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Speech: Tertiary Education in the 21st Century

Tertiary Education Minister
Steve Maharey
13 June 2000 Speech Notes

Tertiary Education in the 21st Century: Restoring Public Accountability

Speech to the Wellington Regional Chamber of Commerce


Thank you for giving me the opportunity to speak about tertiary education in the 21st Century, and in particular links between the tertiary education and business sectors.

I was delighted to be invited to address one of the Chamber's regular forums, and I should note that that invitation pre-dated any suggestion of a smoked salmon offensive on the part of the Government.

For my part, thinking in terms of the portfolios for which I have responsibility, I have never sensed any significant distance at all between the positions that I have advocated on behalf of the Government and the views of mainstream business.

I emphasise mainstream business.

While I am always willing to enter into a first principle debate as to whether or not there should be any public investment at all in university education or vocational education and training, my priority is to engage with those who accept the broad parameters of public sector involvement and who share my concern that we get value for the expenditure of public monies and a high level of responsiveness to stakeholders, including the business community.

Let me take an example – one that I want to return to later. In developing policy and now legislation for Modern Apprenticeships I found a large measure of common ground with the employer community – indeed I am not aware of any issue on which we have any real difference in this area. The Government wanted to make it easier for employers, and small employers in particular, to take on young people in employment based, mentored, workplace learning.

Business said that direct financial incentives were not appropriate. And we agreed.

And so we will have funding directed to the provision of apprenticeship brokerage or coordination services – services that will reduce compliance costs, and manage many of the risks that have prevented employers from taking on apprentices.

I don't know if there is anyone in this room who started their working life as an apprentice – but I would bet a truck load of smoked salmon that there is someone in this room with a parent who did.

I want to focus today on tertiary education – broadly defined. That means the institutional sector – universities and polytechnics; but it also includes the whole vocational education and training domain or industry training, and the kinds of programmes like Youth training and Training Opportunities that span education and labour market assistance.

The context – tertiary education for an open economy

Let me place the challenges facing us in context:

The context is one of a relatively small trading nation in the South West Pacific.

The context is a trading nation that is part of a global economy.

The context is one of seeking a comparative advantage in that global economy by way of our comparative advantage – and that comes down to our ability to grow things, and the quality of the labour force that we deploy when we add value by dis-assembling sheep, assembling furniture, or exporting education.

The context is one of that allows us to see that our new economy is in fact the application of new technologies, new information, and new competencies to what it is that we know and do well, and have being doing well for some time.

That's not to say that there shouldn't be innovation or risk-taking outside of our traditional areas of comparative advantage – but we need to be wary of being carried away by the rhetoric of the new economy when what we require is a sense of the reality of what that means for this place at this time.

The context is one of a Government that provides flexibility and security in the labour market, while at the same time standing firm on the principle that labour is not like any other product that is brought and sold in the market place.

The context is one of a Government committed to a welfare system that is about providing a hand-up not a hand-out, that ensures that there are reciprocal rights and obligations, that provides incentives from welfare into work (avoiding disincentives by way of poverty traps) and yet at the same time addresses issues of social exclusion – of poverty or of educational disadvantage.

Some would see this as a third way context – whatever the label that one affixes to it, it is a context that is markedly different from that provided by statist interventionism of Muldoonism, and the neo-liberalism of Roger Douglas, Richard Prebble, and Ruth Richardson.

It’s a context that is an inclusive one – I am not going to evoke Tony Blair or Peter Mandelson's notion of 'the big tent', but I am convinced that locating our project in this kind of context does provide a means of engaging with all sectors of society.

It also requires us to paint a bigger picture than we have so far – or at least to make the canvass somewhat more accessible to the audience than it has been.

For me the policy challenge can be distilled down to one main objective – and that is to foster our human capability.

Some of you will be aware of an excellent Treasury discussion paper by Des O'Dea that was released last week – I commend it to you.

The study examines the issue of inequality, looking at difference concepts and different measurements. They all paint the same picture.

The picture is that, during the last 15 years, inequality increased – not unusual you might say - it has been a trend in almost every developed country in recent times.

However the significant thing about New Zealand is that the increase in inequality here was relatively large compared with other countries, and we no have one of the most unequal income distributions in the world.

