Part 2: Vocational education reforms

Tertiary education institutions: What we saw in 2021.

In this Part, we discuss:

The vocational education reforms currently under way are the most significant set of changes to the tertiary education sector in more than 25 years.3

According to the Tertiary Education Commission (the Commission), the reforms are intended to create a unified and sustainable vocational education system that is fit for the future of work and delivers the skills that learners and employers need.4

Creating Te Pūkenga on 1 April 2020 was central to the reforms. On that date, the 16 institutes of technology and polytechnics were disestablished and became the subsidiary companies.

The Education and Training Act 2020 states that the subsidiary companies will continue in existence until they become fully integrated with Te Pūkenga, which will be on 31 December 2022 at the latest. Some may be disestablished and integrate with Te Pūkenga before this date.

The performance of Te Pūkenga is central to the reforms' success. It needs to create a unified and sustainable public network of regionally accessible vocational education, while continuing to deliver education as usual.

Working closely with other organisations, the Commission has a leadership role for the overall reform programme. A key part of this is ensuring that the vocational education system's new and existing parts work together successfully as a whole.

Therefore, it is important that the Commission has the capacity and capability to help deliver the programme and monitor the reforms' implementation and outcomes.

Since Te Pūkenga was created on 1 April 2020, work has progressed on other important aspects of the reforms. This includes developing a single unified funding system for vocational education and training that encourages work-based learning and attempts to address national and regional skills needs.5

Figure 5 shows the phases and time frames of the vocational education reform programme.

Figure 5
Three phases of the vocational education reform programme

Figure 5: Infographic that shows the three phases of the vocational reform programme. The first phase is design and amalgamation and involves passing legislation and creating Te Pūkenga. The second phase is transition and integration, which involves Te Pūkenga’s operating model, workforce development councils operating, transitional industry training organisations transitioning, and regional skills leadership groups operating. The third phase is unification and involves reform benefits emerging, the unified funding system, and Te Pūkenga maturing.

Source: Adapted from a graphic by the Tertiary Education Commission.

The vocational education system needs to work in a co-ordinated and cohesive way for the reforms to succeed. Disparities in student outcomes will most likely be addressed through system-wide leadership and delivery.

Progress on the vocational education reforms

In August 2019, the Government announced its decisions on proposals to reform vocational education. Progress on the reforms as at the end of 2021 included setting up:

  • Te Pūkenga and creating the subsidiary companies;
  • the 15 regional skills leadership groups;
  • Te Taumata Aronui, an advisory group formed to ensure that the tertiary education system reflects the Government's commitment to Māori–Crown partnerships; and
  • six workforce development councils.

As well as creating the 16 Crown entity subsidiaries, the legislative changes that came into effect on 1 April 2020 meant that industry training organisations became transitional industry training organisations.

Previously, industry training organisations were responsible for setting skills standards, developing qualifications, moderation and assessment activities, and arranging training that would be delivered at workplaces.

In October 2021, the qualification functions of the 11 transitional industry training organisations were moved to the workforce development councils. The role the transitional industry training organisations have in arranging work-based training must transfer to other entities before 31 December 2022. Responsibility for arranging these activities will transfer to Te Pūkenga, private training establishments, or wānanga.

By no later than 31 December 2022, the skills standard-setting, qualification development, and moderation and assessment activities will transfer to the workforce development councils.

At the end of 2021, Te Pūkenga set up an additional work-based subsidiary, named Te Pūkenga Work Based Learning Limited. Work Based Learning's role is to help move the transitional industry training organisations that opt to do so to Te Pūkenga.

As at the end of 2021, three transitional industry training organisations had moved to Te Pūkenga and one had become a private training establishment. The remainder will transfer to a mix of private training establishments and Te Pūkenga during 2022.6

Based on its role in bringing about a considerable amount of the system-wide changes that the reforms seek, setting up Te Pūkenga has been the most critical part of the reforms so far. For this reason, Te Pūkenga is a significant focus of this report.

Te Pūkenga

Te Pūkenga was established on 1 April 2020. Te Pūkenga is responsible for developing the capacity and capability to support work-based, campus-based, and online learning as a unified vocational education system.

