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Tertiary Education and the 2000 Budget

Steve Maharey Address to the Aotearoa Post-compulsory Student Union (APSU) National Student Conference, Tauhara Centre, Taupo, Friday 23rd June 2000 Speech Notes

Tertiary Education and the 2000 Budget

Thank you to the Aotearoa Post-Compulsory Students Union for giving me the opportunity to speak today. I have enjoyed a strong relationship with APSU over a number of years now and I am confident that that will continue for many more. I'd like to particularly thank your President, David Penney, who has worked constructively with us this year over a number of issues while at the same time not being afraid to criticise us on areas where he feels he has to.

I would also like to pay tribute to David's predecessor, John Barkess, who did so much to raise APSU's profile with the public and with politicians, and mention particularly the strong advocacy he has provided over the transfer of loans and allowances to the Department of Work and Income. As you know I have directed the Ministry of Social Policy to carry out of an evaluation of this year's loan processing disasters and I aim to release the findings of that evaluation next month.

I also send my greetings to those representatives of your sister organisation, the New Zealand University Students' Association, who are with us today.

I am always pleased to be with people who give a commitment of their time and energy to work for the betterment of their sector.

Tertiary education, through its variety of mechanisms, is absolutely critical to the continued development of New Zealand. It is my intent today to talk about our plans to introduce greater affordability in tertiary education, and in particular the fee freeze we're aiming to establish. I also want to looking at our aims in the areas of Closing the Gaps and industry training, and to conclude with some thoughts about the direction we're trying to take tertiary education.


Let me first put my talk into a larger perspective; the so-called Information Revolution, with its globalisation of the world economy by the use of new technology. This present Information Revolution has been likened to the Industrial Revolution early stage when the steam engine was just being put on rails.

All the pundits agree that the early decades of the 21st will see accelerating change as the Internet and a host of inventions, unknown at present, impact upon our culture, society, economy and lifestyle. These forces offer new and exciting ways of learning. Many of you will be involved in developing and shaping these changes. All of you will have to deal with the challenges and consequences they bring.

These changes will create what we call the knowledge society. But what form will our knowledge society take? The Government is convinced that a strong, capable, dynamic tertiary sector is an essential component of a world-class knowledge society.

If access to the various parts of the sector is denied to people who have the ability and the will to participate then that will act as a brake upon the growth of that sector. Indeed the non-participation by significant numbers of a nation's population will have a great bearing on our ability to deliver the type of society within which most New Zealanders would wish to live.

What sort of nation do you want to live in? I know what one I want to live in. It is a nation where fair play is accepted, where people can live with dignity and work together to build better communities, have the opportunity to think for themselves, can acquire new knowledge and skills easily and have the capacity to use such knowledge and skills as compassionately and energetically as possible.

We need a society which welcomes new ideas, is innovative and creative while at the same time it is equitable and just. We need a society that provides the opportunity for people to access education throughout their adult life.

The aim of the Fourth Labour Government's Learning For Life reforms was to enable responsiveness to these accelerating changes and other demands upon the tertiary sector. But the nation has been on the wrong path for a decade, pursuing a wasteful, competitive model.


For nine years, under the previous Government's policy, student fees escalated. From 1990 when a standard fee of $1,250 was charged, average fees have increased to approximately $3,500. This rapid rise was a concern, for as well as individual students, many parents have been hit hard by these increases. Further it put institutions, already under a sinking lid, under greater financial pressure and diverted time and energy from the core task of providing life-long learning.

This rising cost compounded a growing win/lose education system at all levels. This competitive process was part of a wider creation of a win/lose nation. New Zealand's increase in inequality was relatively large in comparison with other countries and we now have one of the most unequal income distributions in the world.

Last week's Budget saw many steps to reverse this trend. The Government is unashamedly determined to do this. But such trends cannot be reversed over night. And we have had to prioritise.

In an effort to improve access and affordability to the tertiary sector we have invested $664 million into improving the lot of students since becoming the Government. However, we are aware there are many other steps to be taken.

One of our first steps is to stabilise tertiary education fees. The Budget confirmed that EFTS-based funding will be increased by 2.3% from 1 January 2001 to those tertiary education providers who accept the offer.

My officials will be in discussions with education providers over the next few months and I hope that by September we will know which institutions will accept the offer.

I want to be clear about what fee stabilisation will mean. Those institutions that take up the offer will have to keep every single fee rate and every single programme levy at the same level as in 2000.

There will be no ability for institutions to 'trade off' decreases in one area against increases in another.

This will make the undertaking transparent and easy to follow. Students will immediately be aware if any institution breaches the 'fee freeze' because any rate that is higher than this year's will be a breach – no if's, but's or maybe's.