The study shows that there is poverty, but there is also quite a lot of movement in and out of poverty. However persistent poverty does exist for some, and the indications are that it is not likely to be caused by being on welfare benefits.

Studies of this kind pose some fundamental questions about the policy challenges of the future. And it is interesting that, however one poses the problem and the question – poverty or inequality, unequal incomes or persistent disadvantage, targeting the individual, the family, the neighbourhood, or the region – the answer tends to come down to skills, to lifting human capability.

It comes down to applying a very basic formula that I constantly apply to the development, implementation, and evaluation of public policy:

Capacity + Opportunity = human capability

Human capability

Human capability is about addressing capacity and opportunity issues, and about ensuring that we get the appropriate match.

I want tertiary institutions producing individuals with the personal capacity – knowledge, skills, capacity to inquire, to question – and I want to encourage the private sector and the public sector to provide the opportunities.

I want the person who is turned away from the opportunity of an entry-level manufacturing job because he or she is unable to read or write to have the opportunity to develop their personal capacity and go back and take up that job.

I want the person who is unemployed to have the incentive to build their skills, and I want a Government department – and I emphasise the words government and department – like the Department of Work and Income to match that person with an employer who has sufficient confidence in the service provided by the Department to give that person a go.

I sense that this commitment to lifting human capability is one that makes sense to the business community, and it makes sense because it is good business, and it is good public policy. It is good for the economy, and good for society.

I seem to recall one prominent British politician of the 1980s and 1990s suggesting that there was no such thing as society. She had her fans in New Zealand.

But as one Chief Executive remarked to me at a meeting we had in Auckland earlier this year, society makes the rules, and it is in the interest of business to ensure that the contract between it and society is a mutually supportive one. Business has a direct interest in ensuring that we have social inclusion and participation – in essence business will only prosper in healthy social environment.

It makes sense, it we really are going to cut in a global economy, to have a workforce that can read and write. And it makes sense, if we are going to be a society with sense of itself, if our citizens can read and write.

Thursday's budget will be about lifting our human capability

The Budget and human capability

I feel privileged to be a Minister in the Government that has worked to produce the Budget that Michael Cullen will present on Thursday.

That Budget is a credit to Michael, and it is a credit to the Government.

The Budget is the first Budget of the Labour-Alliance Coalition Government, and it a credit to both the Coalition partners.

The Budget is a re-balancing budget, not a budget that will engender any unbalancing of the economy.

I note that some commentators have questioned the extent of the Government's mandate for change.

I don't think that the electorate was in any doubt about its collective preference on Election Day last year. The electorate wanted a change – a change, a modest and sensible re-balancing of the policy mix.

And as a Government we take our responsibility to restore trust in Government very seriously. This Government has been about restoration of the notion of an electoral mandate. The Budget is the next instalment in that on-going process.

On Thursday you will see a Budget that is fiscally responsible and socially progressive. You will see a Budget that is about economic growth, and about economic and social development. It will be about lifting our human capability.

It will be a good Budget for business.

I am very much looking forward to its release because it is a Budget that will be good for research, science and technology, for the education sector in general, and for students in particular.

Tertiary Education and the Business Sector

Let me turn to the relationship between business and tertiary education.

As you all know the relationship between education and enterprise is crucial to the development of the knowledge society. An improved partnership between the two sectors will enable us to promote the kind of social and economic developments we need to face the challenges of this new century.

Tertiary education, through its variety of mechanisms, is absolutely critical to the continued development of New Zealand.

I want to comment on three issues today:

 the directions the government would like to see the sector develop,
 industry as one of the stakeholders in the sector
 improving opportunities for participation to assist those who have difficulty at present in accessing tertiary education

The Directions Government Would Like To See the Sector Develop

A strong, capable, dynamic tertiary sector is an essential component of a knowledge society.

In the 1930s it became obvious to people like Clarence Beeby that developed countries such as New Zealand had to make secondary education universal.

Now worldwide, similar countries are on the verge of a similar step in tertiary education. This poses challenges not only for individual students and institutions but also for business leaders like you.

 There are resource implications.

 Institutional responsiveness will need to be quicker.

 Information communication technology offers new and challenging ways of delivery.

 Stakeholders increasingly want to be more involved in the decision-making.

