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Launch of Draft Tertiary Education Strategy

Speech – New Zealand Government

Launch of Draft Tertiary Education Strategy and proposed changes to university and wnanga governance
Hon Steven Joyce
Minister for Tertiary Education, Skills & Employment
2 October 2013
Launch of Draft Tertiary Education Strategy and proposed changes to university and wānanga governance

Introduction

Can I thank Pat and Victoria University for hosting me here today.

Today I would like to outline the government’s new Tertiary Education Strategy.

It will chart the direction for the tertiary sector over the next five years, a direction that will ensure we stay up with the world’s best, and deliver on the needs of our students in the 21st century.

However, before I do, I’d like to recap the progress we’ve made over the last 4 ½ years and the positive results we’ve been seeing.

Tertiary education – government vision

Tertiary education offers a passport to success in modern life.

For young people achieving a tertiary qualification is a crucial milestone towards a successful working career.

Whether they study at a university, polytechnic, wānanga, private training establishment, or through an apprenticeship, a qualification gives young people a concrete record of knowledge learned, and skills gained, that they can use to move up the employment ladder.

And in turn, skilled and knowledgeable individuals are essential to the success of business and other organisations.

The state of tertiary education in New Zealand

New Zealand’s tertiary education system is generally performing well.

We have high levels of participation. 81% of 15-19 year olds and 29% of 20-29 year olds participate in school or tertiary education.

We have high levels of attainment. Approximately 50% of all New Zealanders aged 15 and over hold a tertiary qualification, 17% at bachelors level or above.

Since coming into office, the government has worked to improve the performance and relevance of the tertiary education system.

In tough economic times, we’ve reduced spending in low value areas such as student loans for people who consistently fail courses, and improved the way the system targets need.

We’ve set performance incentives on providers and students, and improved information for students about the performance of providers and the employment outcomes of their study.

At the same time, the Government has made significant investments in tertiary education provision.

We invested $2.2 billion in publicly-owned tertiary institutions in 2012 – an increase of 13.4% since 2008. The increase in universities has been higher – up 16% since 2008.

From the beginning of next year we will have fully closed the gap in funding between public and private sector providers, so that all providers are paid the same amount for producing the same results.

Funding for the Performance-Based Research Fund is increasing from $231 million in 2008 to $300 million by 2016.

And we’ve retained interest-free student loans, plus student allowances for students from lower income families, and adjusted both for cost of living increases every year.

Our results

The Government is seeing encouraging results from our focus on improving the performance and value for money of tertiary education.

Yesterday I announced that the tertiary system is now delivering more qualifications than ever before. In 2012 a total of 162,000 qualifications were completed.

And the number of domestic students who completed a bachelors degree in 2012 was the highest ever at 25,400, up 4,790 since 2010 – an increase of 23 per cent.

Right through the 2000s the number of degree graduates flat-lined, despite big increases in tertiary funding by the previous government, so these results are great to see.

More young people are now moving from school to degree level study – from 13,600 students in 2007 to 16,500 in 2012, including more Māori and Pasifika.

And more young people are completing level 4 qualifications by age 25 – from 40% of 25 year-olds in 2007 to 46% in 2012.

Youth Guarantee has been a great success so far. 64% of at-risk young people taking part in Youth Guarantee last year achieved a qualification, and average credit achievement lifted 50% in one year – 37 credits.

That’s a big improvement on the old youth training programme, or the other alternative which was to allow these young people to simply drop out.

I’m also proud of our work around industry training. After inheriting an expensive bloated system that, amongst other things, paid around 100,000 phantom trainees a year who weren’t actually in training, we have more than halved the number of ITOs, focused the system on achieving credits and qualifications, and emphasised quality training for industry.

Last week I introduced the Industry Training and Apprenticeships Bill to the House, which implements more of our package of reforms to the training system, including implementing the new New Zealand Apprenticeships.

As a result of the changes the government is making, including the apprenticeship reboot, and stimulated by the boom in construction and other trades that is already underway in Christchurch; we estimate that around 14,000 new apprentices will start training over the next five years, over and above the 7,000 who enrol normally.

International context

Higher education is growing rapidly across the developing world as governments look for ways to speed their nation’s recovery from the GFC.

Developing countries are investing heavily to grow graduate numbers, while in the western world many countries are grappling with high levels of public debt and are relying on more private investment in tertiary education.

Meanwhile Massive Online Open Courses, or MOOCs, and online learning generally, are beginning to shakeup the very concept of what constitutes tertiary education.

Over the next century, we will see greater competition around the world for higher-skilled jobs, and our students and young people will need to be better prepared than ever before.

New Zealand needs to continue to improve its tertiary education system to sustain global competitiveness and to grow the level of skills that will be needed in the future.

To support this, our tertiary sector will need to further lift its efficiency and competitiveness, and to advance its thinking quickly to take advantage of new technologies and delivery models, such as online courses.

Tertiary Education Strategy consultation

Today I’m releasing for consultation the Draft Tertiary Education Strategy for the next five years.

