Hon Dr Michael Cullen
Deputy Prime Minister, Attorney-General, Minister of Finance, Minister for Tertiary Education, Leader of the House

12 October 2007 Speech Notes
Transforming tertiary education and the NZ economy

Speech at the Institutes of Technology and Polytechnics of New Zealand Annual Conference, The Hub, Wintec City Campus, Hamilton. 10:00am Friday, 12 October 2007.

Good morning, it is a pleasure to be here.

Today I want to talk about some of the challenges facing New Zealand and the contribution this government believes tertiary education can make to finding solutions to those challenges.

New Zealand is a small country, but we have earned a big reputation.

We have efficient agriculture and horticulture sectors that set international benchmarks for innovative production practice.

We have a dynamic manufacturing sector that has developed markets around the world, based on the design and production excellence of its products.

Our creative sectors – art, film, fashion and visual design – are unique and at the same time, world-renowned and respected.

As a member of the Labour-led government and as a proud New Zealander, I am committed to driving this country forward. I am determined to see us meet the challenges our country faces in maintaining its reputation and enhancing its global competitiveness.

New Zealand has an urgent need to develop more skills, particularly when you consider that 80 per cent of our workforce in 2020 is actually in the workforce right now.

It is no coincidence that I am both Finance Minister and Tertiary Education Minister, because the two portfolios are inextricably linked in creating a more prosperous future. The tertiary sector holds the key to the government realising its vision of a highly skilled, innovative economy capable of competing in a globalised world.

Carrying on business as usual will not deliver on that powerful vision, however. I think everyone in the room can agree on that.

Currently our efforts lack coordination. We must not only ensure tertiary education increases the skills of the workforce, but also consider the role of the tertiary sector in promoting and driving skills utilisation.

The issues we are facing require new, more innovative ways of thinking if we are to tackle the challenges of ongoing skill shortages and productivity levels that are not rising quickly enough.

Coordinating work across government and industry is crucial if we are to future-proof our workforce and economy.

The skills strategy being developed by the Skills New Zealand Forum – comprising government, Council of Trade Unions and Business New Zealand representatives – provides us with an excellent means to obtain a thorough understanding of all the challenges, and develop solutions that will result in real progress.

A core goal of the skills strategy is to use skills development to enable our industries to shift to higher value business models, while at the same time making better use of the current workforce through raising skills and the value of jobs. We must raise the value of what people do in our economy if we are going to have any chance of transforming it.

Taken together, the skills strategy and tertiary education reforms provide a more effective way for employers and employees to better understand current and future skill needs as well as influence the supply of skills.

The tertiary reforms are all about creating an environment in which the entire tertiary sector can continue to be responsive to government priorities and meet the needs of a wider range of stakeholders, including students, businesses, iwi and communities.

Right across the board, we want to lift the capability and performance of the sector, as well as the different types of tertiary education organisation.

At this point, I want to re-iterate the government’s commitment to ensuring that ITPs:
• excel in providing skills for employment and productivity
• support the progression of students to higher levels of learning and work, and
• act as a regional facilitator – by helping build a shared understanding of the tertiary education needs of local employers, iwi and communities.

My vision is an ITP sector that is renowned for its knowledge of what stakeholders need, innovation when it comes to meeting those needs, and contribution to fulfilment of the skills strategy and the economic transformation of the country as a whole.

We cannot create a more highly skilled workforce, boost the country’s productivity levels, and achieve economic transformation without you.

But we cannot achieve these aims with the current tertiary education system – a system in which there is little coordination around what the government is purchasing, and little understanding of whether it is relevant and of good quality, and whether it delivers for students and other stakeholders.

We are in the middle of a process of fundamental change and I know this is creating uncertainty. However, what the reforms offer us is the opportunity to develop a tertiary education sector with the capability to meet the challenges of the 21st century, and drive New Zealand’s economic transformation.

There are many issues to be addressed. In dealing with them, we must be careful to not lose sight of our objectives – development of a cohesive tertiary education sector that consistently delivers for a broad range of stakeholders and contributes to the fulfilment of national goals.

