Part 2: Reforms of vocational education

Tertiary education institutions: 2019 audit results and what we saw in 2020.

On 1 August 2019, the Minister of Education announced the Government’s decisions on proposals to reform vocational education. These included:

The Education (Vocational Education and Training Reform) Amendment Act 2020 (the Act) gave effect to the reforms. It was enacted on 24 February 2020.

Te Pūkenga – New Zealand Institute of Skills and Technology

The Act disestablished all 16 ITPs and established 16 corresponding Crown entity subsidiary limited companies (subsidiary companies) of Te Pūkenga. All 16 ITPs’ assets, liabilities, and operational activities were transferred to their corresponding subsidiary companies on 1 April 2020.

There are some differences between Te Pūkenga and the other types of TEI. The main difference is the amount of control the Minister of Education has over Te Pūkenga.

All TEIs must maintain high ethical standards, permit public scrutiny of those standards, and be accountable for, and properly use, the resources allocated to them.6 Within this context, universities and wānanga have both academic freedom and institutional autonomy.7 Te Pūkenga has academic freedom but not institutional autonomy.8

The Minister of Education appoints most of the members to Te Pūkenga’s governing council. The council can have between eight and 12 members, and the Minister appoints all but three members.9 For other TEIs, the Minister appoints four members to councils that have between 10 and 12 members, and three members to councils that have eight or nine members.10

Te Pūkenga “owes a duty” to the Minister of Education to give effect to its charter. It needs to report on how it has given effect to its charter in its annual report.11

Additional provisions of the Crown Entities Act 2004 apply to Te Pūkenga’s council. These include:

  • providing a statement of intent and a statement of performance expectations;
  • reporting on any ministerial direction in Te Pūkenga’s annual report; and
  • provisions for removing members from autonomous Crown entities.

The disestablishment of ITPs and establishment of subsidiary companies was largely uneventful because very little changed. Most of the work on the transition to a new operating model for Te Pūkenga has yet to be carried out.

However, new boards of directors replaced the outgoing ITP councils. In many subsidiary companies, there was some continuity between the outgoing council members and the new boards. In a few instances, most of the members were new. The directors of the new boards were responsible for preparing the final reports of the ITPs, which covered from 1 January to 31 March 2020.

The subsidiary companies will be in place until 31 December 2022, when they will be merged into Te Pūkenga to become one organisation.12

Originally, the Government proposed that Te Pūkenga would operate as a single entity from 1 January 2020. In our submission on the reforms during the consultation period, we raised concerns about the risks of establishing Te Pūkenga in such a short time frame.13

The Government extended the time frame, and the subsidiary companies will now operate until 2022. This has mitigated some of the risks that we discussed in our submission, and should enable the remaining risks to be better managed. Early certainty about what is changing and what is not changing will help staff and students manage the almost three-year transition period.

In early November 2020, Te Pūkenga announced that it had appointed consultants to co-design the way it will work in future. The design will include arrangements for a regional network of vocational education that will be closely aligned to local economies and local employers. It will also focus on increasing access to, and providing better support during, tertiary education for those who might not have enrolled previously.

Te Pūkenga expects to have completed the design stage by the end of 2021, but some aspects of the plan will take longer to carry out.

In late November 2020, Te Pūkenga reported the results of a short survey of staff across its subsidiary network. The survey showed that a majority of staff understood the need for change, but did not yet know how the changes would affect them personally. Te Pūkenga intends to focus on improving this result, and will re-run its survey to assess progress.14

We also submitted feedback on the draft Education (Vocational Education and Training) Amendment Bill. In our submission, we recommended that the subsidiary companies continue to report separately on their financial and service performance until 31 December 2022.

In the next two years, Te Pūkenga needs to develop its systems and capability to provide quality reporting at a group level. It will also need to consider how it can best serve local accountability.

Unified funding system

Work is continuing on a unified funding system. It will cover certificate and diploma qualifications (level 3 to non-degree level 7) and all industry training.

The unified funding system will fund all work-integrated and provider-based education, including Te Pūkenga, wānanga, and private training establishments. It will also apply to those universities that offer level 3 to non-degree level 7 courses.

Funding will be calculated based on:

  • a funding category component, which considers not just what is delivered but how it is delivered;
  • a student success component, which looks to lift outcomes for students who have been traditionally under-served by the education system by lifting the performance of that system; and
  • a strategic component, which aims to increase how quickly the education system can respond to national and regional priorities and regional labour market demand.

In our submission on the reforms, we said that the operating model and funding system would be integral to the future success of Te Pūkenga. In the coming years, we intend to look at whether Te Pūkenga is meeting the aspirations of the Government, including building a financially sustainable network of vocational education.

Although the unified funding system will change the calculations used to fund learners and courses, there is no indication yet that the amount of overall government funding will increase.

The design of the unified funding system also does not include higher-education qualifications at level 7 (degree) and above. Many TEIs, not just ITPs, tell us that they rely on fees from international student enrolments to maintain financial viability and that a review of other funding streams is also needed. We discuss this in Part 3.

Workforce Development Councils

Budget 2020 provided $276 million to set up new Workforce Development Councils (and Regional Skills Leadership Groups led by the Ministry of Business, Innovation and Employment).

Workforce Development Councils are expected to have a “forward, strategic view of the future skills needs of industries”. They will set standards, develop level 1 to level 3 qualifications, and moderate assessments. When these arrangements are in place, the current Transitional Industry Training Organisations will be dissolved.15

There are six interim establishment boards for the Workforce Development Councils, which are expected to be set up by an Order in Council in 2021. Each Workforce Development Council covers a group of similar industries.

Progress on supporting aspects of the reform programme

The Government has also progressed with other arrangements to support the reforms, including Te Taumata Aronui and Centres of Vocational Excellence.

Te Taumata Aronui

Te Taumata Aronui is a group that provides advice and independent recommendations to Ministers on how to respond to the needs of Māori students and communities better. The group will also work with Ministers and officials on these matters. Appointees to Te Taumata Aronui were announced in December 2019.

Centres of Vocational Excellence

The first two Centres of Vocational Excellence have been set up. These are in the construction and primary production sectors. Centres of Vocational Excellence must meet a range of criteria, including having a national focus and supporting the development and sharing of high-quality curriculum and programme design.

6: Education and Training Act 2020, section 267(2)(a), (b) and section 318(4)(a), (b).

7: Education and Training Act 2020, section 267(1).

8: Education and Training Act 2020, section 318(1).

9: Education and Training Act 2020, section 320(1)(d).

10: Education and Training Act 2020, section 276.

11: Education and Training Act 2020, section 316 and Schedule 13.

12: The time frame can be extended by the Governor-General by an Order in Council on the recommendation of the Minister of Education (see the Education and Training Act 2020, Schedule 1, clause 21). Te Pūkenga can dissolve a subsidiary before the date specified (see the Education and Training Act 2020, Schedule 1, clause 22).

13: See Office of the Auditor-General (2019), Submission on the Reform of Vocational Education proposals, at oag.

14: Te Pūkenga’s staff survey is called Aromātai Kaimahi. 8,000 staff across the subsidiary network were surveyed, and 53% responded.

15: Industry Training Organisations arrange training for trainees and apprentices. Their role is to organise the delivery, assessment, and/or monitoring of training. They are operating in transitional form until the Workforce Development Councils are established.