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Independent Business Foundation September 2004

Independent Business Foundation September 2004


Introduction & Background Recommendations Addendum


Introduction This paper is an expression of concern at developments in New Zealand’s tertiary sector that erodes our position as a knowledge economy. These developments diminish our reputation as a favoured destination for foreign investment and value-added migration.

A knowledge economy requires: secondary and tertiary education facilities that meet or exceed average first nation standards employment opportunities with career prospects in keeping with educational attainment tertiary qualifications comparable to those awarded in leading OECD economies.

The issues: Economies of scale do not apply in New Zealand education. There is evidence that quality is being sacrificed for quantity. The only viable strategy has to be either superior quality or uniqueness. Our institutions are in direct competition with the rest of the world (mainly North America, Europe and Australia). Some New Zealand postgraduate students choose to go overseas in search of quality in further university education. Institutions providing education and qualifications of questionable value receive funding alongside the better institutions and are damaging New Zealand’s international reputation as an education provider. Passing is a certainty at some such institutions. New Zealand institutions have to be comparable globally. Our ratings have to be either superior in respect of content delivery or outstanding in terms of uniqueness. An excellent reputation is required to attract ambitious students, top scholars and researchers and to demand premium tuition fees. This paper is intended to open informed debate to find an acceptable formula for the future development of tertiary education in New Zealand.


The Challenges

The demand (by some educators, parents and students) for alternative university entrance level school leaving examinations in preference to the NCEA indicates a lack of confidence in the home grown award. NCEA is considered insufficient qualification for study overseas, except for Australia and the UK where it is recognised. Should we not consider following the Australian model with UE and study right according to a rating formula of universities and entry criteria?

New Zealand tertiary institutes lacking international recognition are unlikely to attract academic staff with the necessary credits and career aspirations that inspire young minds and lead innovation in scientific research. Are we able to attract tertiary teachers and researchers of renown to serve as a magnet to retain our brightest talent and attract their foreign peers to study in New Zealand?

The outflow of talented young New Zealanders in search of higher education and research opportunities without an equivalent intake of foreign students from developed countries is of growing concern. Foreign students are also predominantly engaged in undergraduate education, whereas the bulk of New Zealanders travelling overseas for education are doing so at a postgraduate level. Could the predominance of foreign students from non-European sources be seen as a disincentive by academically ambitious New Zealanders and students from English and related European language speaking countries to study here?

New Zealand is over supplied by education providers, particularly in the private sector. There is also a tendency in public funded institutes for duplication in course offerings with different qualifications on the same theme. The competition leads to a lowering of standards driven by cost cutting. Would there be merit in discouraging unnecessary duplication by limiting accreditation and student numbers and increasing industry standards to achieve rationalisation?

Political Considerations

Two recent developments are relevant: A greater emphasis on research capacity and outputs in New Zealand universities. The allocation of extra funding for overseas market development to attract foreign fee-paying students. There is a possible conflict between the research-based ‘quality’ orientation at the upper end of the sector and the education industry’s focus on ‘quantity’ with education as a foreign exchange earner. Are these two aims reconcilable?

The Government sees education as a mechanism for the improvement of social and economic development. Politicians and their administrators carry the responsibility of balancing educational aspirations with the needs of employers of a skilled workforce. A productive workforce provides the wherewithal to afford the refinements of an advanced society. New Zealand with its small population base, while officially promoting a knowledge economy, is falling short in respect of retaining home-grown talent and attracting noteworthy migrants on which a thriving education system depends How can we correct our low profile where it counts?

Quality or Quantity

The critical issue facing New Zealand is whether to present itself internationally as a provider of high value at the upper end of the education market, or increasingly compete with other developed countries for numbers of students at the lower end of the market. A country’s positioning is largely determined by its reputation. High achievement in the upper levels of tertiary education can be negated by poor performance and/or poor perception in others. In a recent Ministry of Education survey of international students, English language acquisition led all other considerations in degree of importance. This reinforces arguments that language deficiencies are slowing the academic process when there is a strong foreign element in the student body. New Zealand is not mentioned in the lucrative international fee-paying student market by the Financial Times, UK. Its annual rankings of the world’s best business schools, measured by full-time MBA programmes, are dominated by US institutions with Australian universities also faring well. According to a Massey University study, migrating New Zealanders are strongly influenced by economic opportunities and challenging learning opportunities. These perceived benefits are more significant for migrants than for stay-homers and returnee life-stylers. There is strong evidence that educational high achievers are more likely to study towards advanced degrees in prestigious overseas locations with a resulting loss of their talents to the home country. One in two departing graduates is staying abroad long-term.

