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Innovative, Strong and Responsive Institutions

4 November 2000
Hon Steve Maharey Speech Notes

Innovative, Strong and Responsive Institutions:
Developing a Framework for Success

Keynote address to the Association of Polytechnics in New Zealand (APNZ)
2000 Conference. Wellington Town Hall.

INTRODUCTION

I am pleased to be here today. APNZ has a good record of service not only for its members but also for the tertiary sector as a whole.

I am going to talk today about the kind of sector that the Tertiary Education Advisory Commission’s and the Government’s efforts are aimed at developing. I will talk about the knowledge society and the vital role that polytechnics need to play in it. I will stress the need for institutions to be innovative, strong and responsive.

And I will announce for the first time the details of legislative measures to reinforce this that we hope to introduce before the end of the year.

THE KNOWLEDGE SOCIETY AND THE TEAC

This Government's advocacy for the development of a knowledge society is well known. The key to that knowledge society is education. If New Zealand does not have a vibrant system of life-long learning then we will never unlock the potential of that knowledge society. This is where your role becomes crucial.

This country needs strong, capable, dynamic, quality polytechnics. In partnership with government and industry your efforts to date and in the years to come will, I confidently believe, help us achieve the vision.

But the tertiary education system itself will need to change to support your efforts. That is why I am pleased with the way the work of the Tertiary Education Advisory Commission is progressing. It is opening up the debate and allowing the sector and the wider community to participate.

The Commission was not formed to invent the Government's policy. That had already been made clear as anyone who has read both Alliance and Labour 1999 education policies can confirm. Both parties wanted:
 A sector characterised by diversity with excellence;
 Cooperation and collaboration between tertiary education providers; and,
 The focus to be on strategy, quality and access.

The Commission’s role is to develop an approach to accomplishing that and to act as a means of consulting with the sector, industry and the wider community. I will receive its Shape of the System report by the end of the year. After discussion within the Government, I intend to release it early next year. I look forward with interest to your particular reaction to it as well as the general reaction.

THE INDUSTRY TRAINING REVIEW

As well as the Commission there is also the review of industry training arrangements that I announced late last month. While 63,000 workers have undertaken subsidised industry training since the passage of the 1992 Industry Training Act, it is now time to review that Act.

There are some issues that need consideration. These include, uneven training coverage across some industries, the capacity and the number of training providers, funding arrangements, the under-representation of women, and the fact that some industries have to relate to multiple ITOs.

A discussion document will be available in early 2001 seeking the views of all stakeholders. I know this is another issue of great interest to you and again I look forward to receiving your ideas and thoughts on it.

THE POLYTECHNIC IN THE 20th CENTURY

Before looking at the role of the polytechnics in the knowledge society I want to briefly look back. Like so many of the important facets of our education system, the development of polytechnics can be traced back to Clarence Beeby.

It was an appreciation of the needs of industry that motivated Beeby to develop the first polytechnics. He recognised the emerging need in the postwar era for a new breed of worker, whom he called the technician. Beeby saw that a technician needed something different from the technical high school education and apprenticeship of the tradesperson, but was different also from the professional engineers that the university produced.

Beeby's original vision was supplemented by the ‘community college’ model of the Third Labour Government of 1972-75. This American concept was community-centred, encompassed less vocational and more creative skills, and advocated ‘second chance education.’ The adoption of this model was largely due to a young MP named Jonathan Hunt who today is Parliament’s Speaker.

The Fourth Labour Government's Learning for Life reforms in the late '80s brought further innovations. Their intent was to reinforce the existing strengths of the polytechnic sector by updating what needed to change while preserving what was working well. The reforms aimed at a careful balance.

Principals and Councils gained the measure of institutional autonomy they had been requesting. But this was to be within the bounds of carefully drawn-up charters setting out institutional missions. Yet in the last decade little emphasis has been placed upon demanding or adhering to strong tertiary institution charters. The three-way partnership envisaged between Government, the institution and its wider community therefore never eventuated.

Polytechnics were given the ability to offer degree courses in their own right but Learning for Life Two was clear: “degree-level courses are expected to be a small percentage only of the total courses offered by polytechnics.” [p. 40] National's competitive model however created pressures for institutions to position themselves in the market by seeking the perceived 'status' of a degree.

An institutional definition of polytechnic drew together the missions of Beeby’s technical institutes and Hunt’s community colleges. It emphasised diversity, vocational training and promoting community learning. But this clear set of roles was undermined over the last decade. Increasingly, National thought in terms of some amorphous entity called a T.E.I. – Tertiary Education Institution.

This Government does not see you as generic T.E.I.s. We see you as polytechnics (or institutes of technology for those who prefer that) with a clear and distinct role to play in the new century.

THE POLYTECHNIC IN THE 21st CENTURY

I stress what I have said often. The Government sees polytechnics as the engine-room of the knowledge society. Far too often the focus of discussion of the knowledge society has been exclusively on a handful of scientists and managers at the top echelons of decision-making. The key factor is actually the importance of knowledge throughout society. To use Beeby's labels, every 'tradesperson' is becoming a 'technician' – and I would emphasise that this trend extends far beyond the job areas where those terms literally apply.