 "Second-chance" and life-long learning moves from important to imperative.

 Upskilling will become so routine that it will be taken for granted.

 Participation will be the name of the game.

We are already a considerable distance down this path.

Around a quarter of a million students receive some form of tertiary education. The taxpayer is the major funding source.

It is my long-held conviction that to ensure the best use of the taxpayer's dollar, the tertiary sector has to act together in a more collaborative fashion.

Institutions must see themselves as each providing an essential element within an overall system, not simply as competitors whose status comes solely from gaining the greatest number of students.

There are however examples of collaborative behaviour.

Last week I attended the launch of a Memorandum of Understanding between UNITEC and the Hutt Valley Polytechnic. This is the first agreement of this kind to be signed between tertiary institutions. UNITEC’s Applied Technology Institute and Hutt Valley Polytechnic agreed to work together to develop a strategy of co-opetition.

 At the International level they will work together to ensure the best interests of New Zealand are promoted and to develop and maintain standards and curriculum consistent with the highest level of international demand.

 At the local level, they will recognise each other’s Applied Technology programmes and share best practice in programme development to ensure contemporary needs of New Zealand are satisfied including the integration of IT core generic skills into programmes.

By working together, Hutt Valley Polytechnic and UNITEC Applied Technology Institute can increase the opportunities for students in a wide range of vocational areas. With additional resources to call on, there will be the capacity to meet more specific needs, and even to customise education and training to meet the specific needs of niche groups.

Another very good example is where Lincoln University, Christchurch Polytechnic, Christchurch College of Education and Ngai Tahu created Te Tapuae o Rehua, to increase the participation level of Maori students in tertiary education. The aim is to enable Maori students to use the best path to improve skills in both industry and academia. It will ensure quality of course content, delivery and environment for Maori. Now, the University of Otago has joined the group.

However these kinds of developments stand in very stark contrast to much of the institutional behaviour that has been the direct result of the model that we have had for much of the last decade.

That model has led the tertiary sector to the brink.

Many institutions are now in truly difficult financial situations, and even those better positioned are battered and bruised. Already I have had to step in to give one polytechnic the financial breathing space to reorient itself for the future. Several other institutions now have Crown Observers working with their Councils to work out plans for the ongoing viability.

Other institutions are struggling.

My objective is to secure our collective public investment in the tertiary education sector.

The 38 public tertiary institutions have between them combined assets worth approximately $4 billion.

And let me state my position very clearly – these are public assets.

The sector caters to a large and growing proportion of the population every year – over 90% of the population will participate in tertiary education before reaching 25 years of age.

Presently the sector offers over 52,00 courses of study.

Almost half of the research and development staff in New Zealand is employed in our universities

The sector is estimated to bring in approximately $500 million per year in export earnings (and we have recently announced additional government funding designed to grow this figure significantly).

Times change however and there are new pressures on and challenges presented to our university sector.

We have to face up to the challenges of the new environment, such as:

 the internationalisation of education;
 the growing importance of knowledge to the economy; and
 changes in modes of delivery in response to new information technologies

Different governments have responded to these challenges in different ways. The previous government sought to depart from the tradition of education as a public good – it sought to make that tradition secondary to the imperatives of competition.

This was the wrong path.

It was not wrong to see education and research as the basis of our success in an increasingly knowledge based world – they are – but it was and is wrong to believe we should treat them like any other commodity.

What we need to do now is reassert a vision consistent with the view of education that we have held in this nation over the past century.

The 21st century will mean challenges for in our tertiary institutions. They will have to become more connected and involved in the society and economy. So much more will be expected of them and they will need to deliver on those expectations by working closely with a variety of constituencies.

They will need to work with business.

Industry as a Stakeholder

A strong and vibrant tertiary sector is fundamental to the development of an inclusive and innovative economy through improving our knowledge base and technological capacity.

The more skilled our population is, the more it has the potential to achieve diverse aims.

All New Zealanders are in this together.

We need strategic directions.

We need priorities.

The Government will encourage this through its new Tertiary Education Advisory Commission.

Its work is to look at tertiary education as a whole and advise the government on long-term strategic directions. It has a mandate to make recommendations about the shape of the tertiary sector and the way that it is resourced.