Tertiary Education Organisations

There are eight universities, 20 polytechnics and institutes of technology, four colleges of education, and three wananga. In addition to these public institutions, over 800 Private Training Establishments (PTEs) offer a wide range of programmes, and thirteen of them have been accredited by the NZQA to deliver degrees.

(See Addendum for detailed overview of the tertiary sector structure, governance and funding.)

Disparities in Delivery

There are marked differences in the competencies of providers. PTEs rely primarily on tertiary qualified academic managers and tuition provided by vocationally experienced, but not necessarily formally qualified, teaching staff. In broad terms Polytechnics and Institutes of Technology require faculty members teaching at undergraduate level to be qualified to masterate level, with universities increasingly requiring doctorates for their masters programmes on the understanding that the teacher be marginally better educated than the student. Seen in the context of secondary education, where degree qualifications are the norm, rather than the exception, it is unacceptable that PTEs, teaching at tertiary level, are able to employ academically under-qualified tutors. This is supposedly justified under the requirement to have appropriately qualified and/or experienced staff. PTEs that want to offer degree programmes have to prove that the teachers involved are research active.


Unlike the situation in most developed countries, tertiary education in New Zealand is open to all school leavers with formal NCEA certification at three levels with the actual university entrance requirements spread across all levels. It is also open to adult students with prior workplace experience, as well as any New Zealand citizen or permanent resident who reaches the age of 20. All such students have access to student loans for fee paying attendance. The exceptions are foreign students, who attend self-funded and are assessed on their eligibility with English language ability as an additional criterion. We see the greatest challenge facing New Zealand education is in providing for foreign students. The popular philosophy seems to be that financial benefits far outweigh qualitative considerations on which our country's reputation as an educational destination depends. In our eagerness to take their money, we are overlooking our responsibilities to both the visiting students and our own nationals, and disregarding our international profile. While acknowledging that there is no necessary correlation between accessibility and quality, we believe that tertiary education is in danger of becoming too readily available to ensure the ideal quality of output. We blame gaps in the quality assurance system, which is in place but not strictly adhered to, for the failure to guarantee that assessment is up to standard.


It is regrettable that the Study Right, which entitled promising young New Zealanders with high entry qualifications to five years tertiary study, was not affordable in the long term. While student loans enable a greater number to pursue tertiary studies, there can be little doubt that a more selective approach to entitlements would reduce the burgeoning student debt level and high dropout rate. The oversupply of competing courses in the metropolitan centres with their proliferation of degrees, spill out an endless stream of graduates, many of whom fail to achieve meaningful careers in their chosen speciality or discipline. There are strong arguments for a greater geographical distribution of specialised courses, to give regional New Zealand growth opportunities together with access to tertiary education for local populations. Centralising the supply of courses clearly is not the answer (viz.the demise of the Central Institute of Technology). While it is encouraging to note a gradual redirection in favour of vocational training, there are still too many options available under a confusing array of variations in a nomenclature of degrees that is incomprehensible to prospective employers and meaningless outside New Zealand. Of more serious concern is the admittance of insufficiently prepared and motivated students, who do not stand up to the academic requirements and leave the system disillusioned and indebted.

Adult Further Education

Not enough provision for further education for adults already in the workforce – particularly for those who lack the theoretical knowledge demanded in an increasingly technological work environment. Distance learning, block courses and lectures delivered during the shoulder early morning and late afternoon periods are offered, but tertiary institutes are largely unused outside normal daylight hours. Compared with numerous overseas countries where many tertiary institutions maintain two sessions, with programmes running from late afternoon to mid-evening, we still regard tertiary study as a continuation of secondary education – full-time (daytime) study that excludes those already working. Allowing a greater proportion of school leavers to find their career direction before engaging in further study has the potential to achieve better outcomes. Despite a reported lack of student interest in extra-mural tuition outside normal hours, community education involving evening classes is popular. There was good demand for two commercial law papers offered by the University of Auckland many years ago at the end of the working day to full-time employed business executives. There is a market in specific career areas, which is not being met.

Business Considerations

New Zealand, in spite of our best efforts, is and always will be a small business environment. The makeup of our population and our preferred lifestyle dictate against a corporate culture. Notwithstanding our lack of individual growth aspirations, our private sector could function more effectively and profitably given better management and higher technical skills. With emerging greater emphasis on technical training, we are still failing to (re)educate self-made, largely trade based operators to run their businesses more effectively. According to Enterprise North Shore, an economic development agency (serving a metropolitan business population of 18,000) it employed 188 mentors during the past year to handle 350 assignments. It provides conclusive proof that owner/managers, unlike career minded employees, for a variety of legitimate reasons are disinclined to reskill. This realisation has prompted the Master Plumbers and Mechanical Services Association of Australia to include business skills into their apprenticeship training prescription. It ensures that trades persons are not only technically competent, but also capable in management or self-employment.