Completing and implementing the Te Pūkenga operating model

Te Pūkenga released its proposed operating model in October 2021.7 It describes the tertiary education experience that learners, employers, staff, and Māori will have. It also describes how Te Pūkenga will advance equity, especially for Māori, Pasifika, and disabled learners.8

Te Pūkenga has also been clear about what the proposed operating model is not – it does not confirm the new organisational design and structure, what the governance arrangements are, or how it will define its regions, as the Education and Training Act 2020 requires. Te Pūkenga has stated that the proposed model provides the foundations for further kōrero about these matters in 2022.9

Te Pūkenga needs a clear and detailed operating model and organisational design to determine what capabilities it needs to develop and what structure it needs to operate. The model will also help it determine whether its asset base and systems support its operations.

A detailed operating model and organisational design will allow learners, staff, Parliament, and the wider community to better understand how Te Pūkenga plans to deliver the reforms' intended outcomes and what it is accountable for.

We understand that Te Pūkenga will complete work on the next phase of finalising the operating model in the first half of 2022. This will include an outline of the intended organisational structure.

Te Pūkenga ran an engagement process on its proposed high-level operating model from 18 October to 8 November 2021. The main feedback from the engagement process was the following:

  • There was support for the operating model's direction and its focus on ensuring that learners and their whānau are at the centre of the vocational education system.
  • Many respondents wanted to know how the model would work in practice and what it meant for individuals and their roles.
  • There was a desire to strengthen the relationship between Te Tiriti o Waitangi and Te Pūkenga. For example, there was strong support for the principle that Te Tiriti o Waitangi should underpin the entire operating model of Te Pūkenga. Many thought that the operating model did not go far enough in this regard.
  • There was a desire for the operating model to clearly set out the commitment to regional decision-making included in the organisation's Charter. More clarity about the regional relationships was requested.

As well as further refining the operating model, it is also important to understand how Te Pūkenga will monitor and report on its performance.

This is a challenging and complex task that needs a deep understanding of what is relevant at the whole-of-sector level and to the communities that make up the sector. These communities include Māori and Pasifika learners, disabled learners, and staff and learners in regional New Zealand.

To be effective at a community level, it is important to understand what needs to be measured and how that is to be reported. To develop effective measures and reporting systems at this level, stakeholder engagement will be critical.

Ultimately, Te Pūkenga needs to decide what dialogue about its performance it will want to engage in at a community level. Different communities may have different expectations.

There is a real opportunity for Te Pūkenga to build a new and meaningful approach to engaging with the communities it serves. Part of that involves reporting on its performance to those communities.

The Commission produces quarterly monitoring reports on Te Pūkenga for the Minister of Education. Its report for the quarter ended 30 June 2021 says that Te Pūkenga still has not delivered a "detailed, integrated roadmap for its transformation programme – an issue we have raised in our previous two monitoring reports".

The report also says that, at a recent update of its operating model to the Reform of Vocational Education Programme Board, Board members stated that it is "not clear from the information presented how Te Pūkenga plans to deliver an integrated model for work-based learning".10

We understand that Te Pūkenga provided the Minister of Education with an integrated work plan, a critical path, and an update on its progress with the operating model in December 2021.

We also understand that the Commission has continued to report to the Minister of Education on the progress Te Pūkenga is making in the context of the reform programme. We expect this progress to be more visible to the public and Parliament in future.

Improving the financial sustainability of the Te Pūkenga subsidiary companies

Many of the subsidiary companies have been experiencing increasing financial difficulty for several years. Although the net deficit in 2020 reduced compared to the previous year, this was because the Government decided not to recover funding from tertiary education institutions that under-delivered in 2020 because of the Covid-19 pandemic.

At the end of 2020, the overall net deficit for the subsidiary companies was $27 million. Nine of the 16 subsidiary companies ended the year in deficit.11 If the Government had required that the money be returned on a funded delivery basis, the Commission would have recovered $49 million. This would have meant an overall deficit of $76 million.12

In July 2020, the Minister of Education outlined his expectations of Te Pūkenga. He said, "it is the New Zealand Institute of Skills and Technology's responsibility to manage and integrate its network, improving efficiency and effectiveness across its functions, and I expect decisive action to be taken where required".13

The Commission's 30 June 2021 quarterly monitoring report on Te Pūkenga raises concerns about the lack of work done to improve the subsidiary companies' financial sustainability before they are fully integrated with Te Pūkenga in December 2022.