Norman Kingsbury, an educationalist well respected throughout the sector and current Chief Executive of the New Zealand Qualifications Authority, chairs TEAC.

There are seven other members and one Special Adviser:

 Jonathan Boston, Ivan Snook and Linda Tuhiwai Smith from the university sector;
 Tony Hall from the private training establishments;
 Patricia Harris from the Crown Research institutes;
 John Ruru with interests in industry training;
 Linda Sissons, the Chief Executive of Hutt Valley Polytechnic from the polytechnic sector.
 Sir Colin Maiden has been appointed as a Special Adviser to the Chair of the Commission.

There is provision to augment the membership of TEAC if required, and I have already raised with Dr Kingsbury the possibility of using an additional appointment to increase the skill base of the Commission and to establish a more direct connection with the business community.

TEAC will be working closely with a variety of stakeholders. Its terms of reference stress the need for a greater partnership between key stakeholders, which includes industry.

Its members are asked to give advice on "how the opportunities for increased collaboration and co-operation across the sector can be maximised, and how the links with the wider economy and community can be strengthened."

TEAC is specifically asked to advise on how the sector can support industry development. It is my expectation that as a result of its consultation, deliberations and advice, there will be an improved relationship between the sector and industry.

I anticipate that the Commission's work will lead to the establishment of:

 A funding system that encourages institutions to work actively together;
 A way of funding research that advances excellence in a complementary way across the sector, avoiding unnecessary duplication; and
 A system where institutions identify what they do best in order to serve New Zealand’s social, economic and regional needs.

This will enable us to steer our tertiary system in a more cooperative and collaborative direction.

It will enable us to move to a position where we have a much greater degree of institutional differentiation and specialisation.

Our aim is "diversity with excellence". Diversity should be a defining characteristic of the excellence in our tertiary system, with each institution contributing in the areas where it has the greatest strength.

But, by the same token, excellence is the condition placed upon the drive for diversity - we will not support diversification into areas where we cannot be assured of excellence.

I would rather that we get to that position without having to resort to legislative instruments to do so. But I am prepared to use whatever instruments I have at my disposal.

I am of the view that we already have sufficient universities to meet our needs. Put simply we don't require any more – particularly at this time when the TEAC is working through the options for the development of the sector.

It may well be that the TEAC will recommend a new class of institution – I sense from my contact with the business community that many would welcome the development of a separate category of 'University of Technology'.

There may be some disquiet about institutional profiling and specialisation from some quarters. There are some that refuse to accept that New Zealand universities are indeed public institutions. There are some that feel more comfortable with government distance and disinterest.

Academic independence, and the independent role of universities as the critics and conscience of society, must be protected. But there need be no tension between academic independence and public accountability.

Society has decided that we may have left research priorities predominantly in the hands of academics last century, and that may have worked well on the whole. But times have changed. Knowledge is now hugely important throughout our society. We want to know what's going on in our tertiary institutions, and to be assured that these huge storehouses of knowledge and expertise are focussed on the same problems as the rest of us.

We can no longer afford for them not to be.

They're just too important for that.

Institutions are going to be asked to look at what they do best and how they can reinforce those strengths. This will be a challenge for them. It will also be an opportunity, because we are saying that we don't expect each one to be all things to all people - that they don't have to all adhere to the same mould.

It is an opportunity for innovation - a chance to build the best of the new on the foundation provided by the best of the old. That is my vision for tertiary education - it is a vision that allows us to preserve the tradition of education as a public good, and marry that tradition with the challenge of innovation.

There are few existing points of leverage available to me.

That will change. And I do intend to make use of institutional charters as we drive the reform process.

Learning for Life and Institutional charters

The aim of the Fourth Labour Government's Learning for Life reforms was to enhance such responsiveness in the tertiary sector. It has not happened to the extent that it should have. One reason, and there are several, is that after the change of government in 1990 little emphasis was placed upon demanding or adhering to strong charters.

The charters were amongst the lynchpins of our reforms.

The principals and Councils got the measure of institutional autonomy they had been requesting but this was within the bounds of carefully drawn-up charters setting out institutional missions.

There was a balance between accountability and autonomy, a sense of mutual obligation. That three-way partnership envisaged between Government, the institution and its wider community never eventuated.

There still remains a need for institutions to see themselves in terms of the wider national good.

