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Hon Steven Joyce: Speech to the Higher Education Summit

Hon Steven Joyce

Minister for Tertiary Education, Skills & Employment

5 March 2014
Media Statement

Speech to the Higher Education Summit


Good morning. It’s great to be here.

Today I’m going to outline and launch the new Tertiary Education Strategy for 2014-19.

The new strategy builds on the gains we as a sector have already made. It will drive the tertiary system to be more outward facing and engaged, with stronger links to industry, community and the global economy.

I’m also going to detail the final package of changes we’ll make to the Performance-Based Research Fund to make it more efficient and more effective.

First, I’d like to briefly recap on what we’ve accomplished in the last five years.

Gains since 2008

I’m proud of the tertiary education sector’s achievements since this Government was first elected five years ago.

When we came into office in late 2008, the fiscal environment was extremely challenging.

We therefore reduced spending in low value areas such as student loans for people who consistently fail their courses, and improved the way the system targets need.

This created savings which have been reinvested in higher value tertiary expenditure and in policies that improve the performance of the system.
We set performance incentives on providers and students, and improved information for students about the performance of providers and the employment outcomes of their study.

Despite the tough times, government investment in tertiary education has actually risen substantially. In 2012 we invested $2.2 billion in publicly-owned tertiary institutions – an increase of 13.4 per cent since 2008.

The increase in universities has been higher – up 16 per cent since 2008.


Our focus on results is paying off.

The tertiary system delivered a record number of qualifications in 2012 – 162,000.

The number of domestic students who completed a bachelors degree in 2012 was the highest ever at 25,400, up 4,790 since 2010 – an increase of 23 per cent.
Right through the 2000s the number of degree graduates flat-lined, despite big increases in tertiary funding by the previous government, so these results are great to see.

More young people are now moving from school to degree level study – from 13,600 students in 2007 to 16,500 in 2012.

These young people include more Māori and Pasifika.

The number of Māori students enrolled in qualifications at bachelors level or higher has increased from 17,500 in 2007 to 28,900 in 2012.

The number of Pasifika students enrolled in qualifications at bachelors level or higher has increased from 8,570 in 2007 to 11,800 in 2012.

Course completion rates for Māori students at all levels are up to 76 per cent in 2012, compared with 63 per cent in 2007.

Course completion rates for Pasifika students at all levels are up to 74 per cent in 2012, compared with 54 per cent in 2007.

The Youth Guarantee scheme has been a great success so far. Sixty-four per cent of at-risk young people taking part in Youth Guarantee in 2012 achieved a qualification, and average credit achievement lifted 50 per cent in one year – 37 credits.

Forty per cent of Youth Guarantee students are Māori.

Last month I released a report showing that around 1,000 more young people remained in education at age 17 and more young people achieved NCEA Level 2 because of Youth Guarantee programmes.

From this year, Youth Guarantee will be expanded to 18 and 19 year olds.

Our reforms to industry training have been very important.

We inherited an expensive and bloated system with serious deficiencies

So over the last five years the Government has made a series of changes, which are all about increasing the opportunities for in-work training for all Kiwis.

A big part of the vocational training story in NZ has always been apprenticeships. However the importance of apprenticeships slipped over the last ten years in favour of more generic industry training; which in many cases involved a lot of short courses, and very low levels of completion.

Under Labour, up to 100,000 people a year listed as being in industry training were in fact “phantom trainees” who achieved no credits and in some cases were no longer alive.

A year ago, the Prime Minister announced the creation of “New Zealand Apprenticeships”. These new apprenticeships provide a premier vocational pathway into an industry-based career. They provide the same level of support, and the same level of subsidy, for all apprentices, regardless of their age.

We’ve boosted funding as well as the educational content of apprenticeships. At a minimum, they will require a programme of at least 120 credits that results in a level four qualification.

We launched these new apprenticeships by rolling out an “Apprenticeship Reboot” scheme. The reboot gives the first 14,000 new apprentices who enrolled after 1 April 2013 $1,000 towards their tools and off-job course costs, or $2,000 if they are in priority construction trades. The same amount is also paid to their employers.

Over 10,000 apprentices have already taken advantage of the reboot scheme, with 67 per cent being in priority construction trades.

This Government has set a target that 55 per cent of 25–34 year olds will have a Level 4 qualification, or higher, by 2017. Progress toward this target is on track and New Zealand apprenticeships will be an important part of meeting it.

Business Growth Agenda

The tertiary education and research systems are vital parts of the Government’s Business Growth Agenda.

