Don Brash MP - National Party Leader

27 September 2006

Tertiary Education: where to from here?

Speech to the Bay of Plenty Polytechnic's Applied Business Education Conference

Ladies and gentlemen, thank you for the opportunity to address your conference. It is a pleasure to be able to speak to an audience of talented and dedicated professionals in this important part of the tertiary education sector.

I strongly support the great work you do for the students undertaking applied business studies in our tertiary education institutions.

Today, I've been asked to outline my vision for tertiary education in New Zealand.

First, let me put my views in context.

Tertiary education plays a key part in National's vision for New Zealand because, at least up to a point, it's a vital tool for promoting economic growth.

Most of you will have heard me speak about my determination to close the growing gap in living standards between New Zealand and Australia, and to chart a course to get into the top half of the OECD.

Why do I want to do this? Is it simply because I am a former Reserve Bank Governor and have a fondness for dry economic theory? Most certainly not. It's because this is the country I love and in which I have raised my children, and I want to ensure that it continues to prosper.

It's because if we do not achieve these growth goals then New Zealand won't be able to offer New Zealanders the quality of life that their neighbours in Australia and other developed nations are able to enjoy.

The human face of this gradual slide can already be seen in people like Aletia. I met Aletia on the steps of Parliament earlier this year; she was 33 years old and suffering from very aggressive Grade 3 invasive breast cancer. And there she was on the steps of Parliament clutching a petition, in tears, begging for her life, because her Government said it couldn't afford to give her the Herceptin treatment that was her last chance of survival.

Not surprisingly, Aletia couldn't afford Herceptin's $100,000 price tag. Her friends, family and community had already rallied round to raise $24,000 for another drug, Taxotere. Had she lived in Australia, she would've got Taxotere free in a public hospital. Taxotere has been funded by the Australian health system for the last five years.

In New Zealand, despite Pharmac having approved Taxotere, it's been locked in the cabinet, awaiting funding, for nearly two years.

Aletia is why we need strong economic growth. Without more economic growth, and the increased wealth which growth brings, New Zealand will continue to have a death rate from breast cancer 30% above that in Australia.

National's commitment to economic growth goes hand in hand with our commitment to ensuring New Zealand has a first-class education system.

I'm sure all of us here today agree that good quality, accessible tertiary education and training is vital to New Zealand's economy and citizenship.

Tertiary education and training is essential to building the productivity of our workforce and gives New Zealanders an avenue through which to make aspirational choices about their future.

As you know, participation rates in tertiary education have climbed steeply over the last decade.

There are now many more people enrolled in tertiary education than there are students in secondary school. In 2004, there were more than 350,000 students attending tertiary education institutions, while there were just over 250,000 students attending secondary schools.

The extent of that participation has entailed a very large investment by the community, with government funding for the tertiary education sector set to reach $2.9 billion this financial year.

Students themselves also make a significant personal investment in tertiary education, in the form of course fees, though of course these fees typically cover only a small part of the total cost.

So as we look to the future for tertiary education in New Zealand, there seems to be an emerging consensus: having made substantial gains in participation, it's time to focus more attention on increasing the value of that participation.

It's against this background that National's views on tertiary education have developed.

Under-pinning my thoughts on tertiary education is one key principle. Governments owe it to taxpayers and students to ensure that the tertiary education dollar is being spent wisely. To achieve that, they must be able to guarantee students and employers that there is quality in every publicly-funded and accredited tertiary education course.

Before I discuss the future for tertiary education any further, I think it's worth assessing just how well those principles have been applied in the recent past.
Labour's track record

Those principles - value for money and guaranteed quality - may seem like commonsense, but sadly Labour's record in applying them has been extremely patchy.

In recent years, examples of questionable use of the tertiary education dollar have been all too common - we had the scandals emerging from Te Wananga o Aotearoa; we had the $15 million COOL IT debacle; we had homeopathy for pets and we had radio sing-a-long. These examples of dubious, low-quality, tertiary education courses have been numerous enough to rock New Zealanders' confidence in our tertiary education system.

An NZQA-commissioned UMR survey published in April this year found that just 36% of New Zealanders have confidence in the tertiary education system.

And a recent Massey University study found that fewer than a quarter of employers felt that schools and universities were giving students the skills they needed, with polytechnics faring little better.

That loss of confidence is significant because it means the Government is failing to deliver on its duty to students and taxpayers. It is failing to ensure that publicly funded tertiary education courses offer the value for money and quality needed to engender public confidence.

