Speech to Victoria University

Good afternoon - it's a real pleasure to be here. 

I'd like to thank Pat and Victoria University for hosting us here this morning. 

Today I'm going to give you an update on the government's plans for the tertiary sector - things are moving pretty quickly. 

But first - a bit of context. 

The National-led government was elected with a clear mandate.  A mandate to secure a brighter future for New Zealand by creating the conditions that allow our country to grow faster so that we can successfully compete in the wider world and afford the sort of first-world services that our people depend on.

 We're working to: 

• Remove infrastructure bottlenecks with new roads, improvements in rail, new electricity transmission lines and so on. 


• Create a tax system that rewards hard work, and encourages people to save and invest more, and consume less. 


• Invest in world-leading broadband services to take us from also-rans to top of the class in high-speed digital communication. 


• Develop our education and training sector to make it one of the highest-performing in the world. 

The tertiary education sector is critical to our plans to make the country grow faster in the long term and make New Zealand an even more attractive place to live, work and do business.

As a government we are very keen to ensure that New Zealanders from all educational backgrounds have the right opportunities to gain - at a level that suits them - world-class skills and knowledge to allow them to get ahead in life.

Tertiary education covers a huge range of provision - academic, vocational, foundation learning (literacy, numeracy, digital literacy) right through to informal community education. 

And we're lucky because it's actually a pretty good system overall - in particular, our universities perform very well; we have very good vocational training available and our wananga are doing a great job. 

We produce some of the best and brightest students in the world. 

There's a lot to be proud of. 

So the system isn't broken, but it's not without its issues. 

• Over the past ten years, despite big increases in funding, the number of degree qualified students has plateaued. 


• We have too many courses with unacceptably low completion rates. 


• There are too many qualifications on the register - causing confusion for students as well as employers. 


• Very heavy controls on the sector, in price and volume. 


• A very big spend with some issues in ensuring value for money 

We're working hard to address these issues and already we've seen good progress. 

So what's the end game? 

I want to see a tertiary education system that supports our economy at all levels.

I want to see our young people maximising their potential.  This means:

• § More with degrees and the better paying jobs that come with them


• § More that are encouraged to get a good vocation and make things of their life


• § And especially more young Maori and Pasifika achieving their potential - more and more they are this country's future


• § And less young people falling through the gap between secondary and tertiary 

And I want to see second chance learners give the opportunity to improve their skills.  This means:

• § More getting to Level 4 and above - and getting into better paying jobs


• § And better literacy, numeracy and computer literacy so they are more productive in their work and in their lives 

This year's Budget lays the foundation work for this kind of system. 

It provides more than $4.2 billion to the tertiary sector, as we continue to focus on improving accountability and raising educational performance. 

A key element of the package is a set of initiatives designed to ensure more higher education opportunities for New Zealanders by creating more student places, streamlining funding, and reforming student support. 

The recession - along with increased senior school achievement and demographic trends - has increased demand for tertiary education. 

I want to acknowledge that this has seen some universities - Victoria included - move to restrict enrolments. 

While universities have always restricted enrolments in some courses to some degree it would not be ideal to see too much of this at this time. 

However, we think it's likely that a number of factors will combine to ease the pressure a little for school leavers seeking to enrol at university next year: 

• A record number of funded places at universities in 2011 (117,400 which is about 5,600 more than in 2008)


• the easing of the recession


• changes to student loan entitlements for new residents and Australians


• the introduction of a performance element for existing students (i.e. a requirement to pass the equivalent 50% of their full time courses over two years). 

So we're funding more than 4,900 full-time places at universities, polytechnics and institutes of technology than were previously budgeted. 

This means an additional 765 places in universities and 455 core places at polytechnic and institutes of technology will be available next year.  High-priority areas will be targeted. 

We must get the balance right between having much-needed certainty about overall levels of spending, while at the same time freeing up education providers to be able to come up with innovative initiatives and respond to economic and community needs.   

As a country we spend about $4 billion each year on tertiary education - including student support.  That's huge. 

Its twice as much as the government spends on roads each year and about $600 million more than we spend on health for all of Auckland. 

So alongside comparable countries we certainly aren't tight in the tertiary area.  That's a relief because it is highly unlikely that there will be any significant cash injections in the foreseeable future. 

That's just economic reality - additional money simply isn't available.  Not now and not in the foreseeable future.

The exciting thing is that we're getting more out of the system - the placement numbers I talked about earlier will see an increase of 20% more graduates in 2012 than in 2008.   

So how do we get the sector to perform better - both for individual students and the economy as a whole - without spending a truck load more money? 

Well, over the next two years we're moving tertiary providers to a system where their funding is based on how well they perform academically by preparing their students for life after study. 

In short we'll provide financial incentives for institutions to continually work to improve the educational performance of their students. 

I want to make it clear that you won't see a wholesale overhaul of the funding system overnight.  

Initially, a maximum of 5% of funding will be performance-based. 