The Business Growth Agenda is the Government’s comprehensive economic programme to really take this country forward and deliver the higher incomes and more jobs that kiwi families deserve.

There are six key themes in the BGA.

· export markets
· efficient and effective capital markets
· innovation
· skilled and safe workplaces
· utilising our natural resources
· and reliable and cost-effective infrastructure

Across these themes, the government has around 350 initiatives to create the right environment for business investment and growth.

The tertiary education system is a vital part of the Skilled and Safe Workplaces workstream.

A skilled workforce is the engine-room of a thriving economy.

Much of the difference in long-term economic growth rates between countries is explained by differences in education and skills.

The Government’s goal is to materially lift New Zealand’s long-run productivity growth rate while maintaining our high rate of labour force participation.

Put simply, we need more skilled people and more qualified people.

Tertiary education and research is also vital to the innovation stream of work.

A mass of economic evidence tells us that developed economies need to focus on innovation to keep growing at high speed. Innovation helps firms produce higher value products and produce them more efficiently. Innovation is exactly how we improve our competitiveness.

The Government’s considerable investment in research at tertiary institutions reflects this importance.

Tertiary education is also an important part of the building export markets stream.

The contribution of international education to New Zealand’s GDP in 2012/13 was around $2.6 billion and it accounts directly for 13,600 full-time equivalent jobs.

Beyond that, tertiary education opens both New Zealand students’ eyes to the world, and the world’s eyes to New Zealand.

Our success as a country over the next 20 years will be determined by our level of connectedness with the rest of the world.

International education is vital in building those global linkages.

New strategy

That brings me to the new Tertiary Education Strategy.

I’d like to take this opportunity to thank all you for the feedback you provided on the draft strategy at the end of last year. We had a good response from providers, business, and the wider community.

Tertiary education in New Zealand faces some critical challenges, such as the international expansion of tertiary education, the needs of a growing economy, and new technologies.

These will require the future tertiary education system to be more outward-facing and engaged. This means having strong links to industry, community, schools, and the global economy.

The tertiary education system needs to become more flexible and strategic and perform well, not just as its own system, but also as a part of the wider New Zealand economy.

The system needs to adapt more quickly to change, including changing technologies and changing patterns of demand

And we need to address changing skill needs so that the skills gained by students in tertiary education link to employment opportunities in the labour market.

It’s important the system continues to have strong international credibility, by delivering educational performance that compares with the best in the world.

The new strategy signals a deliberate shift in focus for the Government. While we will continue to have high expectations of institutions; performance in terms of efficiency and student achievement, a stronger focus on the outcomes of tertiary education is needed.

This recognises that educational achievement does not stand alone, instead providing a stepping-stone to assisting communities and individuals to realise their full potential.

The new strategy contains six priority areas where we need to focus our attention. These are unchanged from what we consulted on. The priorities are:

· Priority 1: Delivering skills for industry

· Priority 2: Getting at-risk young people into a career

· Priority 3: Boosting achievement of Māori and Pasifika

· Priority 4: Improving adult literacy and numeracy

· Priority 5: Strengthening research-based institutions

· Priority 6: Growing international linkages

I don’t intend to run through them one by one today, but let me just make a few comments about things I think are particularly important.

First, as we move out of the global financial crisis, employers are once again starting to find it difficult to attract people with an appropriate range of both specific and transferable skills.

Overall, we are seeing a strong demand in all skilled occupations with science, technology, engineering and mathematics becoming increasingly important for growing and sustaining New Zealand’s economic competitiveness.

Specific skill gaps in these areas are still evident.

Our tertiary system, particularly our universities, needs to be part of the solution to addressing these shortages.

It is of course true that universities are the “critic and conscience” of society. And it is important that they have academic independence and I will continue to defend those principles as Minister.

But we have to guard against those two principles being used as an excuse not to direct resources to where they are needed within the sector.

As last week’s QS subject rankings show, New Zealand universities need to lift their competitiveness and their investment in STEM subjects.

The reality is that the vast majority of students who go to university do so to get a ticket to a well-paying job and science, technology and engineering are big growth areas in the New Zealand economy.
In the years ahead, we need more explicit co-operation between industry and tertiary organisations on meeting skill demands. Tertiary organisations need to create opportunities for industry involvement in planning and delivering education, including re-skilling opportunities for the existing workforce.

And industry needs to clearly identify its medium and long term needs, and work with tertiary institutions to attract and retain the talent it requires.