What's more, it means that high-profile scandals are tarnishing by association the hundreds of high quality, highly relevant, well-taught and internationally competitive courses offered at New Zealand tertiary institutions.

Understandably, Labour has sought to avoid blame for this lack of confidence. It has argued that any problems with the tertiary system are the result of policies from the 1990s and that any remaining problems are being fixed.

But this attempt to relinquish responsibility holds no water with me.

Labour have had almost seven years to fix problems with the tertiary education system. They've had seven years to act decisively but they've been asleep at the wheel.

It's only in their third term of Government, after millions of dollars have already been wasted and public confidence has been eroded, that Labour are waking up to the need for action.
A path littered with good intentions

I'm happy to acknowledge that Labour has had good intentions for the tertiary education sector. They've produced endless documents describing the need for quality, relevance and value for money, but with little result.

In 2001, then Minister for Tertiary Education, Steve Maharey, gushed that the Government's new Tertiary Education Strategy would ensure learner needs were met; would ensure there was a continual improvement in quality; and would "deliver an increased return on our nation's $1.5 billion plus annual investment." [1]

The said strategy was full of good intentions, with six key strategies, nine key change messages and 35 objectives. It gave rise to a new bureaucracy, the Tertiary Education Commission (TEC), with 341 staff, and an operating budget of $42 million.

So what did all this strategising and bureaucracy actually achieve? It created a tertiary education system that in 2005 led the Vice Chancellor of Victoria University to write to the Minister and proclaim, "The system is haemorrhaging dollars right before your very eyes".

Indeed, Minister Maharey's so-called 'steering of the system' saw spending in possibly the single least strategic area of the tertiary education system - community education - blow-out completely, from $14 million in 2000 to $105 million by 2003.

You're all familiar with the scandals that this funding blowout gave rise to, some of which I've already mentioned today.

The important lesson from all of this is that the Government's extensive strategy documents, its carefully articulated statements of priorities, its sweeping visions, and its brand new bureaucracy did precisely nothing to prevent the blowout.

Why does it matter? Because all that paperwork cost a lot to produce - both in terms of taxpayer dollars and in terms of compliance demands on the tertiary institutions it was seeking to improve. That bureaucracy cannot be justified when you look at the derisory results it delivered. In short, for the last six years the Government has spent too much time talking about 'vision' and not enough time putting that vision into action.

Tertiary education providers have been victims of a policy environment where stated priorities conflicted with the funding rules. In practice, we saw a fundamental disconnect between the Government's rhetoric and its funding model.

The courses that the Government said it wanted -like applied trades courses for example - were funded at levels so low that many polytechnics felt forced to cross-subsidise them with low-quality courses that were considerably cheaper to run. Yet still Labour attempts to sheet the blame back to National.

Uncertainty abounds

In a scene that could be straight from 'Back to the Future', we find ourselves in 2006 with the new Minister of Tertiary Education, Hon Dr Michael Cullen, having announced what he terms the "first steps" in a "new approach designed to ensure tertiary education has greater quality and relevance". [2]

It's hard to see this 'new approach' as anything but Steve Maharey's reheated leftovers.

I find myself asking why it is that after spending millions of dollars and producing hundreds of policy pages it's only now that the Government is embarking on the "first steps" towards quality and relevance in tertiary education.

The failure to take these steps earlier is an indictment on former Ministers for Tertiary Education, Steve Maharey and Trevor Mallard, and an indictment on the Labour Government.

As if Labour's tardiness isn't bad enough, Dr Cullen is only prepared to commit to "demonstrable change" in tertiary education commencing in 2008. [3] That timetable presents tertiary education institutions with a high degree of uncertainty in which to plan their own futures. And that uncertainty will not be alleviated until the Government's high faluting intentions manifest themselves in revised funding mechanisms.

But my concerns do not end there. Let me take this opportunity to briefly outline some of my fears about the reform process your sector finds itself in as you plan for your future beyond 2006.

First, I fear that Labour's 'clean up' will be inherently politicised, as future decisions about which institutions receive what quota of funding will be by their very nature discretionary. This will force institutions to spend more time trying to influence politicians than trying to improve tertiary education provision.

Already we are seeing Chief Executives of tertiary institutions spending an inordinate proportion of their time in Wellington as they try and make sense of the new environment and conjure ways to best leap through the hoops on the pathway to more funding.

