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Tertiary Education Reform Bill Backgrounder

This Bill amends two existing pieces of legislation, the Education Act 1989, and the Industry Training Act 1992.

This Bill gives effect to the Government’s reform of the whole tertiary education system. We began this process upon entering office – immediately recognising the critical contribution that tertiary education and training has to make to New Zealand’s future as a knowledge economy and society.

This Bill represents the culmination of two years work by the Tertiary Education Advisory Commission, by an Industry Training Review Group, and by the Government. It sets the framework for our tertiary system to enable it to meet the challenges of the 21st Century and anticipate and respond to our future skill development needs.


Our current tertiary system is not always connected to New Zealand’s goals. The system as it stands is also fragmented.

The current system has been too narrowly focussed on student demand. This has led to competition and duplication.

These timely reforms will lead to a more co-operative and collaborative tertiary education sector, which is characterised by excellence, greater specialisation of investment and less duplication of effort.

As part of its commitment to lifting New Zealand’s performance, Government needs to carefully focus its investment in what we call ‘enabling’ sectors, such as tertiary education.

We need a system that is ‘connected’ to New Zealand’s national development goals, and ‘connected’ with other sectors of society and the economy.


This Bill establishes the new direction and policy framework for the whole tertiary education sector, based on recommendations by TEAC.

The sector is a diverse one, spanning all learning in quality-assured environments beyond the school system. In 2000, close to a third of a million learners participated in tertiary education. They learned in universities, polytechnics, wananga and colleges of education, registered private training establishments, in the community through adult education programmes, and on the job through industry training organisations.

This Bill establishes a new Crown Entity, the Tertiary Education Commission (TEC) to oversee, for the first time, all tertiary education – with the important inclusion of training.

I will soon be calling for expressions of interest from people wishing to become members of the TEC Board. Clearly the success of TEC depends on attracting high calibre people to govern it.

The TEC will embrace both Skill New Zealand and the tertiary operational functions of the Ministry of Education. The uniting of government’s tertiary education operational functions in TEC will allow the tertiary education system to actually be treated as one integrated system.

This is an important milestone. Eleven years ago, the Fourth Labour Government introduced the National Qualifications Framework and put New Zealand at the forefront of an integrated approach to lifelong learning. Over the last decade many countries have begun to follow New Zealand’s lead. The establishment of the Commission takes New Zealand’s integrated approach to the next level, and once again provide the lead for other nations to follow.

Alongside the development of the National Qualifications Framework, supervision for training programmes was moved from the Department of Labour to the Education portfolio under the Education and Training Support Agency, now known as Skill New Zealand.

For just over a decade, this agency, with Max Kerr as General Manager at the helm, has successfully administered and developed both foundation education programmes, such as Training Opportunities and Youth Training, and the Industry Training Strategy. They have located these programmes within the education system, as key users of the Qualifications Framework, while maintaining their vital labour market connection.

The integration of Skill New Zealand into the Tertiary Education Commission is recognition of that decade of success. The process of bringing what has traditionally been seen as vocational training within overall network of a person’s learning throughout life will now be taken to the next level – while continuing to maintain the distinctive characteristics that make industry training and foundation education programmes unique.


The Bill provides the means to fulfil Tertiary Education Strategies, now and into the future. The Tertiary Education Commission will be dedicated to implementing the Strategy. It will work closely with industry and communities (including Maori and Pacific communities), to ensure their needs are met.

TEC will use this Strategy to shape and drive a dialogue with providers, which for most providers will be about shaping a new way of thinking and developing new organisational strategies. The Strategy will inform the development of tertiary education priorities by the Government and the development by TEC of criteria for funding.

The tertiary education priorities will shape the sector. They will form the basis for the approval of charters and profiles for all publicly funded tertiary education providers and ITOs.