Lowering of Standards

Unlike other public services (except health) that rely exclusively on tax based revenue, education like health has been allowed to become a market driven industry. Because the funding formula is quantitatively driven, it is in the interest of providers to focus on maximising student numbers rather than on quality of teaching and content. This invariably leads to a lowering of admission criteria. This may account for the relative success of overseas universities in attracting our best talent. Kimberley, a University of Auckland alumnus, who graduated in commerce and property, whose entry to an overseas Masterate programme was based almost entirely on academic achievement, chose Cambridge because of its outstanding international reputation and exceptional academic staff. Concern regarding the lowering of standards is also reflected at secondary level, where private and reputable state schools give their students the option of sitting well established internationally recognised university entrance examinations, notwithstanding the assertion that the NCEA is accepted in the two countries that are closest in culture to ourselves. Higher standards in delivery, monitoring and accreditation are essential for us to join the select number of countries where educational achievement has become a hallmark of excellence. We are in danger of being internationally regarded as an easy option, attracting foreign students not intent on a quality education, as evidenced by a proportion of Asian students, who enrol but rarely attend classes. Notwithstanding their lack of enthusiasm to learn, they are rewarded with a national certificate, which will discredit our providers when the students return to their home country. More disturbing is the reported high number of visa overstayers, who entered New Zealand as students apparently with no intention of either completing a course of study or returning to where they came from. Institutions with a good reputation can take credit for more positive outcomes. According to a recent internal survey undertaken at Massey University Albany a sample of graduating foreign students indicated 57% intending to return to their home countries, 26% moving into employment in New Zealand, 12% wishing to remain in New Zealand, but facing uncertainty with the prospect of having to rely on social security and 5% being undecided. We quote for the record from a letter received from a student at a well-known university with his permission. The contributor's name will remain anonymous for obvious reasons. I am currently completing a full-time MBA. There are 22 full-time students on the programme from 9 nationalities. The entrance requirements are supposed to be strict (GMAT scores of 550+). A number of essays, extensive interviews with the director of the business school, and IELTS minimum 6.5. There are students currently on the course who barely speak English and certainly have no understanding of much of the course material. I am personally appalled at the University for their lowering of standards and have complained at Vice-Chancellor level. The university is simply not interested and seems more concerned with the financial issues. There are a number of extremely bright students on the course who are appalled at the actual criteria for entry. We attended a (public) lecture given three weeks ago. An older lady in the audience stood up and asked what (the presenter’s) thoughts were on lowering academic standards in order to gain overseas funds. She pointed out that she was a professor in a university department and that she was only allowed to pass students regardless of their ability. Another student enrolled at a PTE in a diploma course, noticed a rapid turnover in tutors. It transpired that the institute was employing a succession of skilled migrants “on probation” and without remuneration for up to three months. One must question the consistency of the tuition provided. There is further evidence of employment practices in this sector that do not require academic or professional qualifications. While these may be isolated cases, they illustrate the vulnerability of the system that allows for shortcuts and omissions that have no place in an achievement orientated education sector.

Where from here?

We are dealing with a diverse community of interests: Education providers need economic mass in terms of student numbers to be able to function. The majority of students see higher qualifications as a means to greater earning ability. Many students are not too concerned about their university's ranking in the applied research stakes, but insist on value for money where course content and presentation is concerned. (It is worth mentioning here that Deakin University, a privately funded institution in Geelong, Victoria, requires its lecturers to be holders of teaching qualifications in addition to relevant academic credentials.) Employers are looking for staff with workplace relevant knowledge. The State has education as one of its three key social services demanded by all regardless of ability. Foreign students are seen by some as the cash cow, by others as a problem. We are all agreed that we want good tertiary education at the best possible price. We believe that there is an answer to the quandary.

