 in annual tuition for its two-year MBA program _ nearly nine times higher than provincial limit that caps tuition at around $3,400 per year.

The university said the MBA program has improved considerably since making the changes, citing a jump in the ranking at the Financial Times from 95th to 57th in the world.

"Quebecers deserve a world-class MBA program and McGill is providing it," the university said.

"McGill has demonstrated that it can do so without limiting accessibility, and without doing so on the backs of our undergraduate students."

The provincial government says McGill's move broke provincial rules and lowered accessibility to the program.

"This downward adjustment will be applied until the situation returns to normal,'' Education Minister Line Beauchamp said in a statement Monday.

"I still have a hard time, however, accepting that reducing this subsidy will have an effect on the quality of services offered to students.''

McGill plans to increase the business administration master's rate by another $3,000 next year. In order to charge the higher rates, McGill has given up the public funding it receives for the MBA program.

The move follows a similar one by Queen's University, which privatized its MBA program in the 1990s, allowing it to set tuition rates higher than provincial limits.

Several other MBA programs, including those at the universities of Toronto and Western Ontario, have since followed suit.

with files from The Canadian Press