The one exception is where institutions have had separate fee rates for study right students and non-study right students. As you will know, we are also completing the phase-out of the Study Right funding differential next year. This differential was inconsistent with goals of encouraging lifelong learning, and added administrative complexity to the funding system.

However, this means that institutions with dual rates are going to have to move to a single rate at the weighted average of the two 2000 rates for each area. Ministry of Education officials will work closely with these individual institutions to see that this is carried out fairly and accurately.

Other than that I'm looking at a pretty light-handed monitoring regime – we don't want to get too bureaucratic about this. But I'm sure that the Ministry of Education can count on student associations to 'blow the whistle' on any attempts to get away with charging students more. This Government – unlike the previous one – believes that student associations have an important role to play in the operations of tertiary education!

Trevor Mallard, the Minister of Education, and I have made it very clear to institutions that any breach of the 'fee stabilisation' contract – even a small one – will result in forfeiture of the entire supplementary grant, equivalent to 2.3% on top of the regular tuition funding. To be honest, I don't think any institution would be foolish enough to try it.

2001 is only a first step of course. And the particular approach of an across-the-board freeze at 2000 levels has been clearly signalled as an interim measure. It is our intent as we go along to bring fees back to a reasonable level. But as I said earlier it takes time to change direction.

The taxpayer is already spending nearly $2 billion dollars on tertiary education. We want to ensure value for money and that means balancing institutional and individual students needs. This means consultation and the development of policies that are fair and equitable with all parties.

The focus next needs to shift to investing in the system itself. The Government currently spends close to $2 billion dollars on that funding. The newly formed TEAC (Tertiary Education Advisory Committee) is charged with looking at tertiary education as a whole and advising us on long-term strategic directions as well as resourcing.

Established earlier this year as one of our first tertiary initiatives, TEAC has a mandate to make recommendations about the shape of the tertiary sector and the way that it is resourced. The advice we receive from its members will reinforce the further steps we take to improve access and affordability.


However we have already spent a considerable amount on a number of other measures to improve the affordability of study.

Dental students, in particular, were hard hit by high fees. We have ensured that tuition fees are now on the same level as for medicine.

Fees are, of course, associated with student loans. We have stopped charging interest on loans while you are studying for full-time and other low-income students, at a cost of $420 million over four years. That is one of the most expensive single initiatives that this Government is likely to produce.

The Inland Revenue Department will be writing to all borrowers in early 2001 and asking anyone who was a student in 2000 to write back with a student ID number. That way, when the 2000/01 interest increment comes round, they will automatically have all their interest for the year wiped.

I'm well aware that many students move addresses often, so I'd urge student associations to get the message across to them that they should get in touch with IRD if they don't think IRD is going to be able to find them. And don't worry – we aren't going to remove your write-off entitlement if you don't apply until after interest has already accrued. It will be possible to get the write-off backdated.

I'd also assure you that this is only a transitional mechanism. We're looking at approaches for the following year which mean that the write-off will happen automatically.

Other loan measures include freezing the interest rate for the 2000/01 income tax year has been frozen at 7.0%, and rescinding the previous government's decision to raise the repayment rate to 15 cents in the dollar for income earned over $50,000. And, of particular benefit to your own organisations, compulsory student association fees may now be borrowed under the compulsory fee component of the Student Loan Scheme again.

Moreover, we have requested the Parliamentary Education and Science Select Committee to review all aspects of the student loan scheme.

We have also made a number of changes to the training incentive allowance (TIA) in recognition of the additional barriers to paid employment that are faced by domestic purposes, widows and invalids beneficiaries. The TIA provides assistance with fees and course costs for those groups of people.

Although studies showed that receipt of the TIA is associated with improved employment outcomes, the previous Government constrained the allowance. In particular, it changed the allowance so that it represented a co-payment of 60% of fees and course costs and it equalised the rate across beneficiaries to a maximum of $75 per week (those in tertiary study had been able to assess a weekly maximum of $81.65).

From 1 January this Government:
 abolished the co-payment so that now the TIA covers up to 100% of fees and course costs;
 introduced an annual inflation adjustment to the TIA from 1 April 2000; and
 restored the TIA to beneficiaries who have completed a degree course within the previous five years, if they are undertaking a short term employment related training course.

This Government has also provided greater resources to Student Job Search to better enable them match students with work over the summer vacation periods. Last week’s Budget included an initiative that will result in a wider provision of summer services from Student Job Search. In particular Student Job Search will, with the increased resourcing, now be able to operate in locations such as Timaru, Gisborne and Nelson. There will also be an investment in the computer systems of Student Job Search that will, for example, allow them to link directly with the Department of Work and Income.


