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Bill to strengthen tertiary governance

12 December 2000 Media Statement

Education Amendment Bill to strengthen tertiary governance

The Education Amendment Bill (No. 2) introduced to Parliament this week matches tertiary institution governance and management capabiities with the demands of the 21st century, says Associate Education (Tertiary Education) Minister Steve Maharey.

Some of New Zealand's tertiary institutions have been experiencing severe financial difficulties. This has highlighted the gaps which exist in the current legislative framework to enable active Government support. New measures contained in the Bill strengthen the ability of tertiary institution councils to hold institution chief executives accountable and allow for greater Government assistance to at risk institutions.

"The demands on tertiary council governance and management have substantially increased in line with the level of skill needed to be active in the modern economy. The Bill gives tertiary councils new clear responsibilities.

"Where institutions are at financial risk the new legislation will provide for a new series of powers and improved monitoring comprising:
 a requirement for more frequent and in-depth provision of information;
 the appointment of an Observer to the Council of the institution; and,
 where institutional performance and/or governance seriously threatens 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.

"The legislation has been drafted to focus upon situations where institutions face genuine financial risks or where continued provision is at risk. Proper checks and balances on the use of these powers will also be provided for in order to preserve the balance between institutional autonomy and the public interest.

"It is now ten years since the passage of Labour's Learning for Life reforms that established the current tertiary governance and accountability framework. The Government wants to ensure that our institutions are well managed to meet the changing needs of New Zealand's society and economy this century," Steve Maharey said.

ENDS

Attached is a summary sheet detailing the tertiary education provisions of the Education Amendment Bill (No. 2).
. . / 2

The Education Amendment Bill No.2 is currently going through the legislative process. It includes several proposals to lift New Zealand’s education performance, including:

Increased Duties for Tertiary Education Institutions Councils and a New Monitoring Regime

The Government wants to halt the too frequent occurrence of tertiary education institutions being at risk.

Background to the Changes
 The Government is seeking to enhance the quality of the governance of tertiary education institutions;
 The complexities of managing and operating successful and innovative tertiary institution have increased;
 The Minister currently has little or no statutory authority to intervene and this carries risks for financial outcomes;
 The proposals are consistent with the wider Crown entity reform process;
 The Government is determined that where educational provision is threatened by ineffective governance or management, early and useful intervention will be allowed for in the law;
 Well-managed and high performing education facilities will not be affected by this widening of intervention powers. Communities where education has not been well managed will be the beneficiaries.

The Proposed Changes
 The Bill will propose that the duties of councils be enlarged to include monitoring the performance of their chief executive officer (CEO); and ensuring that their institution operates in a financially responsible manner (i.e. uses resources efficiently and maintains long-term viability);
 There will be a set of graduated monitoring and intervention powers proposed, including: (a) a requirement for institutions to report more frequently and in more depth; (b) power to appoint an Observer to a council; (c) power for the Minister to dissolve a council and appoint a commissioner if the viability of an institution is seriously threatened by shortfalls in either performance or governance;
 There will be checks and balances to Ministerial powers to intervene. The proposed changes do not allow the Minister to act without regard to sections 160 and 161 of the Education Act, which protect institutional autonomy and academic freedom. Councils will have the opportunity to make submissions and contest decisions;
 Sections 160 and 161 of the Act will remain unchanged.

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