Our education system has to respond to this reality, both by equipping school-leavers and by updating older workers' skills. Inevitably, it will be the polytechnics that we turn to for this task.

This Government also sees polytechnics as a vital component of any strategy of closing the gaps for Maori and Pacific Island peoples. As you know, closing such disparities of advantage is a major priority for this Government. An important part of any successful strategy will be about building human capability, and here once again the polytechnics have a proven record of success. That is why polytechnics are likely to receive the largest share of the Special Supplementary Grants for support and services for Maori and Pacific students that I announced this week.

THE NEW ENVIRONMENT

How will the new environment enable the polytechnics to fulfil such roles?

There will be clear differentiation between institutional types and differentiation within types. We would also like to see specialisation by each institution. Polytechnics will be expected to refocus towards their legislative role. This emphasises diversity, vocational training and promoting community learning. For every polytechnic these statutory missions should take precedence over the provision of the sort of degree programmes that aim to emulate or compete with the universities.

Polytechnics will continue to be able to offer degrees. It is ten years since the legislative definition was enacted and we are not going to pretend that nothing has changed in that time. Nursing is a good example. This is an area that has moved significantly towards a degree-level entry qualification. There are strong arguments, and a long history, in support of nursing training being offered through the polytechnics. Polytechnic nursing degrees therefore make good sense.

Institutions should forget all that nonsense of competing with your neighbour for each small sliver of market share. If you want to know where our competition is, it is overseas, it is very well-resourced and it is increasingly aggressive. Our tertiary education providers have to act together in a more collaborative fashion. Institutions need to see themselves as each providing an essential element within an overall system, not competitors whose status comes solely from gaining the greatest number of students. We need a win/win situation, not a win/lose one.

I am pleased that the polytechnics have already started developing both formal and informal collaboration and co-operation. To give just a handful of examples:
 Waikato Polytechnic is working with Ruakura and Auckland University to identify a hormone that may be able to increase milk production;
 Christchurch Polytechnic has formed an alliance (Te Tapuae o Rehua) with Christchurch College of Education, Lincoln University, Otago University and Te Rununga o Ngai Tahu to enable Maori students to use the best path to improve skills in both industry and academia;
 Manukau Institute of Technology has outreach projects involving the local authority and local schools and one involving local Pacific Island churches.

Another important feature of the new system is the Government's commitment to maintaining and even extending the provision of tertiary education throughout New Zealand's regions. We see information and communications technology having a crucial role to play here. It will allow institutions to tap into one another's expertise to deliver a range of programmes that would not be viable otherwise, and may allow delivery into localities where provision is currently impossible.
GOVERNANCE AND MANAGEMENT

Polytechnics, like universities and other tertiary institutions, are Crown Entities. If a polytechnic went under the Crown would assume any residual liabilities that it had. A number of universities dispute, however, that the Crown 'owns' them in the usual sense of the word. Nonetheless, I think that everyone would agree that universities and other tertiary education institutions are public assets. The Government has the responsibility and the obligation to ensure that these assets are preserved and are used in the public interest.

Over the 1990s we had a Government that was careless with that responsibility. The competitive framework it set up seemed almost calculated to cause the failure of some institutions. If that was the plan, they nearly succeeded. Shortly after taking office, I was briefed by my officials on the parlous financial state of some institutions in the sector. A great deal of our energy this year has gone in working closely with institutions to bring them back from the brink.

Recently, one of the most difficult situations was brought to a successful conclusion. I approved the merger of Wairarapa Polytechnic with UCOL, to take effect early next year. I am very pleased with this result, which preserves and extends the range of education offered to the people of the Wairarapa. I am also pleased that this solution was arrived at in a very cooperative manner with the institutions and staff involved. We have Crown Observers working with a number of other polytechnics to address barriers to their ongoing viability.

MEETING NEW CHALLENGES

I am determined that I will not leave my eventual successor the same sort of legacy that greeted me, in terms of sector viability. Part of the solution to that is funding. We have to be clear about what it is we are asking from each institution and fund them in a way that realistically supports those expectations. If each institution has a clear and unambiguous individual mission agreed with Government, and is funded to succeed in this mission, then staff and students will have a significant degree of security, which they don't at the moment.

The Tertiary Education Advisory Commission will look at how to set up institutional profiles, and how to fund them.

However, we also have to be honest. It is not only underfunding which has caused institutions' financial problems. Funding alone will not resolve all the problems of the tertiary sector.

Institutions need to be:
 Well-managed;
 Efficient and effective; and
 Connected to the communities they serve.

They need to be able to retain the confidence of students, or else they will lose enrolments. They must also maintain the confidence of their community that they are well-managed and that their courses are of high quality.

They must be clear about their mission and what they stand for.

Let me be blunt. The kind of governance and management arrangements that prevailed in the last century are not adequate to meet the demands of this century.

While I still support a representative model of Councils, it is time to ensure everyone around the table understands the job they must do and have the appropriate skills. Equally it is time to ensure senior management have the skills to run highly innovative educational and research institutions.