The Budget contained several special equity initiatives to enable Maori, Pacific Islanders, and other under-represented groups to overcome barriers to education participation and achievement at all levels.

Our attainment of a successful knowledge society will depend to a considerable extent how much we can close the gap of Maori educational under-achievement. 'Closing the Gaps' is a major priority for this Government and the Prime Minister has taken personal leadership of our efforts.

In the sector for which I have responsibility many Budget initiatives are part of this policy. Many are in the area of transition from school through further education to the workforce.

New funding for the Careers Service will enable it to deliver better targeted careers education services to teachers and parents, especially those in low decile schools. More occupational and industry outlook information will be developed for inclusion on the KiwiCareers website which is used by people as a key source of impartial career and training information.

We have decided to fund permanently the CareerPoint 0800 information line which has been successfully trialed this year. This provides free career and training information and advice to help people of all ages make the best possible decisions about their working lives. During piloting it was well-used by people in rural communities, and by Maori, and we are impressed with its ability to reach New Zealanders who may otherwise have no access to careers advice.

We have introduced Gateway, a new programme designed to provide young New Zealanders with the opportunity to mix experience in a variety of workplaces with normal course work. Building on the STAR initiative, Gateway will provide an even greater range of pathways for young people.

Another step in closing the gaps is to ensure more effective use of second chance education, especially in the field of literacy.

Further, funding has been given to the development of a Maori Tertiary Education Strategy. The aim is to contribute to closing the gaps between Maori and the rest of the population. It will empower Maori communities to build their own capability in tertiary education provision and increase support for those who have left school without basic skills, in particular literacy.

Participation by Pacific Island people is also lower than that of the generic population. There is a strong need to identify barriers more vigorously in order to address them and close the participation gap. We therefore are commissioning research to inform future policy-making.

These are just the first steps. My officials are currently immersed in a major work programme developing initiatives to close the gaps for Maori and pacific island peoples in tertiary participation and achievement. I believe you can look forward to some significant measures in this area.


I would also like to mention our initiatives in the area of industry training. Industry training does in many cases involve services provided by the polytechnics that many of your associations come from. More generally, however, industry training is vital to extending learning opportunities to those who might otherwise have missed out, something APSU has always championed.

It is also an essential component of the knowledge society. Individuals, by acquiring new vocational education and training 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 16and 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.

Yet 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, IT0s found it difficult persuading employers to hire younger people.

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

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 'coordinators' whose task will be to liase between employers, in particular small employers, and their apprentices and other stakeholders such as ITOs. These organisations will help recruit and place apprentices and then support and counsel them through their training, both on-job and off-job. These organisatons will both reduce the costs and risks to employers.

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

1. 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.

2. Modern also because we are extending apprenticeships to the new industries which have sprouted in our economy.

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.


Put together, you can see, all these initiatives will enable gains to be made and gaps to be closed in developing the dynamic tertiary sector this nation needs.

To achieve that dynamic tertiary sector 'diversity with excellence" this Government has clearly signalled that it expects institutions to
 Be co-operative and collaborative;
 Contribute to the nationwide tertiary sector based on their individual strengths and specialties; and
 Have a strong regional and community focus.

It is my long-held conviction that the 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. We do need that win/win situation, rather than a win/lose one.

A few critics claim such talk of collaboration means we lose our competitive advantage. Nonsense. Collaboration is happening throughout the global village. There has been an explosion of trans-disciplinary scientific research. As such research has become increasingly expensive and specialised, collaborative international links have been established between centres. This not only reduces the likelihood of duplication and wasted effort; it increases both the specialisation and the interdependence of the various centres.

The emerging global economy provides a great opportunity for New Zealand to tap into the global knowledge base. We shouldn't lose sight of the fact that we currently only carry out about 0.13% of the total global investment in science and technology. That means that there's 99.87% we do not do.

In order to gain access to this global knowledge base we need to build our networks and develop collaboration opportunities. The energy and time that has been put into the competitive model at home has diverted attention from this crucial task.

Our policy is also quite clear on another mater; we need greater differentiation between the various types of tertiary institutions.

We intend to go back to heart of the Learning for Life reforms which were based on clear institutional types - universities, polytechnics, colleges of education and wananga. We will ensure that each of these institutional types has a role and clearly understands what it is. We will reinforce the differentiation between them, and also encourage each individual institution to specialise on its own strengths and the needs of its community.

Also at the centre of the Learning for Life reforms is the concept each institution having a clear and unambiguous mission agreed with Government, and is funded to succeed in this mission, then staff and students will have a significant degree of security, something they do not have at present. We will work to restore that concept.

With support from people like yourselves, we can succeed in achieving these objectives; and then the tertiary sector will be that dynamic entity needed for a modern knowledge society.


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