Encouraging Signs

We acknowledge that there are encouraging signs that Government is intent on enhancing the Tertiary Education Sector with a $149m allocation in the 2004 Budget towards “greater levels of excellence and to connect teaching, training and research”. It is encouraging that several provisions are aimed at better anticipating and meeting the skill needs of business with funding over four years. We see a good example of this in the recently launched pilot of TRIPNZ (Teacher Release to Industry Programme) by a consortium of stakeholders headed by Enterprising Manukau, a leading metropolitan Economic Development Agency. It provides for selected host employers to offer teachers full-time, 10 week engagements within their enterprises. Teachers placed in industry remain employees of the Ministry of Education for the duration of their secondment on full pay. The purpose of the initiative is to better inform teachers on the educational needs of business to enable them to be a positive influence on career options in commerce and industry. We also strongly support the announced extension of the Student Loan Scheme, enabling students studying between 0.25 and 0.3 of a full-time course load to qualify for a student loan for tuition fees, if their course meets certain conditions and they are in employment and studying for qualifications that will lead to employment. Additional funding for Student Job Search to help students find employment away from short-term, low-skill job placements to focus on placements in skill demanding positions of longer duration is also welcomed. Encouraging students to spread their course load over a longer period with concurrent related employment resembles the long held tradition of “articles” in the professions of accountancy and law. This has a place in an SME culture. These options for professional development will reduce the dependency on student loans and lead to better career choices. Employers and students will benefit from a better mutual understanding that is frequently lacking when a graduate enters the workplace for the first time without experience. They will also help to alleviate the critical skill shortages confronting many business sectors. Commercial Apprenticeships such as those established in Germany, Switzerland and Austria as an entry and first step into business administration and management may be worth considering. Without a formal means of office skills acquisition outside the academic streams, many young school leavers are subject to the vagaries of workplace training, lacking formal guidance from small business owners with insufficient business skills. Provision exists for Assessment of Prior Learning in a practical environment with work experience qualifying as unit standards, leading to a National Certificate on the first rung to higher qualifications in management development. This option is not sufficiently utilised. As an alternative route into Tertiary Business Education, commercial apprenticeships would lead to better managed and compliant businesses that offer better career prospects and returns on staff development.

The example of a business secondary school providing a dedicated business stream to prepare students for commercial careers with or without further post-secondary education is worth considering as a form of accelerator to provide business with new entrants who are familiar with the basics and therefore immediately useful. What is wanted from tertiary education organisations is credible, relevant education through multiple pathways.


1. Educational Staircasing

There is growing evidence of a blurring of the boundaries with secondary schools teaching subjects on the national framework and PTEs aspiring to deliver to National Diploma at Level 5 without the necessary foundations. Polytechnics, which are well set up to teach vocational courses and advanced qualifications are best equipped to provide the transition link to further research based academic study. Greater coordination in respect of cross-crediting of papers and passes between lower and higher-level education providers is desirable to enable students to establish a clear path without repetition and duplication. At present there is evidence of misalignment and subject choices at different levels, which can be overcome with a reduction in available subjects.

We recommend: Establishing an interface, which already exists in some regions, between polytechnics, education colleges and universities to enable the transfer of credits in a co-ordinated manner without duplication. Additionally, we suggest that serious consideration be given to the establishment of an independent advocacy body to adjudicate between students and institutions on credit transfers.

2. Oversupply and Competition

The growth in the PTE sector, which is largely driven by foreign and ‘second chance’ students is not desirable. The crucial mass of under-resourced, family-owned firms operating in this market is vulnerable to fluctuations and is unsustainable. With a reported 60 such businesses in financial straits and a further nine on the edge of extinction, it is not in New Zealand's interest to nurture this industry at the expense of public institutes that are well established and with credible output ratios. There is a place for private tertiary education providers in New Zealand, but they should be required to be complementary to Institutes of Technology and Polytechnics and not competitive.

We recommend: That PTEs be required to satisfy the same criteria as polytechnics in respect of meeting student tuition, providing premises, resources and qualifications of tutors to compete on an even basis.

3. Rationalisation

There are too many choices of courses and qualifications in the main population centres of our small market leading to a lowering of standards under diminishing returns. On the other hand prospective students in the provinces are poorly served, necessitating their relocation to the cities where an abundance of choices exists. By estimation only 20 percent of offerings reach the standards necessary to receive the support of industry practitioners and employers. This leads to marginal opportunities for students attending lesser-rated establishments with prolonged student debt burdens. Introducing new degree qualifications for the sake of competitive advantage is unproductive and runs counter to the academic traditions still subscribed to in most overseas jurisdictions. For example, Cambridge University in England awards a Master of Philosophy (M Phil) in Real Estate Finance, when the most likely NZ equivalent would have been a meaningless MREF. It is preferable to adhere to a traditional faculty-based descriptive method with endorsements to the graduate’s area of specialisation. Bearing in mind the length of time it has taken to establish Technology as a separate discipline in academic terms, new variations and distinctions should be avoided from here on.

We recommend: That the wasteful duplication of courses and variation of degrees for competitive reasons be discontinued thereby enabling education providers to specialise in disciplines that meet the requirements of the labour market. Harmonisation of international degrees in the traditional faculties with endorsement to the specialised nature of the course of study should be the preferred option.

