Government announces planned reforms of vocational education and training

Auckland’s Unitec is the country’s biggest polytechnic and received a $50 million dollar loan from the government last year so it could continue to operate.

The government has announced drastic measures to reform the country’s vocational training sector.

Education Minister Chris Hipkins on Wednesday announced plans to establish a unified, national system of vocational education and training. This will see the existing government owned institutes of technology and polytechnics (ITPs) brought together as one entity with the working title of the New Zealand Institute of Skills and Technology.

This will be coupled with a vocational education funding system and a regional network of providers. The changes will also see redefined roles for education providers and industry bodies Industry Training Organisations (ITOs) to improve the role of industry and employers.

“The world around us is changing rapidly and our education system needs to keep up,” Chris Hipkins says. “At a time when we’re facing critical skill shortages, too many of our polytechnics and institutes of technology are going broke.”

It follows a string of high-profile polytechnic and training institution bail-outs and closures, despite an ongoing national skills shortage.   

Hipkins says the changes are designed to ensure the industry can better meet the needs of New Zealand’s economy and workforce.

“We would also ensure there’s strong regional influence in the New Zealand Institute of Skills and Technology through the proposed formation of Regional Leadership Groups which would identify the needs of the local economy and become a key link between local government, employers, iwi and communities.

“The development of courses and programmes would be consolidated, improving consistency and freeing up resources to expand front-line delivery.”

He says the government’s proposals for the sector are designed to make sure it delivers the skills employees and employers need.

“What we are proposing is ambitious, but it needs to be. We cannot continue to tweak the system knowing that the model is fundamentally broken, and isn’t delivering our workforce the skills that they need to thrive.”

The vocational education sector is made up of government owned institutes of technology and polytechnics (ITPs) and in a statement last week Hipkins outlined the pressures many of the industry’s providers were facing.

Hipkins said the number of domestic students training at polytechnics and other training institutes had fallen by 23,190 between 2011 and 2017.

“Financially, that’s been disastrous and, unfortunately for taxpayers, the chickens have come home to roost. Last year, the Government had to find $100 million to bail out four polytechnics. We know that several more are on borrowed time. It is a damning indictment of National’s total lack of vision and foresight. It’s not like they weren’t warned.”

He referred to a 2016 briefing for then incoming Minister for Tertiary Education Skills and Employment Paul Goldsmith which clearly spelled out the challenges the sector was facing.

Hipkins’ thoughts on the vocational education sector were echoed by Prime Minister Jacinda Ardern when she spoke at a BusinessNZ breakfast last week.

“We currently have a vocational education system that is in many cases, struggling. Take the building sector for example. We know we need more tradies and they are just not coming through fast enough. That’s absolutely no reflection of the people who are involved in the sector – far from it. What it is, is a damning statement that the system has been left to drift, to muddle through. How is it, for example, that at a time when we’re facing critical skill shortages, our polytechnics and institutes of technology are in many cases going broke?”

Auckland’s Unitec is the country’s biggest polytechnic and received a $50 million loan from the government last year so it could continue to operate. It has had to slash both staffing numbers and courses in a bid to survive. Unitec was forecasting a drop of about 900 full-time students in 2018 and a further 1000 this year. And the problems in the sector aren’t limited to Auckland.

Other providers have felt the same pressures. The West Coast's Tai Poutini Polytechnic received a $33 million government bail out in February last year. It had been operating under a government-appointed crown manager since 2016 after concerns about its financial and educational performance. 

A cabinet paper from Hipkins released early last year showed the Tertiary Education Commission (TEC) had predicted that 50% of all the country's institutes of technology and polytechnic (ITPs) would be in deficit by 2020, and 80% would be in the red by 2022. 

“This is due to the strong labour market leading to declining enrolments and rising cost pressures. It is also influenced by changes in who ITPs deliver education to, leading to increased competition with other tertiary providers. Overall the ITP subsector is in a position where widespread business change is necessary to ensure the ongoing quality, attractiveness and sustainability of its vocational delivery.”

The Tertiary Education Commission established the ITP Roadmap 2020 project in early 2018 to work with the sector and wider community to look at options to structurally change the sector.

Public consultation on the government’s proposed changes to the vocational training sector is open until 27 March.

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16 Comments

Vocational training to remain in the big deep shadow of university. Our school system aims all pupils to university whatever their aptitude or aspiration. Germany and Switzerland start vocational training at school aged about 15. Note it is far easier to move from vocational training to pure academia than the other way round. Wittgenstein started an engineering course in Manchester, JK Galbraith started at agricultural college.
More recently my son wasted years at college just to play rugby so now he is 20 he is a building apprentice and despite a sharp brain he will not do the book work. If we had been in Germany he would be a qualified builder by now. Motto: practical first - theory second.
The OECD says NZ has an exceptionally skilled workforce - just we have far too many studying commerce, communications, sport, physchology etc with little enthusiasm.
Best solution for vocational training: close half our universities.

