ANALYSIS: NZ Government Tackles Debt-Ridden Vocational Training Sector

NZ PM Christopher Luxon with Tertairy Education Minister Penny Simmonds and Governor General Dame Cindy Kiro. Courtesy of NZ National Party

News Analysis

All 16 of New Zealand’s polytechnics (vocational education providers) are running huge deficits and those in the North Island risk failing, figures leaked to Newshub have revealed.

The worst are both in Wellington: Whitireia and WelTec, which are $28 million (US$17.4 million) in deficit. But many others are almost as broke: the Waikato Institute of Technology is $22.5 million over budget, The Open Polytechnic is facing a $22 million deficit, and Toi Ohomai (which covers Rotorua, Taupō, Tauranga, Tokoroa, and Whakatāne) has losses of nearly $21 million.

The deficit across all 16 polytechnics is more than $185 million.

The previous government’s solution was to merge all the institutes into Te Pūkenga, a single, nationwide tertiary education provider, which was underway when the country went to an election.

The new Coalition government is now undoing the change part-way through the process, telling those building the new entity to turn around and dismantle it.

According to a briefing prepared in November, Te Pūkenga was expected to lose around $93 million this year; comprised of $100 million revenue from workplace learning, the $185 million loss from the 16 polytechnics, and costs of its head office.

But it also pointed out that the institute was about to make savings from restructuring and had a two-year plan for moving from high to low financial risk.

Tertiary Education and Skills Minister Penny Simmonds said earlier that she had told the council of Te Pūkenga to cease any activities inconsistent with disestablishment, including recruitment or staff restructuring.

No Leaders Left

A source within the sector has alleged that “none of the institutes have leadership anymore” and “no one has a CEO, CFO, CIO, ICT director, head of HR, head of facilities, or many of the senior academic roles anymore,” leaving open the question of who will carry out the government’s plan.

Te Pūkenga Chief Executive Peter Winder has already been made redundant, Chairman Murray Strong resigned last week, and the deputy chief executive responsible for the academic centre and learning systems, Megan Gibbons, has also resigned.

The minister was head of the Southern Institute of Technology when the creation of Te Pūkenga began. During the campaign, Ms. Simmonds said that it had been her motivation for entering politics.

Leak Confirmed as Correct

Ms. Simmonds confirmed that the leaked figures were “absolutely correct” and said, “That is a result mainly of the unified funding scheme that the previous government brought in.”

The government is planning on giving the polytechnics more funding—how much is yet to be revealed—and the minister said, “They will also be working very hard over the next year to get international students back.”

In an earlier statement, Ms. Simmonds said she had asked officials for advice on “ensuring financial stability now, and in the future, and restoring regional decision-making for local institutions to ensure they can better respond to the education needs of their communities.”

It is understood she plans to have eight to 10 institutions rather than the previous 16, but uncertainty over that number is fueling concern and leading to widespread resignations.

And some institute staff have pointed out that returning to locally managed polytechnics and reinstating local managers would bring significant cost increases.

The disestablishment also leaves questions over the future of several initiatives, including a major investment in ageing IT infrastructure, funded by a $220 million Crown loan approved by the previous government.

Te Pūkenga had been working towards building a national network for vocational skills and training after inheriting 25 different systems from the polytechnics. It had also partnered with Major IT system providers such as Microsoft and AWS to develop ICT skills and career opportunities.

Deal Signed with China

Te Pūkenga had also entered into an “arrangement” with the China Center for International People-to-People Exchange (CCIPE) which would have included “talent cultivation, cross credits, student exchanges and academic visits.”

The Memorandum of Arrangement, which was signed at the NZ Parliament, established the New Zealand-China Vocational Cooperation and Development Alliance, “a framework for discussing and enhancing further cooperation between vocational training sectors in both countries” and planned on doing collaborative research.

Te Pūkenga Deputy Chief Executive Andrew McSweeney (R), and Director General, Department of International Cooperation and Exchange, Ministry of Education, Liu Jin (L), sign an Memorandum of Understanding at the New Zealand Parliament in August 2023. Courtesy of Te Pūkenga

The various New Zealand polytechnics hold 66 active partnerships with education providers in China: including between Ara and Shenyang Jianzhu University, Jinhua Polytechnic and Wintec; Hunan University of Technology and NMIT; Qi Lu University of Technology and EIT; Yiwu Industrial and Commercial College and NorthTec; and Shandong University of Finance and Economics and Unitec.

Te Pūkenga’s Deputy Chief Executive—Learner & Employer Experience and Attraction—Andrew McSweeney said at the signing, “Collectively, there is a lot of experience and understanding in the network [of polyetchnics] of what it takes to care for and deliver successfully to Chinese students both as international learners and in their home country and we are excited to take that to the next level with the scale we now have as Te Pūkenga.”

With the entity about to disappear, and the minister seemingly planning to merge the polytechnics into larger entities, the future of these agreements adds another layer of uncertainty.