Vocational Education overhaul gets majority approval

Laura Walters

Stand First: The Education Minister is working hard to provide certainty as the Government begins its vocational education overhaul. The Government’s biggest reform of the vocational education sector in 25 years was initially met with strong opposition, but a softly-softly approach has brought the majority on board.

Issue on Priority

Education Minister Chris Hipkins named an overhaul of the Vocational Education Sector as a priority soon after coming into Government, due to the long-term challenges of skill shortages, the mismatch between the training provided and the current needs of employers, and a sector that was losing money hand over fist.

Last year alone, the Government pumped $100 million into bailing out the polytechs, and more are on the cusp of needing a state handout.

In February, Hipkins released the proposed plans, which laid out a significant shift in how vocational education – both on-job and off-job training – would be delivered.

Amalgamation of Polytechnics

The main change was the amalgamation of the polytechnics into a single, centralised provider, which would be followed by unifying and simplifying the dual funding system.

At its core, the system would move from one where vocational education is primarily split between eleven industry training organisations (ITOs) supporting work-based training, and 16 institutes of technology (ITPs) delivering provider-based training, to an integrated model where four to seven industry-governed workforce development councils (WDCs) have oversight of all vocational education, which is primarily delivered or supported by a single institution spread across a range of regional campuses.

While some providers, especially those that had been struggling financially, were onboard with the changes, there was a strong opposition.

Resistance and thereafter

Hipkins was slammed by the ITOs and some of the polytechs on his approach to consultation.

As a Minister that’s no stranger to significant reforms – and the resistance that comes with them – Hipkins continued with his plan.

However, he changed his approach to consultation and engagement, making stakeholders feel more a part of the process, and extending the transition timeframe in order not to spook students, staff and employers.

In an unusual move, on Thursday, August 1, 2019, the Minister announced his (largely unchanged) finalised plans via a Facebook livestream from his office. This was followed by a 45-minute Q&A session with the public and students via social media.

Teleconferences with the major trainers and providers had taken place ahead of the public announcement. And a media Q&A session followed later on Thursday afternoon.

It was clear he’d learned his lesson and realised just how important it was to take everyone along for the ride.

Comms change, plans stay the same

As well as the amalgamation of polytechs and the replacement of ITOs with WDCs, the finalised plan includes Centres of Vocational Excellence (CoVEs) at regional campuses to drive innovation, and a Māori Crown Tertiary Education Group – Te Taumata Aronui – will be established to work with education agencies and ministers.

The single institution, with the working title New Zealand Institute of Skills & Technology, will also have a statutory charter to guarantee continued provision in the regions, while Regional Leadership Groups (RLGs) will ensure regional skills needs are met.

The institute will be run by an establishment or transition board.

Overall, the changes are expected to cost between $285 million and $385 million, not including inflation.

Worthwhile investment

So far, the Government has put aside just shy of $200 million in a contingency budget, and Cabinet papers show about $50 million of it is expected to be spent in the first year. The funding will be topped up, as needed.

Finance Minister Grant Robertson said this was a worthwhile investment and he was not concerned about the establishment costs associated with improving the system, and making it more sustainable.

A Treasury regulatory impact statement put the efficiency benefits of the reform at $225 million to $368 million. Accurately putting a dollar figure on the wider benefits was not possible, but in the next 30 years the total benefits relating to employment and earnings could be valued between $1.4 billion and $2 billion.

Slowly but surely

The most noticeable changes to the original plan relate to how the new system will be phased.

There has been a marked effort to ease the uncertainty around the changes through longer phase-in periods, and clear timelines.

“We want to assure you that implementing this change will not be rushed. We have given a great deal of thought to how to minimise disruption, and listened carefully to the concerns of employers, staff and students alike,” Hipkins said.

Any reform of this size and complexity had to be implemented methodically and in stages, he said. Changes would be made with “clear signposts and communication at every stage” for those involved.”

The feedback from those involved was they wanted decisions to be made and announced as soon as possible, so students, staff and employers knew the plan. But they wanted the actual changes slowly phased in, in order to avoid disruption.

Institute and Campuses

The launch of the new institute will now launch in April 2020, and there has been a commitment the Head Office will not be in Auckland or Wellington.

There will be a national network of campuses throughout the country, and for the first two years polytechnics will be subsidiary companies of the core institute.

The transition period for ITOs has also been clarified, with a two to three year phase-in period to move the role of ITOs to training providers. Holding organisations will be formed from ITOs to smooth the transition.

ITOs were one of the strongest opponents to the significant changes proposed in February, saying under the new system they would no longer exist.

At the time, Hipkins said the organisations were being misleading “to the point of being downright dishonest”.

But ITOs have responded to Hipkins’ latest softly-softly approach positively, with most now saying they welcomed the slower and clearer transition plan.

The country’s biggest construction training provider Building and Construction Industry Training Organisation (BCITO) has been against the amalgamation plan since the beginning, and chief executive Warwick Quinn said he was disappointed Hipkins had forged ahead with this.

However, Quinn was pleased the Minister had taken on sector industry views on how to manage the transition, and the Government needed to mitigate risks.

“We cannot afford to throw the baby out with the bathwater and get this wrong. The last thing anybody wants is to look back in five years and wonder what happened to all the apprentices.”

Others, including Canterbury’s Ara Institute, Horticulture NZ and Dairy NZ welcomed the changes, saying they saw them as an opportunity. Meanwhile, Business NZ and the EMA were cautiously optimistic, pointing to the importance of a smooth transition in order to retain confidence.

Question over jobs

On the flipside, National slammed the announcement, with the Party’s Tertiary Education Spokesperson Shane Reti talking about continued uncertainty, and potentially “thousands” of job losses.

The figure he was referring was the 1300 current jobs held by ITO staff. Reti was basing this on the disestablishment of ITOs resulting in all jobs being lost, without taking into account the WDCs, and the creation of new positions.

The problem is that there is no way to verify the number of jobs that will be lost or affected, because the Government has not modelled it. However, Hipkins has been emphatic that job losses were not any part of the motivation for change, and impacts on jobs would be minimal.

Reti said he supported the plans to streamline the funding model, and said the centres of excellence had some merit, but beyond that saw no more benefits or certainty in the new model.

There’s no doubt the sector is overly complicated, and while some businesses and providers have flourished, it’s unsustainable on the whole. All submissions on the Government’s plan recognised the current system has some failings.

It’s too early to say whether this plan will work, and the stakes are high: the single institute presents the risk of a “single point of failure” – if it fails, the system fails.

However, Hipkins has now got his approach right, in terms of engagement and consultation.

Laura Walters Laura Walters is a Senior Political Reporter of Newsroom based in Wellington, covering Justice, Education and Immigration. The above article, which appeared on the Newsroom website has been reproduced here under a Special Agreement.

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Photo Caption:

Education Minister Chris Hipkins (Photo: Lynn Grieveson)

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