The report says that this work should include addressing areas of the network that are performing poorly from a financial perspective. The Commission expects Te Pūkenga to put in place a financial management plan or strategy for Te Pūkenga as a whole and for those subsidiary companies under the most financial stress. It also expects Te Pūkenga to regularly report against that plan.

In response to questions raised by the Education and Workforce Committee during its 2020 Annual Review hearing in October 2021, the Chief Executive of Te Pūkenga said that:

part of the rationale of the reform of the tertiary education and the vocational education and training part of the system was to recognise that the previous financial arrangements were not sustainable and we are looking forward to the introduction of the unified funding system in 2023 to support the arrangements and the priorities that Te Pūkenga has.

We have raised the issue of financial sustainability for several years, including in previous reports on the tertiary education sector. It is important that Te Pūkenga address the underlying problems with financial viability within its network. The lack of a detailed plan about how it will do this is concerning.

Performance reporting

Effective performance reporting is essential to building and maintaining trust and confidence in the public sector and, arguably, its ongoing social licence to operate. As we mentioned in our recent report on performance reporting, if the Government wants to maintain the confidence of Parliament and the public, the public sector needs to significantly improve its performance reporting.14

The reforms are making fundamental and complex changes to the tertiary education sector. However, while these changes are being implemented, tertiary education needs to continue to be delivered as usual. Meaningful performance measures are important to assessing whether the reforms and tertiary education institutions' usual operations deliver the Government's intended outcomes.

It is important that Te Pūkenga is clear about the performance measures within its performance framework. This will allow Parliament and the public to clearly see how it is contributing to outcomes for New Zealand.

Under the Crown Entities Act 2004, Te Pūkenga must prepare a statement of intent and a statement of performance expectations. Te Pūkenga must report its progress against its strategic intentions and its performance against the statement of performance expectations in its annual report each year.

Te Pūkenga did not have a statement of intent or statement of performance expectations for 2020. These are both important to establish the basis for year-end performance reporting. However, Te Pūkenga did have a transitional statement of intent and statement of performance expectations for 2021.

Instead of a performance framework from the statement of intent and statement of performance expectations, Te Pūkenga developed parent reporting measures and targets from its transitional plan and reported against those in 2020. For the group, it reported against selected educational performance indicators that the Commission provided.

Based on the work that Te Pūkenga completed and the content of its annual report, we concluded that its performance reporting met the basic standard required.

However, as part of our audit, we signalled to Te Pūkenga that it needed to make significant improvements to enable better reporting on its performance in the future. There is considerable opportunity for Te Pūkenga to improve its accountability to Parliament and to the various communities Te Pūkenga serves throughout New Zealand.

After its Annual Review hearing in October 2021, the Education and Workforce Committee asked additional questions about the Te Pūkenga performance framework. In response, Te Pūkenga said that it had made significant progress on its monitoring and reporting processes.

We are currently completing our 2021 audit of Te Pūkenga and will assess its performance framework and measures as part of this work. As is normal, we will report our audit results to Te Pūkenga, the Commission, the Minister of Education, and the Education and Workforce Committee.

In its Annual report for the year ended 30 June 2021, the Commission said that it has begun developing a performance and monitoring framework for workforce development councils and an engagement model to support new and transitioning institutions (including Te Pūkenga).

The intention is that the performance and monitoring framework and engagement framework will enable Commission staff to work closely with the new institutions to ensure that they are carrying out their legislative functions in a way that gives effect to the reforms' intended outcomes.

Given its involvement in leading the overall reform programme, it is important that the Commission prioritise finalising the performance and monitoring framework for workforce development councils as soon as possible and that it continue to closely monitor the performance of Te Pūkenga.

Unified funding system

The reforms include developing a unified funding system for vocational education. The purpose of the unified funding system is to encourage work-based learning and address national and regional skills needs.

The unified funding system has three components.

The delivery component funds tertiary education institutions based on the number of learners they have. Funding rates are calculated based on the subject and the mode of delivery.

Differentiating funding by mode of delivery will be a new feature of the system. It incentivises tertiary education institutions to support learners to transition to work-based learning and build more work-integrated learning pathways.

This component accounts for about 84% of the funding in the unified funding system.

