The government will merge the 16 polytechnics into a single institute next year and replace all 11 industry training organisations within three years as part of a total overhaul of the vocational education system.
The polytechnic sector has suffered from falling enrolments in recent years and some institutes required multi-million-dollar government loans and bailouts. Photo: 123RF
Education Minister Chris Hipkins said the new institute would be created in April 2020 and would be a new kind of organisation providing both on and off-the-job learning.
He said the head office would not be in Auckland nor Wellington and it would be known provisionally as the New Zealand Institute of Skills and Technology.
Mr Hipkins said the institute would take over responsibility for workplace training and apprenticeships from industry training organisations over the next two or three years.
He said the Industry Training Organisations (ITOs) would be replaced by four to seven workforce development councils that would be set up by 2022 to influence vocational education and training.
The changes confirmed options for overhauling the vocational education and training the government had consulted on earlier in the year.
ITOs lobbied strongly against the changes, arguing they would wreck a system that was currently working well and that they were being made solely to prop up failing polytechnics.
Polytechnics were more positive about the proposals, but some regional institutions were worried about losing their autonomy to a national organisation.
The polytechnic sector had suffered from falling enrolments in recent years and some institutes required multi-million-dollar government loans and bailouts.
Mr Hipkins said the changes were needed because the current vocational education system was not working well enough.
"Nearly nine out of 10 of our businesses are not training through industry training. Yet at the same time, 71 percent of employers surveyed say there is, or will soon be, a skills shortage in their industry area," he said.
"The plain truth is that while there are some bright spots, the current system is not set up to produce skilled people at the scale we need."
Mr Hipkins said the government would set up regional groups to advise on local interests and skill needs.
It would also unify the currently separate funding systems for subsidising on and off-the-job training.
Existing polytechnic councils will be disestablished
A summary document said the national institute would standardise teaching programmes among its 16 campuses and enable them to share resources and support each other.
It said the institute would be set up as a national body with 16 subsidiaries for up to two years as a transitional measure. Existing polytechnic councils would be disestablished and replaced with subsidiary boards appointed by a national council.
The campuses would have sufficient financial delegations to make decisions on behalf of their own communities and would have nearly 140,000 students in total between them.
The document said the changes would give industry greater control over aspects of vocational education through new Workforce Development Councils (WDCs).
It said the councils would decide if courses were fit for purpose or whether they should be taught on-the-job, on campus, or online.
"Unless a programme has the WDC's confidence - effectively, industry's confidence - it won't be approved and won't be funded," the report said.
"They will also provide advice to the Tertiary Education Commission on its funding decisions more generally and will get to determine the mix of training in their industries."
The report said the councils could also require courses to have a final external exam to ensure all graduates met the same standard.
It said wānanga would remain outside the councils' standard-setting, except for situations where they were supporting on-the-job learning.
The report said removing responsibility for on-the-job training from ITOs would break down barriers between classroom training and training in the workplace.
It said workplace training would be provided by the new national institute and by private providers and wānanga.
Training organisations mixed reactions
Building and Construction Industry Training Organisation chief executive Warwick Quinn said the government's announcement was disappointing.
"The sector was very clear in its view that the status quo was performing well and should be maintained. They are concerned the reforms have the potential to undermine the confidence of construction employers and apprentices at a time when construction is booming and skills are more critical than ever," he said.
Taranaki's Western Institute of Technology chief executive John Snook said the changes were "the most significant move in the sector for a generation" and would have an "extraordinary flow-on effect".
Mr Snook said the government had done what polytechnics should have done themselves years ago and the reforms would be good for Taranaki.