4. Educational Attainment

While the financial contribution of foreign students should not be underestimated, attracting the wrong students is short sighted. There are clear indications that many arrive here with the intention of becoming permanent migrants, but do not do justice to their academic credits in the absence of a persistent lack of good English in verbal and written communications. In the light of 30 percent of foreign students still being unemployed six months after graduating, greater stringency in enforcing language proficiency as an admission criterion to tertiary study is advocated. This should not be seen as discouraging foreign born New Zealand graduates from becoming permanent residents - students who attain New Zealand qualifications are able to credit some of the time towards meeting the requirements for residency. This requires diligence by the New Zealand Immigration Service when issuing visas and following up students who cease to participate, and facilitating their repatriation. A typical example is Yoga, who migrated to Auckland 15 years ago and graduated BA majoring in Sociology and Asian Studies from a leading New Zealand University. While a competent verbal communicator, his written English is inadequate to meet most work situations. Aside from intermittent short terms of employment, he has experienced long spells of income support. By comparison with Yoga, Doris, a refugee from Central Africa, is completing an accountancy degree while working part-time in a study related position. After six years in the New Zealand she is fluent in English to a professionally acceptable level.

We recommend: Greater care in screening prospective students with inbuilt safeguards and provisions to ensure that those intending to remain in New Zealand study for qualifications that meet local skill requirements.

5. Abandonment

The dropout rate of tertiary students from all sources is reported to exceed 40 percent and cannot be taken lightly. Insufficient preparation for academic study appears to be the main cause. Special admissions to a Master's programme, where two-thirds left the course before completion, is one example of students lacking the foundations for academic pursuits at an advanced level. Such students are a drain on the resources of a tertiary institute and have a dragging down effect on better qualified peers. It would be better to have fewer students enrolled from the outset, who stay to complete their degrees with minimal disruption and better career prospects at the conclusion. For the rest, they would be more likely to have success with short courses and seminars – and would thus avoid clogging up the full length tertiary delivery process. We recommend: That in the spirit of staircasing in a seamless process each progressive step in academic advancement be strictly observed. Only in exceptional circumstances, depending on a satisfactory level of prior learning supported by professional qualifications and attendance records, should a student be allowed to bypass the qualifying admission to degree requirement.

6. Over-Qualification A survey undertaken as part of a prescriptive academic project in 2003 revealed that 38% of marketing graduates were employed in unrelated roles, with many having experienced protracted delays in securing a suitable position. Among those fulfilling marketing related functions, several were found to be overqualified and destined to experience slow advancement to senior positions. For example: Miriam, aged 26, a Bachelor in International Business and Marketing from a NZ University including 9 months as an exchange student at the University of Portsmouth, UK and with a University Diploma in Travel and Tourism is employed as an outbound telemarketer. Full-time study from the outset may not be the ideal approach for young inexperienced school leavers. The average age of polytechnic students is late thirties While school leavers have a traditional route direct to university, the majority of polytechnic students have had intervening work experience and could be regarded as being better motivated and career orientated.

We recommend: Greater allowance be made in tertiary education for students to ‘find their feet’ in a practical work environment whilst prolonging their course of study, supported by the practical experience gained with less reliance on student loans. We also see merit in opening tertiary institutes outside normal daytime hours, giving access to tertiary qualified, industry active part-time lecturers unavailable during office hours. This would establish synergies between the academic and business worlds and create new opportunities for those in the workforce wishing to upskill. It would also help maximise use of facilities that are currently under-utilised.

7. Business Skills

Efforts to re-educate personnel owning and managing SMEs once they have commenced business are not successful. However, further education is essential to enable this sector to reach its full potential. This provision is specific to owners/managers who are not tertiary educated in commerce, business or management faculties and rely on their technical knowledge and experience gained as employees.

We recommend: That business skills be included in all trade related tertiary education to better prepare vocationally qualified individuals for careers in and ownership of small businesses. We further advocate extending modern apprenticeships to office skills, as an alternative route to laying the foundation for advanced qualifications in preparation for business management.