The draft strategy is designed to move the tertiary system to being more outward facing and engaged, with stronger links to industry, community and the global economy, building on the gains that we have already made.

A stronger focus on the results of tertiary education is needed.

For most students, tertiary education should be a pathway to rewarding work. Tertiary education creates improved outcomes for New Zealand regions and industries. It contributes to growth through labour productivity and effective public services.

This strategy therefore focuses on employment, higher incomes and better access to skilled employees for business as critical outcomes.

The strategy is a key part of the Government’s Business Growth Agenda of supporting New Zealand business to invest, grow and create jobs so more New Zealanders and their families can be successful based in this country

There are six priorities in the draft strategy, which I’ll run through in a moment.

I encourage all of you to read the draft strategy, and to participate in the consultation process.

This process will run for six weeks, after which Government will consider the submissions and prepare a final strategy.

The final strategy will likely be published early next year.

Priority 1: Delivering skills for industry

As we move out of the GFC, employers are once again starting to find it challenging to find people with the right skills.

The challenge for the tertiary education system is to maintain the recent focus on student achievement, while doing more to help students and their families make informed choices about what to study and where that study leads.

We’ve done a lot in this space already. Better information is available through the Moving On Up, and Occupation Outlook Reports, as well as the Vocational Pathways publications.

We have responded to existing skill shortages by allocating an extra $27.2 million over four years to increase tertiary tuition subsidies for engineering and science. This will help deliver our targeted 500 extra engineering graduates every year.

Another area of skills shortage is in ICT degrees, and I am pleased to report the sector has started to respond to increased demand in this industry; shifting 22% more funding and EFTS into ICT degrees over the last two years; the first increases in 10 years.

We need to continue to address existing skill shortages in these specific areas like ICT, large animal sciences and engineering, and to address new shortages as they arise.

The government will complete our evaluation of funding rates, to ensure these rates are not sending the wrong messages to TEOs about investment in key disciplines and skills.

It is crucial that the tertiary system is responsive to the needs of our economy, and as much as possible ensures the skills people develop in tertiary education are well matched to the needs of the bright new technology-based industries in sectors like ICT, high-tech manufacturing, biotech, agritech, medtech, food and beverage, and high value services, that are New Zealand’s future.

In the years ahead I will be looking for more explicit co-operation between industry and tertiary organisations on skill demands.

Priority 2: Getting at-risk young people into a career

The GFC has led to reduced employment opportunities and lower wages for young people around the world.

If we don’t focus specifically on this GFC cohort; this economic shock could have a lifelong impact of the outcomes for some of this generation of young New Zealanders.

The Government has committed through its Better Public Services targets to lift, by 2017, the percentages of:

18-year-olds achieving level 2 qualifications to 85%, and

25- to 34-year-olds holding level 4 qualifications to 55%.

Interventions like the Youth Guarantee already support increased participation and achievement of young people in tertiary education.

We are seeing good progress; with the numbers of young people classified as NEET dropping to the lowest level last quarter since the GFC began.

And we are making more changes – extending Youth Guarantee to 18 and 19 year olds, and making foundation education fees-free for all 20-24 year olds who haven’t got a level 1 or 2 qualification.

We need to stay focussed on reducing the number of young people particularly 20-24 year olds, who have not yet gained the qualifications or work experience they need to achieve in a career.

Priority 3: Boosting achievement of Māori and Pasifika

30% of New Zealanders will be Māori or Pasifika by 2030. It is essential that tertiary education delivers as well for these groups as everyone else in our society.

Both Māori and Pasifika have made big gains in participation and achievement at higher levels of tertiary education in recent years, but more progress is needed.

Tertiary providers need to be giving good advice to Māori and Pasifika students, providing culturally relevant learning opportunities, and engaging with these communities.

They must also look at how they can continue to improve the way that tertiary education supports young Māori and Pasifika into the workforce.

One of the big strategic investments here is the expansion of AUT’s Manukau campus, from under a 1000 EFTs today to more than four times that number by 2020.

Our goal here must be to ensure that young New Zealanders are achieving in tertiary education at equivalent rates, regardless of their background or ethnicity

Priority 4: Improving adult literacy and numeracy

In 2012 an estimated 485,000 New Zealanders aged 20 to 65 had no qualifications, including 310,000 who were currently in work.

Basic skills in literacy, language and numeracy are essential to participate fully in the modern world, and they are a priority across the education system.

This area has been an emerging focus in recent years – particularly around ESOL students and workplace literacy programmes. It needs to be more of a focus in the years ahead and that is why I am proposing it as one of our six key priorities.

The tertiary education sector must continue to offer a diverse and flexible range of foundation skills programmes that reflect learners’ different needs.

This means having shorter, quicker options targeting job-specific literacy, language and numeracy gaps as well as longer, more extensive options for those with more substantial learning needs.

Priority 5: Strengthening research-based institutions

Our tertiary organisations need to deliver high-quality internationally-recognised qualifications for students and to attract and develop skilled staff to teach and contribute to growing a strong research base.

This requires strong collaborative links with other research institutions in New Zealand and internationally.

