Consultation on what the operating model would look like for the new polytechnic entity Te Pūkenga was supposed to begin early next week but has been deferred while financial woes are worked through.

Te Pūkenga was born out of the government’s Reform of Vocational Education programme which aimed to improve education outcomes for students by working more closely with the sectors they were training in.

It was tasked with bringing together 16 Institutes of Technology and Polytechnics and up to nine Industry Training Organisations, the equivalent of about 200,000 students and 8,000 staff, by January 2023. 

But a May memo from the Tertiary Education Commission to Education Minister Chris Hipkins outlined a number of concerns it had with Te Pūkenga’s progress, including its forecast $110 million deficit for this year – double what was originally budgeted.

Te Pūkenga acting chief executive Peter Winder told staff this week the concerns raised by the minister and commission “are real”.

“We began the year with a significant budgeted deficit. With far lower domestic enrolments than budgeted across campus-based learning, we now face an even larger deficit for the current financial year. Together we need to urgently consider how we address the deficit, both in the second half of 2022 and as we transition into a unified network next year.”

“We have now decided to postpone the consultation period. This is to provide time for a focused reset that enables us to address our financial position and the concerns that have been raised.”

It is not just finances. Concerns remain about what exactly will be delivered on day one, what the business case will look like to support that, and what it all means for staff.

Winder said: “I met with Te Pūkenga [leadership] yesterday. We have formulated and are now refining an immediate action plan to address the situation that we face. The action plan will be considered by the Transformation Committee on Thursday and the Te Pūkenga Council on Tuesday of next week.

“We expect to be able to provide a further update on the timing of consultation following the Council meeting.” 

Tertiary Education Union national president Tina Smith said staff had been anxious to know more about the operational make-up of their new workplace, having only had a high-level explanation provided last year.

“The uncertainty has already caused a number of people to leave the sector.”

She said the delay would make things “tight” to get the entity ready for takeover but any reduction in quality or quantity of consultation would be unacceptable.

She said she would be “horrified” if there were frontline redundancies as a way to claw back cash in the meantime. 

“They can’t actually get that done in time to do the full transition on 1 January as planned. It is just not possible to be able to do that.” – Penny Simmonds, National Party tertiary spokesperson

National Party tertiary education spokesperson and former Southern Institute of Technology chief executive Penny Simmonds said the delay would scupper plans to have the entity ready by January 1.

“It was [supposed to be] finalised in September and then any redundancies that had to occur would happen between then and December.

She said the financial deficit was already locked in at $110m – if not more – and the only way to make that back between now and year-end would be through redundancies.

“It’s going to get more of a mess because they are going to try and please the minister by pulling back this deficit so they’re going to have to go through this redundancy process with staff and that can’t be done in anything less than three months.

“Then if they start their consultation process on the operating model, they can’t actually get that done in time to do the full transition on 1 January as planned. It is just not possible to be able to do that.”

Winder would not say if he was confident things would be ready by the implementation date.

“The minister has made his expectations very clear. We have a lot of work to do. The best way to do that is to roll our sleeves up and get stuck in which is precisely what we are doing.”

Hipkins also stood by the date, saying the expectation on Te Pūkenga was clear.

“I know they are working hard to achieve the outcomes we all want.

“It’s a large and complex transition, and TEC and the Ministry of Education have been keeping a very close eye on it, as you’d expect with a project of this kind.”

What went wrong

Tina Smith said before the proposal to merge there had been “major problems”.

“There were some real duplications across the system and the funding model didn’t work.

“So TEU got behind the changes… it seemed sensible.”

Simmonds said while she agreed there were funding issues and aspects that could have been centralised, overall there was no need for the merger and it would have been better to look at the “six or seven” polytechnics that were struggling.

“What should have happened was sort out the polytechnics that were financially poor performing, get the ratios and things right so they’re performing and see if there’s still some sort of financial deficit… look at the ones that are too small and consider other operating models for them.

“There should have been a sequence of events to get to sensible centralisation of things that were going to bring about efficiencies, but there was no modelling done, there was no certainty of what centralisation was going to bring to the organisation in terms of efficiencies or effectiveness.”

A strategic review of the programme undertaken in February found unless there was “a clear intervention of additional resources with an appropriate mandate”, the entity would not be ready.

The review made seven recommendations, with the TEC memo noting work on three were well underway, but further work was needed on the others.

In a note made by Hipkins on the memo, he said the new organisational structure and a lack of planned rationalisation to address financial performance was his “number one area of concern”.

Smith said the reforms were also being “undermined” by some polytechnics and to some extent the TEC.

“There’s 14 subsidiary boards and within that you have some that realise change is needed, but others struggle because they don’t want to lose their empire.”

She said TEC’s plan for a unified funding model, which would come in at the same time Te Pūkenga took over, was flawed because it was volume-based and because of lower enrolment predictions, staff cuts would ensue. 

“This is the worst time to cut staff… staff are the people who know the sector, they are the experts on what is quite a complicated mix of professions, industry and student needs.

“Any job losses at this time would be disastrous and the current change process needs to be supported and funded to succeed and not undermined for political ends.”

Emma Hatton is a business reporter based in Wellington.

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