All tertiary education institutes viz. Universities, Polytechnics, Colleges of Education and Wananga are covered under the Education Act. They are all provided with a similar amount of institutional autonomy and all have the same governance structures. All their programmes are approved by their academic boards and for public funding have to be accredited externally by the New Zealand Vice-Chancellors Committee, in respect of Universities and NZQA, or its delegated agents where all other education providers, including PTEs, are concerned. Degree programmes in Institutes of Technology and Polytechnics are supported and endorsed by relevant industries or professions. Polytechnics are subject to external audit. Part of the problem with PTEs is that NZQA does not have sufficient resources to be able to provide the level of auditing and monitoring required to identify detailed issues at an early enough stage. While polytechnics are subject to periodic external monitoring, PTEs rely on advisory boards comprising a mix of their own and ‘outside’ independent business and professional representatives, who lack the auditing role of formally appointed monitors. We acknowledge that in theory all registered PTEs are subject to regular audits by NZQA in a one to three year cycle, but have reservations about its performance given recent cases that have undermined the credibility of this education sector. The sheer number of PTEs and the variety of subjects taught makes it virtually impossible to do justice to the requirement without a substantial increase in staff and resources. An extended time frame of up to three years is not appropriate in a profit and consumer driven environment. The same, if not greater, supervision as is applicable to Polytechnics is required to identify and correct deviations and omissions.

We recommend: That all private education providers be subjected to annual external monitoring and be subject to a reporting system to the same extent as Institutes of Technology and Polytechnics and based on a relationship between the monitors and NZQA. We suggest the use of qualified independent agents in preference to extending internal NZQA resources.

9. Education Interface with Business

The Onehunga Business School model sponsored by company director Tony Falkenstein, provides an environment where secondary school students can develop the knowledge and skills to become the next generation of business leaders and can serve as an example of early business orientation. This, and another initiatives such as “Principal for a Day” and TRIPNZ, are essential to foster the understanding and co-operation between educators and business on which a vibrant education system relies. We are informed that from 2005 the Tertiary Education Commission will administer a specific Institutes of Technology and Polytechnics Fund, which will require Polytechnics to get closer to industry and business in terms of the courses they teach and the research and development they offer. We endorse this as a very positive move.

We recommend: That the successful pilot projects serve as role models for a rapid expansion into regions of New Zealand with national coordination involving both interest sectors, education and business.


The Independent Business Foundation is a charitable trust with educational objectives. Its interest, represented by a board of trustees drawn from business, professional and academic sectors, is strongly orientated towards tertiary business relevant education. Individual members are actively involved in professional development and have served as assessors, monitors and advisory group members to tertiary institutes and PTEs. The Foundation subscribes to the view that companies directed and managed by tertiary educated graduates are better prepared for the conduct of their businesses. It follows that the substance and quality of tertiary education available in New Zealand deserves greater attention to ensure a growing economy with a high standard of achievement in all fields of endeavour. In preparing this document we have drawn on the opinion of qualified external commentators who represent academic, student and employer viewpoints. We invite further input in the interest of Tertiary Education in New Zealand that is relevant, targeted and guarantees better outcomes.

In particular we gratefully acknowledge the contributions of: ITP New Zealand New Zealand Qualifications Authority Tertiary Education Commission


An Overview of the New Zealand Tertiary Education System

NEW ZEALAND HIGHER EDUCATION SYSTEM The Education Act (1989), which covers all levels of education in New Zealand, recognises five categories of public tertiary education institution: universities, polytechnics, colleges of education, specialist colleges and wananga (which offer education and training in and through Maori traditions, customs and language). The Education Act defines processes under which private education establishments (PTEs) may be recognised and provides for quality assurance to be maintained by a New Zealand Qualifications Authority. The NZQA, in principle, oversees all institutions and all tertiary education programmes. However, the Authority delegates many of its powers where public tertiary education institutions are concerned. NZQA does not delegate its functions or powers in respect of universities, which are separately covered by statute. The New Zealand Vice-Chancellors' Committee is the body primarily responsible for quality assurance in the university sector. NZQA currently has two delegations, one for polytechnics/institutes of technology and one for colleges of education. Wananga, government training establishments and PTEs are directly overseen by NZQA. Although there is a category of institution called Specialist College, no such institutions is in existence at present. Both public and private organisations can potentially deliver academic programmes at any level, within a National Qualifications Framework that extends from technical and vocational certificates to doctorates. The Education Act requires that all programmes at degree level and above be delivered mainly by staff members active in research. It is worth mentioning that technically universities are not required to ensure that degrees are delivered by staff members active in research. One characteristic of universities outlined in the Education Act, however states that research and teaching are closely interdependent, and most their (universities') is done by people who are active in advancing knowledge. The Act was amended in 2002 to establish a Tertiary Education Commission (TEC) responsible for system-wide funding and strategic co-ordination, and brings industry-based vocational training, as well as that undertaken within education institutions, within the ambit of the Commission. CURRENT TERTIARY STRUCTURE In 2002 the public sector accounted for 8 universities, 20 institutes of technology and polytechnics, 4 colleges of education and 3 wananga putting out 78,447 graduates spread over 82,376 qualifications. These consisted of certificates (43%), diplomas (15%), degrees (30%), and higher degrees (12%). At the same time there were 800 (estimated and only representing those with EFTS funding) private tertiary education providers (PTEs) producing 22,328 outcomes covering 23,015 qualifications of which 73% were certificates, 21% diplomas and 5% at degree and post graduate-level. Tertiary Education and training is, broadly speaking, provided at the lower level by Private Training Establishments (PTEs), at intermediate level by polytechnics and institutes of technology and universities. Quantitatively speaking PTEs represented by language and business schools are, with exceptions, the lower denominator, although a PTE was the first non-university education provider to be accredited to deliver a degree in New Zealand and required as a PTE to deliver the same quality standards as other academic education providers. Predominantly small, privately owned and profit driven, they rely heavily on student throughput and cost efficiencies to achieve sufficient return under financial restraints to their owners. In the mid-range, polytechnics can be regarded as the real workhorses. Publicly owned with a wide application spectrum, they provide vocational training in trade and occupational skills leading to formal qualifications and tertiary education to national diploma and under- to post-graduate level. Universities make up the academic rest at the upper end of the scale with research based knowledge development and teaching.