Second, while the NEETS rate is coming down – and is at its lowest level since December 2008 - we need to do more to reduce the number of young people not gaining the qualifications or work experience they need for a career.

A particular focus is needed to improve education and employment outcomes for 20-24 year olds, as this group has borne the brunt of the GFC.

The Government’s extension of fees-free level 1 and 2 education to all 20-24 year olds will assist here, but tertiary organisations, government, and industry need to work together to ensure that young people have the appropriate access and incentives to gain relevant qualifications.

Third, we need to unrelentingly focus on raising achievement of Māori and Pasifika students. By 2030 30 per cent of New Zealanders will be Māori or Pasifika, and as such it is essential that tertiary education improves its delivery to these groups.

Māori and Pasifika have made huge gains in participation and achievement in tertiary education in recent years. At all ages, Māori participation in higher level study has increased. Across all levels, Pasifika completion rates are improving.

But there is much more to do. Tertiary organisations need to recognise the diverse needs of their communities and have appropriate mechanisms for meeting these needs. Many organisations have strong equity plans to promote the achievement of particular groups such as learners from low socio-economic backgrounds, people with disabilities, and refugee and migrant learners.

The Government expects that activity of this kind will continue to be built upon so that all learners experience an inclusive tertiary education system that supports achievement and therefore improves outcomes from study.

Fourth, I’m very keen that we keep a strong focus on foundation education for adults.

Basic skills in literacy, language and numeracy are simply essential to participate fully in the modern world

New Zealand needs the tertiary system to continue to offer a diverse and flexible range of foundation skills programmes.

I’m keen to see shorter, quicker options targeting job-specific literacy, language and numeracy gaps as well as longer, more extensive options for those with more substantial learning needs.

And we need the system to reach out to new learners, particularly in the workplace.

Fifth, I firmly believe that our institutions need to internationalise much more quickly than they are already.

Clearly on one level it’s about revenue. International students are an important part of local economies as well as the national one.

But I also see international education as part of our drive to be better connected across the world.
At the end of the day, we are a small trading nation – and we need very strong links with the world. Education is a very important way to achieve them.

International education provides New Zealand with lifelong ambassadors, as graduates returning to their home countries share their good experiences with friends, family and colleague

It helps enhance teaching and research, the sharing of knowledge and the building of human capital.
Our institutions need to develop and maintain relationships with key partner countries in Asia, the Pacific, the Middle East, Europe and the Americas.

Strengthening research-based institutions

Sixth, building tertiary education’s contribution to economic growth requires us to have strong, internationally respected and competitive universities and other research-based institutions.

The government has increased its investment in the Performance-Based Research Fund, so that it will hit $300 million by 2016.

Last year we reviewed the PBRF following the increase in the size of the fund announced in Budget 2012.

The review showed that the PBRF is generally working well. It has contributed to an increase in the research performance and productivity of New Zealand tertiary education organisations and is well-regarded internationally.

Our system has a number of strengths when compared with other performance-based funding systems around the world. However, the system is complex and it carries significant compliance costs for institutions and researchers.

The changes I’m announcing today will build on the strengths of the PBRF and lower compliance costs:

· The research assessment process will be simplified, saving time and reducing costs

· Organisations that attract external research income from international sources, New Zealand industry, iwi and not-for-profit organisations will be rewarded – thus placing a higher value on research that meets user needs

· Organisations that recruit, develop and retain new and emerging researchers will also be rewarded – thus supporting the sustainability of the tertiary education research workforce

· Public reporting on research performance will be strengthened.

Along with these changes, the Government is considering one further proposal to increase the proportion of PBRF income allocated based on external research income (from 15 per cent to 20 per cent of the fund).

This would better reward tertiary education organisations that attract income from contestable research funds and contract research, and strengthen incentives to for tertiary education organisations to actively seek out additional research income. The change would bring the New Zealand system more in line with international practice.

The Ministry of Education will undertake a short, targeted consultation with the most affected tertiary education organisations and some science organisations before the Government finalises this proposal.

Concluding Remarks

Tertiary education offers a passport to success in modern life. It helps people improve their lives and the lives of those around them. It provides the specific tools for a career, and is the engine of knowledge creation.

This Government has high aspirations for higher education in New Zealand. As a sector we’ve made great progress in lifting achievement, improving quality, improving value for money and above all getting better results for the students that invest their money and their time in tertiary education. But there’s still more to be done.

Thank you for your time today – and enjoy the rest of the summit.


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