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Cullen on Auditor-General’s wânanga report

6 December 2005

Cullen on Auditor-General’s report into the wânanga

“The issues raised by the Auditor-General are serious and highlight concerns that the government has been pursuing with Te Wânanga o Aotearoa for some while,” Tertiary Education Minister Michael Cullen said today.

He was commenting on the tabling in the House of the Auditor-General’s investigation into the wânanga.

“The poor management of perceived conflicts of interest in the awarding of contracts to family members; the lax accounting for credit card and international travel expenses and the frequent failure to prepare proper business cases for property development and purchase decisions are completely unacceptable in a public sector organisation,” Dr Cullen said.

“Some of these problems reflect the wânanga’s rapid expansion between 1999 and 2003 under the funding framework inherited from the previous National government in which funding was dictated by enrolments and organisations had a lot of autonomy regarding course content and the scope of qualifications offered.

“Those matters have been addressed through the establishment of the Tertiary Education Commission; the new emphasis on ensuring quality and relevance in courses and the leverage created by the requirement that institutions develop charters and profiles to justify their funding,” Dr Cullen said.

“The government has also introduced a range of policies to control the growth in student numbers. These include funding caps and constraints on the growth and proliferation of new programmes.”

A number of steps had been taken at the wânanga level since August 2004 when the audit was initiated, to strengthen the wânanga’s financial and internal governance structures and to safeguard the interests of the student population.

These included the appointment of Brian Roche from PricewaterhouseCoopers as Crown Observer in February 2005 to provide advice to the institution’s council. In March the council agreed to appoint Mr Roche Crown Manager and to delegate to him control of all the council’s financial responsibilities.

“I am confident that the current council, assisted by Mr Roche, will address any unresolved issues raised by the Auditor-General,” Dr Cullen said.

Consultations begun in May this year to appoint a statutory commissioner to the wânanga had been disrupted by a legal challenge to the legitimacy of the council. The High Court turned back that challenge when it ruled recently that former council members had legally resigned.

“But in light of the progress being made at the wânanga, I have decided not to continue the commissioner process at this time. I will, however, monitor developments closely and reserve the right to take such actions as may prove necessary.

“The government has a duty to protect the students at the wânanga and to ensure that the taxpayer’s dollar is well spent. Thousands of learners who had previously been unsuccessful in education have successfully participated in tertiary learning through the wânanga. We need to build on this platform and to ensure the wânanga’s viability into the future.

“I believe it would be in the best interests of the wânanga if Rongo Wetere listened to some of those closest to him and stood aside as chief executive.

“There is every reason to expect that the wânanga is capable of building on the real achievements which have been masked by governance and management failures. It is the intention of the Crown to work in partnership with the current council to constitute a fully representative council in accordance with Te Wânanga’s constitution,” Dr Cullen said.

************

ATTACHED:

Timeline of interventions.

Timeline of tertiary policy changes.

Timeline of interventions and actions at Te Wânanga o Aotearoa

Start date Lead Nature of action Outcome

Apr 99 Waitangi Tribunal 'Wânanga Capital Establishment Report' released

Nov 01 Deed of Settlement concluded Capital injection 2001-2003 followed by a suspensory loan over 2004-06 if conditions as set in the Deed are met
2002 NZQA /MoE Monitoring increased due to concerns over quality and financial management

May 02 NZQA Focus Audit Review of 2001 audit action plan An audit report was produced
13 requirements not met

May 02 MoE Crown Development Advisor appointed Attends all council meetings, assists with governance and financial matters.
Some improvements in governance

Jun 03 TEC Managing Growth Policy announced

Dec 03 NZQA NZQA Audit Report released Audit report identified significant quality issues

Dec 03 TEC Wânanga managing growth caps 2004-2006 agreed with TEC

Aug 04 Minister Letter to Office of Auditor-General Minister asked Office of Auditor-General to investigate possible conflicts of interest

Dec 04 TEC Wânanga’s Profile agreed by Tertiary Education Commission Tertiary Education Commission identified areas for further development: gaps in Profile content and criteria, gaps in management and governance areas, performance indicators, competition with other providers, information on quality measures, growth in non-EFTS activities (e.g. brokering trade training, international activities)
28 Feb 05 Minister Announcement of government package of action Crown observer appointed, change to wânanga borrowing conditions, renegotiation of Charter, responded to Auditor-General's offer to bring forward some components of review

Reviews of pricing, quality and value of courses across tertiary sector announced

28 Feb 05 Minister Letter to Office of Auditor-General asking them to look into further issues arising at wânanga Ongoing

8 Mar 05 MoE Crown Manager appointed (by resolution of wânanga’s council) Crown manager takes control of finances and restructuring plans

18 Mar 05 Minister Government announces Office of the Auditor-General enquiry (and Terms of Reference) Investigation of use of public monies

23 Mar 05 Minister Minister writes to wânanga’s council seeking review of charter given concerns with strategic direction of wânanga Review of wânanga’s strategic focus

9 May 05 Minister Minister commences the process to consider the merits of a Commissioner Review of the necessity of increased intervention

16 May 05 Minister Crown loan provided to wânanga (loan subsequently rolled-over until 31 Oct 05) Secures wânanga’s financial position

20 Jun 05 Minister Announcement of Minister’s preliminary decision to appoint a Commissioner Increased focus on change requirements

July/Aug 05 TEC` A1/J1 review of wânanga sub-degree programmes for strategic relevance initiated Being assessed currently

Aug 05 Wânanga Wânanga announces restructuring plan and new senior management appointments Consultation on restructuring plan initiated and applicants for new senior management positions being considered

Aug 05 NZQA Focused Audit on new programmes and Academic Board processes Recommendations for improved quality assurance made

19 Sept 05 Crown Aotearoa Institute lodges claim with Waitangi Tribunal Focus on statutory intervention, suspensory loan and future direction of wânanga

13 Oct 05 Crown Waitangi Tribunal hearing into urgent application Tribunal decides to proceed with the claim in relation to revised charter, student profile and future direction of wânanga.