The learner component incentivises tertiary education institutions to support the unique needs of all their learners. This component is key to meeting the needs of learners who the education system has traditionally underserved.

Tertiary education institutions will be rewarded for improving their learners' success. This component accounts for about 8% of the unified funding system. It was less than 1% of vocational education training funding under the previous system.

The strategic component aims to increase how quickly the tertiary education system can respond to national and regional priorities and regional labour market demand.

The workforce development councils and regional skills leadership groups will identify priorities that 50% of this component will respond to. This will also support Te Pūkenga to build a sustainable national network of provision.

The remaining 50% of this component will support the system to innovate and adapt to meet the changing needs of the labour market.

In total, this component accounts for about 8% of the unified funding system.

A December 2021 Cabinet paper said that the unified funding system will take effect from 1 January 2023.15 The paper also said that immediate action will hasten the behavioural changes that the Government requires tertiary education institutions to make and that the Minister of Education considers that most subsectors are well placed to react accordingly.

Officials' preliminary assessment of the impacts on subsectors are as follows:

  • Te Pūkenga is well positioned. It is expected to gain a large portion of work-based training from transitional industry training organisations.
  • Universities will experience small funding decreases, but officials believe that they can manage this within their overall funding allocations.
  • Wānanga funding will increase slightly.
  • A large amount of private training establishments will see decreases in their volume-based funding allocations.

Given the significant changes the unified funding system will incentivise, it is important that the Commission closely monitor its implementation. This includes ensuring that it has the capability to monitor any performance expectations created by the new funding system.

The Cabinet paper also said that the unified means that the Commission will have "significantly heightened" performance expectations of all tertiary education institutions. We intend to monitor how the unified funding system is implemented, including what measures there are to ensure that it delivers the intended benefits to learners and employers.

Unified vocational education system

One of the main outcomes of the reforms is the creation of a unified vocational education system. This means that both the new and existing organisations and advisory bodies in the system will need to work together in a cohesive and consistent way.

More than 10 organisations or advisory bodies have been created since April 2020, and each has a fundamental role to play in creating a learner-centred and unified system.

A unified vocational education system needs to:

  • take account of the unique needs of all learners, including those who have been traditionally underserved, such as Māori, Pasifika, and disabled learners;
  • be relevant to employers' changing needs;
  • be collaborative, innovative, and sustainable for all regions; and
  • uphold and improve Māori–Crown partnerships.16

Te Pūkenga needs to continue its regular engagements with organisations throughout the vocational education system to ensure system-wide cohesion and network collaboration.

After Te Pūkenga fully integrates its subsidiary companies, it will need to build and strengthen its regional connections so that it can deliver the required skills and workforce to regions throughout New Zealand.

Delivering tertiary education to all regions in a way that is collaborative, flexible, innovative, and sustainable is key to the reforms' success. Therefore, it is important that Te Pūkenga retain a high level of regional focus and local accountability.

Addressing disparities

A key focus of the reform programme is addressing the disparities that exist throughout the vocational education system. Because these disparities are not limited to just the vocational education part of the system, strategies that capture all tertiary education institutions and tertiary education and training – not just vocational – have been developed.

Te Taumata Aronui is an advisory group that was formed in 2019 to ensure that the tertiary education system reflects the Government's commitment to Māori–Crown partnerships. It provides independent recommendations and advice to Ministers and officials.

The vocational education reforms' Summary of change decisions said that one of the first tasks for the advisory group was to provide advice on how the reforms could improve outcomes for Māori learners.

The Summary of change decisions also said that:17

we heard from Pacific learners about the importance of a culturally competent system. Teaching and learning needs to understand different Pacific identities, languages, cultures and values. It needs to recognise the importance of family and community life.
We heard that disabled people are not well-served by the current system, partly because they are often not well-supported to succeed in employment. More effective support for transitions from school to vocational education and work is needed, as well as partnership with disabled learners in setting the new system up.

We have previously drawn Parliament's attention to deteriorating tertiary education outcomes for Māori and Pasifika students compared to all students in our briefings to the Education and Workforce Committee.18

Under the Third Article of Te Tiriti o Waitangi, the Crown has an obligation to ensure equitable outcomes for Māori as learners and to ensure that all learners – especially those currently underserved by the system – are able to succeed. The Oritetanga Learner Success approach is how the Commission is giving effect to this obligation.