To begin with, I want to target the outliers. Over time, I expect to see the performance of the entire sector to improve.  - TEOs will know upfront what their targets are. Performance in 2011 will matter for funding in 2012. 

The importance of the performance measures will differ depending on the level of study - the levels will be grouped as followed: levels 1-2, 3-4, 5-6, 7-8 

Course and qualification completion will be the most important things to begin with.  

Progression to higher level qualifications will be a factor at lower levels. This is because research shows that the returns from tertiary education are greater at higher levels 

Mid-qualification retention will be a factor at higher levels. 

Ultimately, I want to see funding linked to employment outcomes, not just internal benchmarks.  This will send a strong signal to students about which qualifications and which institutions offer the best career prospects - and that's what tertiary education has got to be about. 

I'm confident this approach will encourage institutions to provide more support for their students and achieve better results for individual students and the country.  Most institutions are doing that now, but there is nothing wrong with stretching it a bit further. 

Another example of this Government's commitment to incentivising educational performance and providing students with the information they need to inform their study choices is that TEC is about to begin regular online publication of high-level TEO performance information.   

This information, along with what's already out there, will empower students' decisions with the best possible information about course quality, cost, academic requirements and the likely impact on future career prospects.  

I am sure it will also be a big reputational incentive for tertiary education organisations. 

Further, later this year, all providers will be submitting their Plans to the TEC, outlining their response to achieving the priorities of the Tertiary Education Strategy. 

Plans are expected to show a three-year planning horizon, however, for the new Plan period, I have advised the TEC that the Government will be confirming funding for a two-year period.   

This gives me the flexibility to ask the TEC to begin work around the price the Government pays for tertiary courses. It is my intention to make price drive more relevant and more consistent delivery across the sector.  I'll talk more about this in a moment. 

I want to touch briefly on how we can improve and manage quality assurance across the sector. 

One option is to make NZQA responsible for quality assurance right across all the non-university space, so that we have a level playing field for providers. 

We'll be consulting with polytechs on this approach.  I know they'll want to be sure that today's NZQA can move fast enough and is flexible enough to meet their needs. 

NZQA has also been busy working on the strategic review of qualifications that I announced in March, just after I inherited the portfolio.

The review is designed to cut back on the number of unused or duplicate qualifications and ensure they were more recognisable to potential students and employers.

As a result of this a new qualifications framework was launched last month.  This is the first step streamlining the qualifications system and making it more relevant and easier to understand for students and employers. 

Previously there was more than 120 tourism qualifications certificate and diploma courses on offer around the country.   

I simply cannot believe that, despite the importance of this industry to our economy, each of these was uniquely relevant and understood by potential students and employers in New Zealand, let alone internationally. 

The immediate effect of the new framework was that the number of qualifications on the books dropped by about 15% with the introduction of a new feature which assigns every qualification a status of current, expiring or discontinued.

The goal is to cut out duplication, up the quality and reduce the number of new qualifications being added to the system unnecessarily.

I also want to see tougher pre-assessment of proposed qualifications before these go through the process of being added to the New Zealand Qualifications Framework.

Central to this will be questions about whether or not the qualifications have the support of the industry or the sector they're set up to support.

So we're working to simplify the system.  At the same time, if we're serious about getting the sector working for all of us, we need it to become more flexible and more high-performing. 

Also on the radar is a review of the tuition subsidies that the government pays 

These were set in the early 1990s and were last looked at in 2005. 

Need to have a look at pricing the subsidies based more on the cost of provision; looking at whether we need different subsidies for different levels of study; for different delivery modes; and rationalising the numbers of funding categories - in England they just have four.  Here we have 17. 

We also have a quaint thing here where you get a different tuition subsidy whether you are a public or private provider - a thing started by the previous government - and on the face of it, it is a distinction that is pretty hard to defend. 

Alongside that; I think we have to have a look at where institutions are heading with their compulsory non-academic levies on students.

• Over the past year or two, a number of institutions have made significant increases to compulsory levies on all students. These are to cover things like student health, career services and the like - but the amounts being charged are in some cases growing dramatically.

I have seen examples of institutions charging things like a "building maintenance levy" or "library services" or "compulsory charges for internet access".  When I went to university these things were core services.

So I am going to have a close look at these charges. 

I'll be asking questions around whether all the things that are being charged should be compulsory for all students or not; whether part-timers should be treated differently to full-timers.

As a first step I'll be writing in particular to NZVCCs and the ITP peak bodies to formally raise the issue and lay out my concerns. 

In the meantime I would urge universities and ITPs to tread carefully with these compulsory add-ons - I wouldn't want to see big increases after big increases leading people to think you are avoiding fee regulation by charging in another way

So that's a quick update of where we're at with tertiary education - an area we see as critical to economic growth and delivering a brighter future for all New Zealanders.

I look forward to working with you over the coming months and years as we work to achieve our common goals and, perhaps, as we debate issues that we don't quite see eye to eye on.

Together, I think we can achieve a system that delivers even better results for the economy.