It will be some time before the benefits of the institute will be seen after failures to progress work in key areas for two years, the report says. (file photo) Photo: 123rf
Officials approve of recent changes at Te Pūkenga but question marks remain over its financial viability and its core missions, according to a report.
The Tertiary Education Commission's mid-August briefing to Education Minister Chris Hipkins warned that the institute, which will run all of the country's polytechnics and industry training from 2023, was running out of time to get government approval for a robust business case.
The report was the latest in a series showing official doubts about Te Pūkenga's financial situation and its preparations for next year.
It said the institute had made its financial strategy a priority since chief executive Stephen Town took leave and later resigned in the middle of the year.
"While it is pleasing to see this work now being given more prominence, it is well overdue (we have been raising this as a critical issue for over a year), and substantial progress will have to be made quickly," the report said.
"It will take a significant turnaround for Te Pūkenga to return to surplus, let alone a surplus strong enough to fund transformation costs and allow much-needed reinvestment back into the network."
It said the institute was "starting this work from a poor position" and risks included falling enrolments, rising costs, and the flow of international students.
The report said the institute had simplified its planned structure and reduced the changes it expected to make before the end of the year.
It said the changes were a significant improvement that made Te Pūkenga's work programme more achievable but also meant very little would change in the polytechnic and workplace learning sectors.
"While we consider the new transition plan is more achievable, it will likely result in the network largely operating in the same way as previously in the short-term albeit with the head office having greater control to drive change," the report said.
It said integrating polytechnics and industry training organisations into Te Pūkenga earlier than previously planned was a step forward, but "the overall failure of Te Pūkenga to progress key areas of work over the past two years means it will be some time before the key benefits sought from the establishment of Te Pūkenga will be realised".
The report said the commission had been worried about the lack of work on creating an integrated system of on-job, off-job and online learning.
"Te Pūkenga needs a clear plan for how it will move from two separate systems to a single unified model that has a greater focus on work-based learning.
"This work needs to be progressed quickly as it is at the heart of the changes Te Pūkenga needs to make to achieve the desired outcomes of the reforms - acknowledging that that it will take time for the benefits of integration to be realised."
The report said the institute was expected to submit a revised business case in early October, but that left little time for analysis and changes within the timelines for next year's government Budget.
"There is a significant risk that Te Pūkenga cannot develop a robust investment case that meets the needs of ministers within this timeframe," it said.
The report said the commission classed Te Pūkenga's governance and its work on its operating model and business case as high-risk and its confidence in all three areas had declined.
It said enrolments and financial performance remained high-risk areas.
The report said the institute's governing council must hold management to account.
It said governance was reviewed in the first half of the year and the council was implementing some of the recommended changes.
The report said Te Pūkenga was reviewing its courses to reduce duplication and cost.
"This work includes examining programmes that are not viable or where a different delivery approach will be needed," it said.
"Programmes that may not have been viable at an individual ITP [Institutes of
Technology and Polytechnics] level, may be viable in a national, integrated model."
Despite forecasting a large deficit this year, the report said Te Pūkenga was unlikely to use all of the transformation funding it had been given.
Unless the government altered the arrangement, any remaining money would have to be returned to the government at the end of the year.
At the end of August, Te Pūkenga revised its forecast deficit to $63 million, closer to its original budgeted deficit of $59m and an improvement on previous forecasts of about $110m.