The Oritetanga Learner Success approach provides tertiary education institutions with an approach for putting learners at the heart of what they do. It is designed to address biases and disparities that have led to specific learner groups being underserved.

In addition, the companion strategies Ka Hikitia and Tau Mai Te Reo (both of which the Ministry of Education leads) set out respectively the strategic direction for Māori education and Māori language in education. They describe the actions that are needed in the tertiary sector to raise Māori educational success.

The key measures for Ka Hikitia are that Māori learners are engaged and achieving excellent education outcomes and that Māori whānau, hapū, and iwi are active partners with education services in defining and supporting excellent outcomes for Māori learners.19

Tau Mai Te Reo – the Māori language in education strategy – aims to grow te reo Māori through education and growing education through te reo Māori to protect and promote the Māori language for future generations.20

The Ministry of Education leads the Action plan for Pacific education 2020-2030.21 It focuses on a vision that diverse Pasifika learners and their families feel safe, valued, and equipped to achieve their education aspirations.

The action plan outlines the actions for achieving this vision that the Government has committed to and signals how early learning services, schools, and tertiary education institutions can achieve change for Pasifika learners and their families.

The action plan includes five key focus areas for change, including confronting systemic racism and discrimination in education and enabling every teacher, leader, and educational professional to take co-ordinated action to become culturally competent with diverse Pasifika learners.

The Commission's Annual report for the year ended 30 June 2019 set a goal for participation and completion rates for Māori and Pasifika students to be equal with other students in the tertiary education system by 2022 and that it would deliver comparable post-study outcomes for graduates over time.

According to the Commission's Annual report for the year ended 30 June 2021, the 2022 goals for Māori and Pasifika student achievement are unlikely to be achieved. Overall, the gap between the achievement outcomes of Māori and Pasifika students and those of all students has increased.

In October 2021, the Commission was quoted in the media as saying that past attempts at tackling disparities had failed because they were based on isolated interventions.22

Figures 6 and 7 show the differences in the cohort-based qualification completion rate and course completion rate between Māori students, Pasifika students, and non-Māori and non-Pasifika students at universities, wānanga, and institutes of technology and polytechnics during the last five years.23

The 2021 figures are forecasts only, and the final numbers will not be confirmed until May 2022.

Figure 6
Course completion rate for institutes of technology and polytechnics, universities, and wānanga, from 2017 to 2021

Institutes of technology and polytechnics

Demographic 2017 2018 2019 2020 2021
Māori 73% 71% 72% 71% 70%
Pasifika 72% 71% 72% 71% 68%
Non-Māori and non-Pasifika 85% 84% 85% 84% 81%


Demographic 2017 2018 2019 2020 2021
Māori 81% 81% 81% 83% 80%
Pasifika 73% 73% 73% 76% 72%
Non-Māori and non-Pasifika 89% 89% 89% 91% 88%


Demographic 2017 2018 2019 2020 2021
Māori 76% 70% 70% 64% 63%
Pasifika 71% 71% 69% 64% 66%
Non-Māori and non-Pasifika 76% 74% 76% 73% 68%

Source: Tertiary Education Commission, Single Data Return.

Figure 7
Cohort-based qualification completion rate for institutes of technology and polytechnics, universities, and wānanga, from 2017 to 2021

Institutes of technology and polytechnics

Demographic 2017 2018 2019 2020 2021
Māori 51% 50% 50% 50% 48%
Pasifika 52% 49% 51% 52% 47%
Non-Māori and non-Pasifika 57% 58% 60% 61% 60%


Demographic 2017 2018 2019 2020 2021
Māori 53% 53% 52% 53% 54%
Pasifika 50% 46% 47% 52% 48%
Non-Māori and non-Pasifika 66% 67% 67% 69% 69%


Demographic 2017 2018 2019 2020 2021
Māori 52% 49% 64% 66% 61%
Pasifika 55% 47% 67% 62% 61%
Non-Māori and non-Pasifika 49% 49% 69% 63% 57%

Source: Tertiary Education Commission, Single Data Return.

In the Commission's Annual report for the year ended 30 June 2021, it said that it wants to see participation and completion rates for Māori and Pasifika students that are equal to those of other students.