In fact, so time-consuming is this process that UCOL Chief Executive Paul McElroy stated earlier this year that UCOL needed both a chief executive and a full-time acting chief executive "to cope with the demands of running an institution the size of UCOL and to be represented in Wellington".

Something's wrong when tertiary institutions need to dedicate that much resource to their Wellington lobbying efforts.

Secondly, I share my education spokesman Bill English's fear that education bureaucrats look likely to spend thousands of hours trying to make what are ultimately discretionary decisions look like rational planning. TEC officials may well spend just as much time explaining exceptions to new rules, as they will spend on the rules themselves.

Thirdly, I fear that tertiary institutions will become so focused on securing funding by meeting bureaucratic requirements that their capacity for innovation and responsiveness will be killed as "the wheels of government turn slowly but grind exceeding small".

Fourthly, I share the fear of Dr Neil Barnes, Chair of ITP New Zealand, that the detailed decisions made by Government will entail increasing compliance costs for tertiary institutions.

And finally, I fear that over the next two years many millions more taxpayer dollars will be spent on the plans, strategies, reports, discussion documents and consultants needed to advance Dr Cullen's "first steps" and we will find ourselves no further ahead than we did after Steve Maharey and Trevor Mallard's years in office.

So, as we look to the future, let me assure you that the National Party will be watching the Government's tertiary education reforms closely and we will welcome your feedback about them.
National's Vision

So, what is it that National wants for the tertiary education sector? Our approach is best summarised by the following anecdote.

I am told that during preparations for his America's Cup campaigns, the late Sir Peter Blake asked a standard question when confronted with a new proposal to spend valuable campaign funds.
He would ask: "Will it make the boat go faster?" That, I suggest, is a question that governments need to ask themselves every time they deal with a new proposal to spend taxpayer dollars: Will this spending make our economy grow faster or contribute measurably to the quality of life of New Zealanders?

When it comes to tertiary education a similar question can be asked: Will this reform or funding decision improve the service delivered by our tertiary institutions? Any reform that fails that test has no place in National's vision.

At the heart of our vision are the tertiary institutions and their staff that are getting on with the business of responding to student demands, despite the demands of an ever-growing bureaucracy. We believe it is students and tertiary institutions that should drive the tertiary education system - not the central bureaucracy.

Between 2000 and 2005, spending on the operating costs of government agencies involved with tertiary education more than doubled to $141 million - and that rapid increase shows no signs of abating.

As I've already stated, National is not convinced that this spending is the most effective way to spend the limited tertiary education dollar, and we are not convinced that bureaucracy is helping people like yourselves perform your job better.

We would like to see this ever-growing Wellington bureaucracy pared back and the dollars driven back into effective education and training. We prefer a high trust model that puts the emphasis for decision-making on the institutions themselves. In turn, where institutions break that trust - whether by failing to have due regard for the spending of taxpayer funds, or by failing to deliver courses of a minimum quality standard - we would hold them firmly and publicly accountable.

Our system would see fewer rules, but clearer rules. In short, we would let tertiary institutions, teachers and students get on with the business they know best. If these principles are applied firmly, the future of tertiary education is a hugely positive one.

National believes that even without the huge funding increases of recent years, universities, polytechnics and institutes of technology can continue to flourish. This is because of the enormous capacity your institutions have shown for adapting and responding to the changing demands of learners.

Of those entering tertiary education in 2004, only 26% were school leavers. More than half were previously employed and a quarter of all those studying had no previous school qualifications. Students studied everything from applied business to physics to communications to midwifery.

Clearly, your institutions have the ability to remain relevant to the changing tertiary education needs of our nation - if only you're given the chance to do so. You need only look to the diverse courses of studies, modes of delivery and student intakes under the umbrella of "Applied Business Studies" to see that diversity and responsiveness in action.

Your institutions have engendered enormous loyalty from your regions and will continue to do so. You have done this by being responsive to the needs of industry and learners, by having strong networks in your communities and by attracting talented staff like those assembled at this conference.

I look forward to tertiary education playing a key role in National's policy agenda.

I want to see you and the institutions you represent empowered to help us towards our goal of making New Zealand's boat go faster. Because when we make our boat go faster, it's people like Aletia who benefit.

I'm committed to pursuing this vision for New Zealand because I believe that together we can make New Zealand a better society, and one to which our children will want to return.

ENDS

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