The polytechnic sector is on the brink of collapse, fighting against low unemployment and a voracious private market. How did things get so bad, and is there a way back? Shane Cowlishaw reports.

Back in 2003, every town with a population greater than 20,000 had its own polytech.

The industry was booming. In 2004, the ITP subsector (short for institutes of technology and polytechnics) boasted 178,000 students, the largest share of the tertiary system.

But today those once-thriving institutions are struggling.

There are now just 16 ITPs, down from a peak of 25 in the 1990s. Those that remain are scrambling to survive by seeking out mergers and cutting costs.

The most vivid example of this spiral is Tai Poutini Polytechnic on the West Coast, which is in such dire straits it has received not one, but two Government bailouts.

The future for its counterparts is not much brighter. A Cabinet paper released after Tai Poutini’s latest bailout noted four out of five ITPs would be in debt by 2022 under the current funding system.

So, how did things get so bad and why have student numbers dropped by a third in the last decade?

There is a multitude of reasons, but a shift away from community and adult education to a focus on young people studying towards their first qualification is one.

Compounded with a move to competitive funding in 2012, this led to ITPs being out-competed on all sides for students by a robust labour market and other tertiary institutions such as universities and private training establishments (PTEs).

ITPs have found themselves barely keeping their heads above water, left with no cash to invest in infrastructure and the modern learning environments demanded by today’s learners.

A roadmap to the future

To find a way forward, two separate yet intrinsically linked pieces of work are underway.

Led by the Tertiary Education Commission (TEC), the ITP Roadmap 2020 project will look at ways to immediately address the crisis facing the sector and report back to the Government on possible solutions.

More broadly, the Ministry of Education is working on a wider review of vocational education that will look at how it is funded and the relationships between providers and industry training organisations.

“You only have to walk into these institutions to see empty classrooms, classrooms that are not really fit for teaching in with equipment that’s not fit to teach with and a lack of staff.”

It’s the former that will be of immediate interest to polytechs, who will be involved but find their future left in the hands of Education Minister Chris Hipkins.

Facing a heavy infrastructure bill in the portfolio, Hipkins is unlikely to simply open the Government’s wallet and stuff ITPs full of money as a stopgap measure.

He has indicated that while funding issues will be considered in the wider review, he favours streamlining the ITP sector and has not ruled out further closures.

While in opposition, Labour’s general preference was to shift more vocational training back from PTEs to the polytech network.

Hipkins told Newsroom he wanted to see strong polytechs in the regions but the industry would be responsible for doing the hard yards itself.

“We’re not going to force the private sector out, they’re going to have to compete with the private sector and my challenge to them is what’s stopping them doing that now and how can we fix that.”

Hipkins believed ITPs had found themselves in an unsustainable position and it was not simply because they lacked funding.

Many were cumbersome and there was massive duplication across different institutions, he said.

“In the polytech sector I’ve never said we should favour the public over the private, but what I have made clear is the private sector has been able to be more nimble and responsive to industry needs and we need to look at why that is. Why is it that they have been able to eat into, quite significantly, the polytechnics’ market share and is that something we want long term?

“Clearly having 16 quite small organisations all with their own systems and processes isn’t a particularly efficient way of running the system. If you look at it there’s a number of programmes, there might be 10 to a dozen variants around the country but they’re all essentially trying to deliver the same educational outcomes.”

Other decisions soon to be announced by the Government will also be closely watched by the sector.

Crucially, the final form of Labour’s restrictions on international student work rights will determine if an important revenue stream dries up for polytechnics.

Pre-election, Labour promised to remove the work rights of sub-degree level international students, both those still studying and those recently graduated.

But Immigration Minister Iain Lees-Galloway’s stance has softened in recent months, and he has refused to commit to the measures.

There has been strong lobbying from international education groups, who have highlighted the potential economic hit of making New Zealand a less attractive destination.

A reduction in overseas students would hammer ITPs, who have to an extent relied on the money they bring in to subsidise a falling domestic roll.

ITP revenue from international students grew from $67 million in 2008 to $162 million in 2015.

A rise in revenue from international students has not made up for a drop in enrolments in the ITP sector.

But international students are not necessarily the silver bullet many people think, according to Tertiary Education Commission CEO Tim Fowler.

While the students paid high fees, once expenses such as marketing and an agent’s slice of the pie were deducted they were often not much more valuable than a domestic enrolment.

Fowler said the main problem was the huge drop in student numbers, something any business would struggle to deal with.

Funding was an important issue to consider, but there had actually been an increase over the long term, he said.

“There must be something more fundamental at play here if one-third of the students who used to study in the system no longer want to.

“Throwing more money at a system that is producing far fewer students is just not the answer, and I think the sector gets that.”

Great, but we still need more money

Most ITPs – and the union representing their staff – welcome the review and admit things have to change.

The largest polytechnic in the country, the Manukau Institute of Technology (MIT), lost $7m last year after restructuring and haemorrhaging students.

Its chief executive Gus Gilmore said despite its size it needed more scale to generate efficiencies and was in talks with other institutes about how to do that.

While some ITPs were doing good work, others had not moved quickly enough to adapt, and there were still too many, he said.

“This country does not need 16 ITPs. There are eight universities; I can’t comment whether that’s the right number.”

A funding shortfall could not be dismissed, however, and it had contributed to the sorry state of things, Gilmore said.

“Each year labour rates were going up, the CPI has been one to two percent but there has been no recognition of increasing costs and that’s put massive pressure on the ITP sector.”

Gilmore said that with projects like KiwiBuild underway there was a desperate need for money to be pumped into the trades and vocational education.

Tertiary Education Union national secretary Sandra Grey agreed many ITPs had been slow off the mark but said the industry had struggled as it increased marketing budgets to compete with private providers.

“You only have to walk into these institutions to see empty classrooms, classrooms that are not really fit for teaching in with equipment that’s not fit to teach with and a lack of staff.”

Both significant investment, and some hard conversations about how ITPs were structured, needed to be had, Grey said.

“We can’t let the market determine this, we have to strategically say ‘should there be a polytechnic in Northland, it’s a community that needs training, it needs these things, are we prepared to invest the money?’”

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