One of the fundamental and most far-reaching changes needed is a change in behaviour. I am not blaming ITPs for competitive behaviour – the funding system we are replacing encouraged and rewarded that behaviour, but it meant that some ITPs did not focus on regional needs.

What the new system does is enable ITPs to focus on what is important – student achievement and meeting stakeholder needs, rather than student numbers for the sake of them and the generation of short-term cash flow.

Chairs and Councils have a crucial role to play in ensuring their institutions are fundamentally motivated by educational outcomes, and not just the bottom line.

Three-year plans offer the prospect of financial certainty. They will allow you to plan your business in ways never possible with an annual cycle.

Over time, the new system will enable ITPs to get out of each other’s patch – that is, withdraw from out of region provision and stop chasing enrolments. This represents a paradigm shift, which is likely to have an impact on the size of some ITPs.

The new system promotes a regional focus within the network of provision. Indeed, this new view of the world is fundamental to the success of the new system and its efficient and effective use of resources.

ITPs should be excited by the opportunities the new investment system provides. It must surely be a relief not to have to constantly put on new courses and chase new students as one of the few avenues available to ensure the financial viability of an institution.

Rather, the sector can focus on engaging with stakeholders to understand their real needs and in turn, develop high quality courses and qualifications that meet those needs.

All this will not happen overnight – it would be naïve of anyone to expect that.

What the government does expect is real progress on the issues facing ITPs throughout the country. We also expect to see ITPs embracing the new environment of high trust, high accountability and low compliance costs, and making it work for them.

We want to see real collaboration among ITPs, and between ITPs and other parts of the sector. This must be collaboration for the good of the sector and New Zealand, not collaboration as a means to drive further competition to the detriment of the system as a whole.

A good example of what I mean here is how the Bay of Plenty Polytechnic and University of Waikato are collaborating in Tauranga.

The collaboration is based on a simple agreement that the polytechnic offers business studies courses at years 1 and 2, while the university offers courses at years 3 and 4. Students can start their study with the polytechnic and then opt to study towards a degree with the university.

This collaboration has brought many benefits. Courses are aligned and can be credited towards a degree. Students can study without having to move away from family or other commitments. Learning facilities, equipment and services are shared. And the polytechnic gains the kudos of a link to a well-respected university, while the university gains an injection of students to its advanced level courses.

Another significant opportunity for ITPs is building a more complementary relationship with ITOs – as the voice of stakeholders alongside ITOs’ industry leadership role.

Both ITPs and ITOs have important roles to play in boosting the skills of people in the workforce and people soon to enter employment.

Greater clarity around the respective roles and responsibilities of ITPs and ITOs is also critical to the success of the skills strategy.

What we need to do is sort out some of the barriers getting in the way of a more cohesive and strategic relationship. We need to strike a better balance between the short term irritations, and the more long term training needs of industries across New Zealand.

To close, I would like to lay down a challenge to the Chairs and Chief Executives here today.

The TEC and I well understand the issues you face as we implement the new investment system and complete the tertiary education reforms. None of this is for the faint-hearted, but it is imperative to the future success of tertiary education in New Zealand, and of the country as a whole.

Some hard decisions critical to the success of the reforms need to be made over the next few months. We cannot afford to start behaving with only self-interest in mind now.

I am confident that you all understand why the old system had to go. It was inefficient and unsustainable. It led to a tertiary education sector focused on student numbers, not student achievement and outcomes.

The new system enables you to focus on student achievement and meeting the needs of stakeholders like never before.

That is surely something to get excited about and get behind without reservation. Sure, we have and will have issues associated with implementation of the new system – it would be wrong to think that we wouldn’t.

What is important is how we all work through those issues in a way that supports rather than subverts the new system. We need to embrace new ways of working – in particular, collaboration, and high trust and accountability – that are fundamental to its success.

That is my challenge to you. To work within the new investment system to create a tertiary education system we can all be proud of – one that is vibrant and innovative, consistently delivers for students and other stakeholders, and meets the skills development needs of New Zealand in the 21st century.

That is surely a goal worth aiming for.

Ends

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