In September 2021, the Commission announced that it would introduce disability action plans in its 2022 investment round as part of the Government's move to ensure that tertiary education institutions meet their responsibilities under the United Nations' Convention on the Rights of Persons with Disabilities.

The purpose of the disability action plans is to ensure that tertiary education institution practices:

  • avoid discriminating against disabled learners; and
  • provide disabled learners with better outcomes from their education.

The Commission said that understanding all learners' needs and aspirations is fundamental to the "learner success" approach. The work done to develop and implement the disability action plans will play a critical role in tertiary education institutions fully understanding disabled learners' needs.

The Kia Ōrite Toolkit is a New Zealand code of practice intended to achieve an inclusive and equitable tertiary education environment for disabled learners. The University of Otago co-ordinated people throughout the tertiary education sector to develop the toolkit.

The Commission expects all tertiary education institutions to show clear evidence that they are measuring their progress against the Kia Ōrite Toolkit. This will be essential in determining whether tertiary education institutions are delivering on their commitment to address disabled students' needs.

All tertiary education institutions provide support for disabled students. This support includes note taking, mentoring, equipment, accessibility, assistive technology, and transcription.

Most tertiary education institutions' websites outline their commitment to providing equity of access to education for disabled students. However, it is difficult to find feedback on the quality and adequacy of the services provided to disabled students.

It is important that the tertiary education system continue to focus on supporting disabled students. In June 2020, 48.2% of disabled people aged 15-24 years were not in employment, education, or training, compared to 10.6% for non-disabled youth.24

Having the disability action plans as an investment plan requirement in 2022 should help give effect to objective 2 of the tertiary education strategy: barrier-free access. It should also help improve disabled students' learning experience.

It is vital that tertiary education institutions have appropriate performance measures for determining whether they have delivered on commitments to address inequities throughout the tertiary education system.

We will monitor the implementation of the disability action plans and how the Commission measures their effectiveness over time. The new Ministry for Disabled People will be established on 1 July 2022, and we expect that it will want to work closely with the Commission and the tertiary education sector on addressing disparities.

We will watch with interest the Commission's "comprehensive holistic reform of the system" and the impact it has on the inequities experienced by Māori, Pasifika, and disabled students.

3: Kōrero Mātauranga, Summary of change decisions – Reform of vocational education, at

4: For information about the vocational education reform programme, see

5: A list of the key changes in the vocational education reform programme can be found at

6: For information about the transitional industry training organisations, see

7: The operating model of Te Pūkenga describes how the organisation will operate in the future. It outlines what Te Pūkenga will do and how it will be organised to deliver on the intent of the vocational education reforms and its Charter.

8: For information about the proposed operating model of Te Pūkenga, see tepū

9: See Operating Model FAQs at tepū

10: The Tertiary Education Commission (2021), Aide-memoire: Te Pūkenga quarterly monitoring report – June 2021 Quarter, at

11: Office of the Auditor-General (2021), Tertiary education institutions: Main findings from our 2020 audits, at

12: Figures provided by the Tertiary Education Commission in March 2022.

13: Letter from Chris Hipkins to Murray Strong (23 July 2020), Further funding for the New Zealand Institute of Skills and Technology, at tepū

14: Office of the Auditor-General (2021), The problems, progress, and potential of performance reporting, at

20: See Tau Mai Te Reo, the Māori Language in Education Strategy at

15: Cabinet paper (2022), Design of the unified funding system underpinning the Reform of Vocational Education, at

16: See "Minister Hipkins' RoVE update" (2019), at

17: Kōrero Mātauranga, Summary of change decisions – Reform of vocational education, at

18: Office of the Auditor-General (2021), Tertiary Education Commission Annual Review 2019/20, at

19: See Ka Hikitia – Ka Hāpaitia, the Māori Education Strategy, at

21: The Action plan for Pacific education 2020-2030 is available at

22: Radio New Zealand (October 2021), "Tertiary institutions given 10 years to end minority pass rate disparity", at

23: The cohort-based qualification completion rate measures how many learners in a starting cohort go on to complete a qualification at the same level after a given amount of time. This cohort-based approach does not require a learner to complete the qualification that the learner initially enrolled in. The learner is required only to complete a qualification at the same level.

24: Statistics New Zealand (2020), Measuring inequality for disabled New Zealanders.