Six months after ordering Te Pūkenga to stop work, the government has told it to resume cost-cutting and asset sales at its polytechnics.
In a letter of expectations sent on 20 May, Tertiary Education Minister Penny Simmonds said some of the polytechnics were not financially sustainable.
The Tertiary Education Union told RNZ the directive would create more stress and uncertainty for under-pressure staff.
Union assistant secretary Daniel Benson-Guiu said it was very unusual for the minister to send a second letter of expectations to the institute and it appeared to contradict some of the government's initial instructions.
"The second letter is telling and concerning to our members," he said.
He said staff had already endured years of cuts and attrition and it was hard to see where further cost-savings would come from.
"The idea of more cuts isn't just unpalatable, it's actually really hard for our membership to even consider where those cuts would come from. This is an elastic band that's been stretched and stretched and stretched and there's no more stretch left."
Benson-Guiu said staff should be actively involved in discussions about the polytechnics' future.
He said people in every part of the country should have access to consistent, high-quality education and training at their local polytechnic.
Simmonds' letter said she expected Te Pūkenga to devolve as much decision-making as possible to the regions, while continuing to provide education and training, and it should also work with the government on reforming the sector.
"However, in my work with officials on designing the future of the vocational education system, the extent of the financial challenges facing some of Te Pūkenga's former institute of technology and polytechnic (ITP) business divisions, and therefore the sustainability of the network as a whole, has become clear," the letter said.
"My recent discussions with you have also highlighted that Te Pūkenga has put on hold some plans to improve the financial sustainability of the network until the Government has taken decisions on the future of the system."
Simmonds said: "It is important that Te Pūkenga takes whatever actions it considers necessary to improve the financial performance of the network as a whole, through ensuring each of the individual business divisions can become financially sustainable.
"Given that many of the former ITP business divisions are currently not financially sustainable, urgent work is needed to preserve the viability of regional provision. While Te Pūkenga must be guided by its statutory functions and charter, I expect the council to consider all options available to it and I am aware that some difficult choices may need to be made to right-size operations and their associated capital assets. For some business divisions, this may require significant change to how they operate and deliver into their communities."
Simmonds told RNZ in a statement that parts of the polytechnic sector had been in financial distress for close to a decade.
"Te Pūkenga has failed to address this and failed to establish a pathway to financial sustainability. It has also led to a blow out in costs," she said.