Charters and profiles will give us a better idea of the shape of the complex tertiary sector and improve decision-making about the best use of public funding.
Charters will be high-level governance documents that set out the strategic direction of providers and ITOs. Public tertiary institutions already have charters. They will be new for ITOs and private providers.

Profiles are new to the sector. They will spell out exactly what a provider or ITO has on offer and enable decisions to be made about where resources can best be used.

Although I use the term “new”, profiles will be based on current information provided by providers, existing contractual arrangements and Statements of Objectives.

The system of charters and profiles will be phased in. The architecture for the new system will be put in place and TEC established on 1 July 2002. The requirement for charters and profiles will take effect from 1 January 2004.

The overall requirements in charters and profiles will be the same for all tertiary education providers and ITOs. Approved charters and profiles will be required for providers and ITOs to receive public funding.

The reforms will therefore bring greater coherence to the tertiary system. There will be more coherence, but differences will be recognised.

There will be some specific content requirements in charters and profiles for different provision. For example, the recognition and re-recognition process for ITOs will reflect the central role of industry, but also form part of their charter approval process.

We will be changing the funding system to better meet the objectives of the Strategy. This Bill provides for enabling funding provisions that will be able to accommodate the new policies. The major plank of the Government’s response to TEAC’s final report will be a series of decisions relating to the future funding framework for the tertiary system.


The Tertiary Education Reform Bill directly strengthens the industry training part of the tertiary education system.

Thanks to this Industry Training system, more New Zealanders than ever before are now involved in systematic industry training linked to nationally recognised qualifications. During the year 2000, more than 81,000 learners participated in industry training.

The changes to industry training in this Bill will enable the continuing development of Modern Apprenticeships within the industry training system. This successful Government initiative has already grown from its beginning at the start of this year to over 1600 new Modern Apprentices available in 26 different industries across the economy, with more to come in 2002.

To further improve these results, Government conducted a Review of Industry Training in New Zealand this year, with the aim of ensuring the industry training system can better serve current and future skill needs and both employers and employees.

Many interested parties were consulted in this Review process. Submissions were received from a wide range of stakeholders.

There was an overwhelming call in these submissions for industry training to take its place alongside other learning pathways in a much more cohesive and forward-looking tertiary sector.

This Bill will help to achieve that goal. Industry training receives the recognition and attention it deserves as a quality tertiary education pathway. Continued fostering and development of the industry training system will be an important part of the work of the Tertiary Education Commission.

Specific provisions, as part of this package of reforms, including amendments to the Industry Training Act 1992, include:
 The recognition of Industry Training Organisations, currently the work of Skill New Zealand, will be incorporated within the Charter to be approved by the responsible Minister, providing for consistency across the tertiary education sector and preventing duplication of processes.
 New criteria for recognizing ITOs, requiring them to provide greater leadership in skill and training matters for their industries.
 ITOs will also need to provide for the collective representation of employees in the governance of the ITO. Trade Unions already are making an important contribution in the governance of a large number of ITOs and the Government wants to encourage a much higher degree of bi-partite cooperation between employers and unions in industry training.
 The Tertiary Education Commission will work with ITOs who are not adequately fulfilling their industry’s requirements to help them improve their performance. Where this process is unsuccessful, TEC may cancel or suspend an ITO’s recognition.
 An ITO will be able to impose a levy on firms in an industry or sub-industry, on the voluntary balloted agreement of a majority of employers. Such levies will be used to fund industry leadership and qualifications design, but not for the purchasing of training.
 Initiatives undertaken are also placing stronger emphasis on multi-industry generic skills, purchasing of adult literacy programmes, and providing better information for decision makers and planners to deal with skills shortage issues.


Taken together with manifesto commitments from the 1999 election, the result is a package of reforms that will enhance the quality and responsiveness of the industry training system.

These comprehensive and far-reaching reforms, to be given effect through this Bill, will ensure that we have a tertiary education system that can deliver the capability New Zealand needs to become a leading-edge knowledge economy and society.


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