Sound governance is crucial if institutions are to be adaptive in the face of a changing environment. We believe that the governing bodies of tertiary institutions should reflect their communities of students, staff, and other stakeholders, as well as the taxpayers' interests via government. We see industry as one of these stakeholders to be involved in future emerging partnerships.

Improving Opportunities for Participation

In working through the process of developing the Budget the Government looked at areas where New Zealand can make the greatest education gain. Let me comment on two in particular - student fees and loans and improved skills training.

1. Student fees

The rapid rise in tertiary education fees in the last decade is a concern.

As well as individual students, many parents have been hard hit by these increases. My colleague Trevor Mallard and I have been involved in a round of consultations with the tertiary sector with the objective of securing an understanding on fee stabilisation.

Fees are, of course, associated with student loans. Not only have we stopped charging interest on loans while students are studying, we have commissioned an evaluation into the processing of the loans.

We have requested the Parliamentary Education and Science Select Committee to review all aspects of tertiary education resourcing, including the student loan scheme. The TEAC will also look at resourcing tertiary education. When we receive advice from these groups we will further consult with stakeholders before taking further steps.

2. Industry training

Industry training is an essential component of the knowledge society. Individuals, by acquiring new vocational skills and developing their capabilities throughout their lives, benefit themselves as employees and their employers.

There has been a sharp increase over the last six months in industry training.

Not only has the expanding economy increased demand, there has been a continued expansion of industry training into industries which previously did not have systemic training arrangements.

One area of industry training in particular causes concern. One-quarter of all 16- and 17- year-olds and one-third of that age Maori are not in education or employment. Such a high percentage of school-leavers receiving little or no skills improvement is alarming.

This is the background to the government's announced Modern Apprenticeship programme - a move targeting the youth labour market. It will increase the opportunities for young people in particular to undertake training that will enable them to participate in and contribute to the knowledge society.

At present the number of apprentice-style trainees is roughly the same as it was in the 1980s but there has been a significant change in the age-level.

Only about 10% of trainees are aged under twenty.

Over 50% are aged 25 and older. Indeed nearly 20% are over 40. Clearly under the present system employers had gone for older, more experienced people.

While acknowledging the concern, ITOs found it difficult persuading employers to hire younger people. In passing it should be said, most employers are also parents.

The situation was a chicken and egg one. If school-leavers couldn't get work experience then they were unlikely to develop the skills and attitudes expected of them by employers.

If the trend continued we were on a path to polarised work force with a permanent under-class, unproductive and resource-costly. We were not prepared to sit back and allow such a significant segment of this generation of young people drift off into long-term unemployment or a low-skilled future.

We also were aware that industry leaders had been saying for some time that if government wanted more young people to be trained it would have to pay for it.

Apprenticeship is a tried and tested system for young people and existing workers to gain recognised and valued qualifications in a work environment. The small size of most New Zealand firms means that training arrangements must be flexible and oriented towards the realities of the workplace.

The key feature of the new scheme is that there will be 'co-ordinators' whose task will be to liase between employers and their apprentices. These people will help recruit and place apprentices and then support and counsel them through their training, both on-job and off-job. These people will both reduce the costs and risks to employers.

This apprenticeship scheme is what it says it is – modern.

Instead of being time-served, it will be standards-based and training will be linked to the National Qualifications Framework. That is, when apprentices reach the required competence they receive industry-recognised, nationwide certification.

Modern apprenticeships will complement, rather than replace, existing industry training and other tertiary education pathways.

They will be in new high technology areas as well as in the traditional trades.

The government is looking to industry, education and training providers - especially the polytechnics and ITOs - local authorities and iwi to develop partnerships around the delivery of this initiative.


I said at the outset that I didn't see this as a 'smoked salmon' kind of engagement.

I don't feel any need to rehabilitate my relationship with the business sector. I believe that it is already a very good one.

My sense is that business and Government are at one on the need to lift our human capability.

We are at one on this because it is good economic policy and it is good social policy. It makes sense.

 The market will not in and of itself meet the requirement to foster human capability.

 Government, or the state, can't do it in splendid isolation.

 It suggests the need for an alternative – by my counting that would make it a Third Way.

But perhaps that should be the topic of a separate engagement with you at some future point in time. I very much hope so.


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