Crown agrees to halt charter negotiations until Tribunal reports at year end
31 Oct 05

Minister Crown Loan rolled over to 15 Dec 05 Secures wânanga’s financial position

Nov 05 TEC Preliminary assessment of results of A1/J1 review Review ongoing

4 Nov 05 Minister Minister writes to Council asking them to reconstitute council Council taking steps to reconstitute

16 Nov 05 Minister Minister informs wânanga’s council he will not confirm his preliminary view to appoint a commissioner Monitoring and scrutiny of wânanga ongoing

30 Nov – 2 Dec 05 Crown Waitangi Tribunal hearing Tribunal will report by the end of 2005
1 Dec 05 Wânanga Submits Profile for 2006 – 08 to TEC for approval Currently being assessed
06 Dec 05

Minister

Auditor-General’s report into TWOA presented in the House of Representatives
Dec 05 Minister Crown Loan expires 15 Dec 05 Roll-over of loan under consideration

Timeline of Tertiary Education Policy Changes impacting on Te Wânanga o Aotearoa (TWOA)

Date Policy Description Impact on TWOA

1998 Funding cap removed Allowing unlimited expansion of enrolments in tertiary education organisations providing requirements were met.

2000 Special Supplementary Grants (SSGs) SSGs introduced to fund support services for Mâori, Pacific and disabled students to encourage greater participation and completion in tertiary education. High percentage of Mâori enrolments at TWOA would enable the institution to access these grants.

2002 Tertiary Education Strategy (TES) The TES articulates the strategic direction and priorities for the tertiary education system over a five-year period. Outlines government’s six strategies for tertiary education.

Strategy 2 of the TES relates to the contribution of Mâori development aspirations.

2002 Interim Statement of Tertiary Education Priorities (STEP)

First STEP. Looks at short-to medium term priorities. Focused on implementation of the TES. Signalled changes in funding system and changes in approach to tertiary education policy. This STEP focused on access and capability issues.

12/2002 Education (Tertiary Reform) Amendment Act Established Tertiary Education Commission and set out its duties. Established charters and profiles as tools to align provider behaviour with national goals.

01/2003 Tertiary Education Commission established

Established to oversee the implementation of the TES by regulating, funding and monitoring the performance of the tertiary sector.

08/2003 Statement of Tertiary Education Priorities 2003/04 Second STEP. Emphasised need to maintain momentum for change. Identified priorities for

2003/04. Continuation of development of infrastructure and processes to support reforms.

Continued emphasis on capability, with a new emphasis on skills.
2003 Performance Based Research Fund (PBRF)

The PBRF is a separate fund established to increase average quality of research.. Provided to institutions through a bulk grant. TWOA participated in PBRF, but only in relation to research degree completions.
2003

Managing Growth Policy limits annual growth per tertiary education provider for actual funded domestic EFTS to 15 percent of previous years funded enrolments or 1000 EFTS, whichever is greater.

This policy was expected to have a significant effect on TWOA due to the size of the institution. As below, an exception was negotiated with TWOA. In fact, EFTS at TWOA did not grow anywhere near as much as forecast, so TWOA never hit the agreed cap
2004

Adjustment to Managing Growth Policy

Policy provides exception to managing growth policy by spreading enrolments over period of four years if fiscally neutral or fiscally beneficial to Crown.

This policy was proposed because following the introduction of the managing growth policy it was identified that five tertiary education institutions would be affected by the policy. TWOA was one of the institutions who negotiated a special arrangement. Actual enrolments in 2004 and 2005 have never reached the agreed cap.

2004 Fee and Course Costs Maxima

Policy limits providers’ tuition fees to a set maximum for different subject types and level combinations. Aims to minimise increases in fees for students, while maintaining the quality of educational provision. TWOA do not charge fees
04/2005 Statement of Tertiary Education Priorities 2005/07

A focus on achieving greater clarity of provider roles and increased differentiation.
The STEP emphasised the distinctive contribution wânanga makes to the tertiary education system.

Expectation that profile will align with directions signalled in STEP
2005 Clarification of policy regarding inducements to students

Policy on inducements and gifts to students such as keeping computers at conclusion of course clarified.

TWOA agreed no further inducements or gifts to students would be provided.
2005

Strategic Reviews

A1-J1

Enabled the TEC to conduct strategic reviews of provision, and to reduce or remove funding or restrict enrolments when approving Profiles in relation to provision identified as of low relevance.
The A1-J1 review focused on sub degree provision in specified subject areas.

TWOA affected by subsequent reviews, e.g. A1/J1, as they provide mostly sub-degree provision.

Final implications of the review have yet to be determined. Possible outcomes for courses determined as low strategic relevance include a cap on funding or removal of funding for a course. This will be subject of negotiation as part of the Profile process.
2005 Certificate and diploma changes

New limits on short courses. Introduced a fiscal constraint on total amount of certificate and diploma provision effective from 2006. Limit to 200 EFTS in any 12 months. Included new checks on quality, auditing and monitoring.

Reduced EFTS negotiated as part of Profile. Final effects yet to be determined.

Quality Reinvestment Programme in development.

ENDS

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