Tertiary education supports commercial innovation by connecting the research, expertise of the sector and skilled graduates with businesses and communities.

Over recent years, TEOs’ research capacity has been supported by increased external funding for research, including funding from the business community. This funding has increased by 10% – from $370 million to $407 million between 2008 and 2011.

Progress in improving the quality and quantity of research outputs needs to continue.

The Government has increased its investment in the PBRF, and is proposing changes to reduce compliance costs, encourage the development of the research workforce, and further reward commercialisation of research.

The Government is reshaping science and innovation funding to focus more on business-led research and areas of priority.

The 10 National Science Challenges are collaborative programmes, to which tertiary education sector researchers are expected to contribute significantly.

The Government expects TEOs to work more closely with industry to improve the relevance of research and achieve greater transfer of knowledge, ideas and expertise to industry and wider society. We want to increase the tertiary education system’s impact on innovation occurring across the country, and hence lift economic growth.

As I said at the outset, it is an increasingly competitive world we live in and money is scarce in this post-GFC world.

Strengthening research-based provision will require TEOs to work together and/or specialise in particular areas. There will also need to be closer collaboration between TEOs, with other research organisations, and with industry.

Priority 6: Growing international linkages

International education provides an important opportunity to improve the value delivered by tertiary education.

This value obviously includes direct revenue, but it’s also about boosting economic growth through wider benefits to New Zealand’s international relationships.

Yesterday I released a report by Infometrics which puts the value of international education to New Zealand at $2.6 billion in 2012/13.

I’m a passionate believer in New Zealand developing our educational linkages as part of our drive to be better connected across the world.

Our success as a country over the next 20 years will be determined by our level of connectedness.

We are a small trading nation; we need very strong links with the world and education is a very important way to achieve them.

The Business Growth Agenda has set a goal of doubling the total value of New Zealand’s international education sector to $5 billion by 2025.

We expect tertiary education providers to deliver stronger, long-lasting international relationships with researchers, students, and overseas tertiary organisations.

Institutions need to develop and maintain relationships with key partner countries in Asia, the Pacific, the Middle East, Europe and the Americas.

What the new Strategy will mean

The six priorities I’ve outlined will drive tertiary education sector performance over the next five years.

It is intended they will shape the Tertiary Education Commission’s expectations, and will be reflected in providers’ updated investment plans, which will begin to take effect from 2015.

Once the draft strategy is finalised, I expect that tertiary providers, and business and the broader community, will work together more as this new strategy takes effect.

For real change to be achieved, providers will need to successfully respond to the needs of learners, their community, and business.

They will also need to keep up to date with international advances, and to take advantage of new technologies and delivery opportunities.

Governance consultation

The new tertiary education strategy is deliberately ambitious.

That is because I am passionate about seeing our tertiary organisations achieve even more for their students in the face of considerable change around us.

Change to the nature of business, the methods of teaching, and to the competitive environment we all live in.

For our tertiary sector to achieve, we need very good governance of our institutions.

The governance changes made to our polytechnic sector in 2010 have greatly contributed to the turnaround in performance in that sector.

I believe that governance changes must also be investigated for our universities and wānanga to help them deliver the strategy and to be internationally competitive.

The current models of governance do not allow our universities and wānanga to be as agile and adaptive as they need to be.

Therefore today I’m also announcing that the government will begin consultation on a possible new approach to university and wānanga governance that would make council membership more flexible with an emphasis on governance skills and experience.

The government is proposing to:

· Decrease the size of university and wānanga councils from 12 to 20 members; to 8 to 12 members.

· Make council membership requirements more flexible by removing specific representative requirements.

· Require the Minister and councils to appoint members with governance capability

· Clarify the duties and accountabilities of individual council members.

These changes will allow both universities and wānanga to recruit the expertise needed to effectively respond to external challenges and their changing environment.

For wānanga, there would be increased flexibility for them to reflect their unique stakeholders on their council.

The changes will give individual council members a clear picture of what is expected of them, and prevent those who are performing poorly from undermining the overall performance of the council.

They will help address the difficulties large councils can have with timely decision making and communication. It would bring university and wānanga councils more in line with most other organisations, which have been moving towards smaller governing bodies for some time.

The University of Canterbury has recently written to me recommending I approve changes to their constitution along very similar lines to the model I’ve just outlined.

I am not proposing any change to the settings for the appointment of council chairpersons and deputy chairpersons, which are currently made by councils themselves.

Under what I’m proposing, Councils will be able to set their own membership requirements beyond the four Ministerial appointees, up to a maximum of 12 members.

This model will give greater flexibility to universities and wānanga to determine the makeup of their councils. They will be able to retain representative positions if they wish.

The next six weeks offers an opportunity to provide feedback on these proposals.

But it is important we consider all options for progress and improvement, as we consider the challenges that lie ahead for this very important sector.

Conclusion

Thank you for the opportunity to speak with you and explain the Government’s expectations for tertiary education in the future.

I hope you will all have a look at the draft Tertiary Education Strategy and our proposed new approach for university and wānanga governance over the coming weeks. I look forward to hearing your views.

ENDS

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