This ideal, which forms the basis of the National Qualifications Framework, provides for progressive educational stair casing starting at secondary school level, to enable students to advance in graduated steps to the highest degree according to their aspirations and abilities. Under ideal circumstances this process should enable a vocationally orientated school leaver to acquire a skilled trade and progress via a national advanced qualification into a professional academic stream leading to a degree. This depends on the credentials of established education providers, the robustness of their courses and recognition of prior achievement. It is easy to under-estimate the complexity of the transition between school and different parts of the tertiary sector. For example the transition from secondary school to university is reasonably smooth. This is not the case for secondary students wishing to progress to tertiary study in institutes of technology and polytechnics. On first impression it would appear that all linkages in the chain are in place, but on closer examination it is obvious that there are substantial gaps in the sequence of events leading to the conclusion that the objective of Seamless Education is not being met. The perceived disparity between lower level tertiary providers and New Zealand universities provides obstacles to cross crediting of completed papers, which defeats the objective. At present students, who have completed a national diploma at a PTE, are hampered in their efforts to receive credits for subject passes that appear to coincide with prescriptive papers forming part of a degree course at a higher institute. This is indicative of the existing gap between private and public sectors of education that needs to be addressed. It is interesting that there is no independent advocacy body, which will work for students to advocate for their credit transfer where this is not being given by institutions.

Officially, all tertiary institutions and PTEs are required to have processes for the credit of previous study and the recognition of prior learning. The advent of the New Zealand Register of Quality Assured Qualifications (see means that providers are able to identify the level, credit value and outcomes of a qualification in relation to their own. This will assist in decision making in relation to the recognition and transfer of credits, which is supported by an NZQA developed policy that is based on a set of principles to provide guidance to providers. REGULATORY ENVIRONMENT