Close half the Polytechs pretending to be Universities, or focus them back to trades related training. If your NCEA grades are not high enough to get to one of the big Universities then don't waste student loans doing meaningless courses.

Part of the reason students move to academia is due to the relatively poor earning capacity that vocational roles generally attract in this country compared to overseas economies. For every happy desk jockey in an office theres a dozen who'd rather be working with their hands and their brains if only the dollars were there, but they aren't. I have a friend who is a highly skilled heavy lift crane operator, he won't work in NZ because of the rubbish money on offer, he does stints off shore instead. I have another friend who does steel reinforcing, he works offshore too. Then theres the nationwide driver shortage in the heavy transport industry, the one that pays $18 per hour to drive 55 tonne articulated vehicles...funny that.

Nothing has changed over the years as regards tradies. They have always gone overseas where the money is ( I Western Australia during the mining Boom)

I think the comments by Bridges were telling - over 1000 job losses, currently there are 79000 EFTS students enrolled in ITPs, the overall SSR is 1:17 and the overall ratio of support staff to students is 1:16 which provides a total staff count of 9500. So the job losses across the sector is a minimum of 10%. Assuming the average salary is 100K (given the staff losses disproportionately effect managers), this provides an annual saving of 100M in funding to the ITP sector.

And bearing in mind the standard formula that for each FTE in staffing, the raw salary cost can be doubled if overheads are counted in, plus an ERP, a student admin/enrolment system, a payroll, a BI suite, a property maintenance/management system and all the other systems needed to run one of these shows - that $100M looks fairly small.

I expect the new central organisation will create a 1000 jobs in Wellington so all will be cool.
Course development will be a empire in its own right, divorced from course delivery, better and better.
That is one possible outcome.

The losses due to under funding will be made up in cost savings. 100M in losses in the existing structure and 100M in saving (from job losses) in the new structure. Curiously, the above article mentions the 25% decrease in the local Kiwi students between 2011 and 2017 which is due to under funding of the local Kiwi student and therefore Institutes are reluctant to enroll the local Kiwi students because they run at a loss teaching the local Kiwi students but run at a profit teaching international students (hence the explosion in international student numbers). I think it will be a struggle to end discrimination against the local kiwi students (and a general refusal institutionally to educate them) with the new structure without addressing the under funding of the local Kiwi students (the elephant in the room - kiwi students are less valuable to lecturers and institutes than international students).

Surely the removal of free citizenship for doing training in NZ will solve that issue?

Its been nearly 20 years of telling kiwi students that they aren't as valuable as foreign students and that kiwi students aren't wanted in the system - it shows in the number of Kiwi students and staffing profile of the institutions as well these days, staff members that want to teach the local Kiwi students just aren't welcome (along with Kiwi students) these days. If you load these institutes up with staff that want to teach Kiwi students then you end up with classes full of Kiwi students and go broke!

I'd like to see removal of free citizenship for doing training in NZ but with a 50% increase in population in NZ over 25 years due to immigration, both national and labour would receive an immigrant voter backlash on that one, possible enough to remove them from power (which ever government that is in at the time). This is what loss of national sovereignty looks like - a collapse of local Kiwi students in tertiary institutes due to being discriminated against and not wanted in tertiary institutions, staff kicked out who want to teach Kiwi students and tertiary institutes full of foreign students and foreign staff members who all have english as a second language and like to talk to each other in their native languages - yep thats the Kiwi students end of the deal they get in NZ.

Whats wrong with this government...why do they keep doing things that clearly need doing? Why can't they be just like the previous government and do nothing!

on the face of it seems sensible, we need a better structure for trade training and rather than compete with each other working together makes sense it will cut costs and increase efficiency.
example Auckland , you have unitec ( 2 campuses) and manukau tech (4 campuses) offering the same courses, would it not be better for one of the two to take that course and the other concentrate on another course.
when it comes to education it should not be about competition to get bums on seats
the devil will be in the detail and a lot of the ceo's of the polytechnics have built little empires and will fight if they look like losing some of that empire no matter if it better for them in the long run.
its the same with the universities, you used to go to certain ones for certain specialized fields now they are all trying to offer training ie doctors, used to be Auckland and Otago only now Waikato are starting a medical school, why? do we need another school to up the numbers trained ? or will they be biting into Otago and Auckland and just be making it harder for both those medical schools to make ends meet
if it is needed should it not be Victoria? being in the middle of the country to give a good spread for those wanting to train closer to where they live
the problem in NZ is higher education turned into a business so starting competing against each other and made ends meet started to fill up with international students and now we have deans who think they are business leaders and not educators

Your right - Victoria should have a full medical school (or is there Otago University Medical School run with Victoria in Wellington)?

No need for NZQA with their 500 staff flying around doing audits at 100s of millions cost every month - at Tertiary level anymore as all ITPs are one and the same!

I bet that was factored into the calculations for the restructure.