Regional polytechnics face a grim future with many teetering on the edge of financial failure.
The dire warning was included in the Tertiary Education Commission’s (TEC) briefing to its incoming Minister Chris Hipkins. Briefings to all new Ministers were released in a lunchtime dump on Thursday.
While most Institutes of Technology and Polytechnics (ITPs) were making “ends meet”, an over-reliance on international education was the only thing keeping many providers afloat and many were vulnerable to an economic shock, the TEC said.
“Many ITPs – especially outside the big metropolitan centres – have no buffer against a downturn in revenue or increase in costs, and little or no money to invest in capital works or operational improvements.
“Over time, unless something changes, these ITPs will experience an event that tips them over the edge, or will gradually become less capable of delivering high-quality and attractive offerings to students.”
The situation appears particular bad for regional institutions, who lack the economies of scale of larger organisations and struggle to invest in upgrades and innovations.
“That 17-year-old studying in Timaru, that’s going to kill him if he has to travel to Christchurch to study.”
An illustration of the problems facing such education providers is Tai Poutini Polytechnic, who last week was given the lowest ever assessment ranking by the New Zealand Qualifications Authority.
The TEC briefing singles out Tai Poutini, which received a $3.6 million bailout in April, as a particular concern, but also said there were other institutions where there were serious risks.
Sandra Grey, national president of the Tertiary Education Union, agreed ITPs were in perilous situation and unless something was done immediately many would fail.
About 10 of the 16 institutions that fell into the category had or were about to cut costs, close small campuses or downsized staffing levels.
Grey believed the funding model was the main problem, with not enough emphasis given to the unique benefits rural institutions had on their communities.
“That 17-year-old studying in Timaru, that’s going to kill him if he has to travel to Christchurch to study.
“Most of the time when people study in a region they stay and work there. The problem is not an easy one to fix, but something needs to be done quickly or some of these (ITPs) will fall over.”
Hipkins said it was not sustainable for ITPs to rely on international education and confirmed there were several that were in some difficulty.
“It is concerning, I think we have a range of viability issues with the polytechnic and institute of technology sector as a whole and again we’re working through that. There’s a degree of urgency in some cases because their financial viability is precarious and others we’ve got a bit more time.”
A diplomatic risk
A separate briefing from Education New Zealand (ENZ), the department that overseas international education, issued a warning that planned tinkering to student work rights could cause serious damage.
The industry was in a “rebalancing phase”, it said, after a surge in lower value students from India led to high visa decline rates, fraud, and migrant abuse.
Law changes and a crackdown on poor providers had lessened the problem and the aim was to move from a volume industry to one of quality.
But the briefing warned that the ability to work both during and after study was an important factor in some student’s choice of study destination and they would compare New Zealand’s settings to competitor countries.
During the election, Labour campaigned on scrapping the work rights of international students studying below bachelor level and Immigration Minister Iain Lees-Galloway confirmed he would push forward with the move in a recent interview with Newsroom.
ENZ, however, said further changes to immigration settings would have impacts on the industry.
“A reduction in the number of students (even if offset by an increase in overall value through a higher average spend per student here) could have a detrimental financial impact on some providers (including state-owned institutions) and impact New Zealand’s diplomacy and labour market, including the number of jobs supported by the industry.”
Hipkins acknowledged that the Government still planned to make the changes, but would work through any concerns officials raised beforehand.
“We’ve said that we’re working through that carefully, we haven’t made any decisions in that space as a Government. Obviously, we have a manifesto we put out prior to the election, that’s not in our 100 day plan.”