The pressure to lift performance will continue to rise because, as we all know, our future as individuals and as a nation depends on the creation of a knowledge society. Education is central to that effort.

This Government wants to end the competitive model. And it wants to address underfunding. But we also want to ensure that the running of institutions is totally professional. If anything the demands on tertiary governance and management will be even greater in an integrated and responsive national tertiary education system.

Councils and management will need to take the future shape of the sector into account when making their decisions. It is up to them to ensure the ongoing financial viability of their institutions, but they need also to ensure they retain the relevant capabilities to operate effectively in the emerging environment.

TAKING ACTION

The Government is doing its part to strengthen the focus on effective and innovative Governance and management.

For the first time, this Government is putting ministerial appointments through the official Cabinet Committee appointments process. This will expose selections to much greater governmental scrutiny. I have also sent to all Councils a consultative, draft set of expectations for the role of ministerial appointees. We will also look to ensure the Council members get the training they need.

We are also preparing changes to the Education Act 1989 to improve governance and accountability of tertiary education institutions. The Education Amendment (No.2) Bill is intended to be introduced into the House next month to effect some governance and accountability changes.

The main driver for taking some limited action now ahead of the Tertiary Education Advisory Commission deliberations is to better manage the outcomes of the most ‘at-risk’ institutions.

Another reason for taking action now is to move the governance regime for tertiary education institutions in a manner that is consistent with the wider Crown entity reform process. The Government-wide Crown entities reform work is being led by the State Services Commission, and is aiming to bring greater consistency to reporting and accountability across the whole public sector for all Crown entities.
To emphasise good governance we are proposing to make two amendments to the duties and functions of governing councils. The function of councils with regard to appointing a CEO will be enlarged to include monitoring the performance of the CEO.
The other area of change proposed is to the duty of councils with regard to their financial management. We are proposing that this be amended ‘to ensure that the institution operates in a financially responsible manner that ensures the efficient use of resources and maintains the institution’s long-term viability’. Changing the duty of councils with regard to their financial management strengthens the requirements on councils to get involved with and be concerned about the financial well being of their institutions.
We are proposing to introduce a graduated risk management regime for tertiary education institutions. In general terms the approach will be:
 Under conditions of low risk, the Tertiary Advisory Monitoring Unit (TAMU) of the Ministry of Education would focus on assessing structures, planning and processes from a risk-management perspective, rather than making detailed evaluation of the decisions taken by each TEI; and
 Under conditions of high risk, TAMU would undertake greater monitoring and take a more active role in relation to the strategies and operations of the TEI.
On occasions of high risk a graduated, risk-based monitoring/intervention regime is being proposed, comprising:
 A requirement for more frequent and in-depth provision of information;
 Appointment of an Observer to the TEI Council; and
 Where TEI performance and/or governance seriously threatened the viability of an institution, the responsible Minister would be able to dissolve the council and appoint a commissioner whose task would be to assume governance responsibilities and to ensure the long-term educational needs of the community served by the institution continue to be met.

There are to be checks and balances to Ministerial powers to intervene. These proposed amendments do not allow the Minister to act without regard to sections 160 and 161 of the Act, which protect institutional autonomy and academic freedom. These sections of the Act remain unchanged. There are also administrative law procedures including the opportunity for councils to make submissions and then the option for parties to contest decisions. There is certainly no opportunity for Ministers to make capricious or unreasonable decisions that will not stand the test of scrutiny in a court of law.

We have begun discussing these proposed changes with the institution’s representational organisations, and the draft legislation is likely to be introduced shortly. The select committee process will take place in the first half of 2001.

We see these proposed changes as modest and relatively non-controversial. The Tertiary Education Advisory Commission will continue to report over the next year and any “big” changes will be made subsequent to TEAC’s advice.

As well as the proposed legislative changes we, through the Tertiary Advisory Monitoring Unit of the Ministry of Education, are taking a more pro-active role in working with institutions to develop strategies for developing capability and ensuring medium-term viability. This includes working closely with at-risk institutions to develop long-term solutions. This reflects our concern that institutions work more together and more with the government to achieve common objectives. We will also be taking an increasing interest in the strategic plans of institutions, and hope to see greater articulation of strategic planning in the annual statements of objectives.

Many of you will already be aware of the initiative, which the Tertiary Advisory Monitoring Unit has taken in the study on shared services. I hope that institutions will look seriously at the potential benefits which collaboration such as this can offer.

CONCLUSION

I want to finish by making it clear that nothing that I am suggesting will be allowed to interfere with academic freedom or institutional autonomy. I believe absolutely in both of these principles.

Nor am I advocating a 'managerialist' model of tertiary education. In the past much of the management and administration of institutions was carried out by ex-professional staff trying to be managers. Now it sometimes seems that that situation has been totally reversed. In such circumstances the needs of the learners can be ignored.

We have to go beyond managerialism to a new partnership between governors, managers and teachers with a clear focus on the needs of all stakeholders.

I thank you for the opportunity to speak to you today.

Ends

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