The two crown entities responsible for tertiary education are the Tertiary Education Commission and the New Zealand Qualifications Authority. The Ministry of Education also plays a role, especially through monitoring the implementation of policy. All three are respectively responsible for policy formation and implementation in the wider sense of understanding. While TEC determines the nature and shape of tertiary education and vocational training, NZQA is responsible for course content and delivery. Part of this function is the approval of courses and the accreditation of providers below university level to deliver approved courses with the proviso that university is not a level of education, but a class of institutions, which teach qualifications that are equivalent to levels 2 and 3, up to level 10 on the framework. Under this prescription each proposal for a new degree is submitted to an assessment panel of peers, consumers and host institute personnel to validate the content, delivery process and public benefit before the accredited provider is allowed to market the new product to prospective students. National Certificates and Diplomas, because of their prescriptive nature, are subject only to the accreditation criteria applicable to the education provider QUALIFICATIONS A very wide range of certificates and diplomas is available for those engaged in vocational education and training. These include “national” programmes, based on an accumulation of credits granted on the basis of assessment against specific sets of competencies referred to as “unit standards” or “achievement standards“. Training and assessment for “national” qualifications can be carried out either in the workplace or in a public or private institution. However, most certificates and diplomas are awarded by institutions following structured academic programmes that vary in duration from one semester to six semesters when pursued on a full-time basis. Undergraduate degrees are available in most public institutions. The programmes normally take six semesters in Arts, Commerce, Science, Agriculture and Horticulture. Programmes in Engineering, Law, Pharmacy, Medical Laboratory Science, Optometry and Physiotherapy, take eight semesters. Programmes in Architecture and Dentistry take ten semesters while those in Medicine take twelve semesters. Completion of a six-semester “ordinary” degree programme may be followed by two further semesters of study leading to the award of an “honours” degree. Longer degree programmes lead to qualifications granted “with honours”, often on the basis of extra studies undertaken within the normal compass of the programme. Masters degrees are offered at universities, five polytechnics, four colleges of education, two wananga and five PTEs. The normal prerequisite for entrance is an undergraduate degree. These programmes may sometimes be completed in only two semesters when entrants hold an honours degree, but normally take four semesters. Masters degrees have traditionally been granted on the basis of supervised research leading to publication of a dissertation. However, “professional” degrees that involve substantial course-work, supplemented by a project undertaken in the workplace, have become more common. They are often designed to meet the needs of professional practitioners for specialised studies following an initial period of supervised practice. Doctoral studies, based on original research leading to a published thesis, extend to at least four full-time semesters, with six semesters being the normal minimum, and culminate in the award of a PhD. This degree is available at all universities and at Unitec New Zealand. Professional doctorates, based on course work extending over two semesters, followed by a substantial research project extending over four semesters and with direct application in the relevant professional area, are becoming more common. Examples include the Doctorates in Business Administration at Massey University, Computing at Unitec New Zealand, Pharmacy at the University of Auckland and Health Science at Auckland University of Technology. Higher Doctorates are normally awarded on the basis of published work. DISTANCE EDUCATION The Open Polytechnic of New Zealand and several other institutions provide distance learning at trades, technician and degree levels, some print based, some by electronic medium linked with periodic face-to-face practical instruction. Massey University also provides extensive distance education programmes, mainly at degree and postgraduate level. Most institutions now offer e-learning opportunities to supplement face-to-face study. ADMISSION STANDARDS In order to gain admission to university, all school leavers must reach a minimum standard in the National Certificate of Educational Achievement. Entrance to high-demand programmes is often selective, with higher standards being required. Other institutions are more flexible in dealing with applications from motivated school leavers, and all institutions can and do apply more than just academic criteria when dealing with applications from mature students. GRADING SYSTEM Most institutions use a subject-by-subject grading system based on a scale of nine passing grades (from A+ to C-) and two failing grades (D and E). The grading system of A – E does not apply to National Certificates and National Diplomas, which are comprised of unit standards for which students are awarded credits for performance. Assessment for unit standards is based on a competence or achievement model and not on a normative scale. Unit standards are reported as either Achieved or Not Achieved. For Achievement standards a student can be awarded one of the following grades: Not Achieved, Achieved, Merit, or Excellence. Achievement standards are not yet used in traditional tertiary education. There is no direct equivalent to the “grade point average” system. LEGAL FRAMEWORK The Education Act provides the basic framework, but institutions are bound by a wide range of regulations made under the Act and by the requirements of other, more general, legislation covering areas such as occupational health and safety, industrial relations, and so forth. Under the amendments made to the Education Act in 2002, which established the TEC, the government issues a Statement of Tertiary Education Priorities, which indicates the objectives, which will be progressed towards the Tertiary Education Strategy over a 1-3 year period, although the Act only requires a strategy to be approved “from time to time”. It sets out broad goals for the sector, and individual institutions are required to prepare Charters and Profiles defining their character and explaining how they will contribute to meeting the goals of that Strategy.

QUALITY ASSURANCE The New Zealand Qualifications Authority is responsible for quality assurance throughout the tertiary education system except universities, which are the responsibility of the Vice-Chancellors Committee. The quality assurance processes for Institutes of Technology and Polytechnics is the responsibility of Institutes of Technology and Polytechnics Quality (formerly the New Zealand Polytechnic Programmes Committee) under delegated authority of NZQA. NZQA administers the National Certificate of Educational Achievement (NCEA), grants “national” competency-based vocational awards, registers PTEs, establishes the criteria for course approval and accreditation for the tertiary courses, accredits all tertiary providers to deliver approved courses, maintains a national register of qualifications (the New Zealand Register of Quality Assured Qualifications), evaluates overseas and New Zealand qualifications held by people seeking residence, employment, professional registration or opportunities for further study within New Zealand for immigration and employment purposes, and provides information and support to countries wishing to establish or review qualifications frameworks or quality assurance systems. FUNDING SYSTEM For fifteen years following the passage of the Education Act (1989) all institutions, public and private, were essentially funded on the basis of student load. Institutions were free to set and charge tuition fees, which were supplemented by a bulk funding allocation based on student load at subject level, with each subject being assigned to one of more than thirty funding categories.

The bulk funding allocation covered all capital expenditure by institutions and, for subjects at degree level and above, included a component intended to cover the costs of the research necessarily undertaken to support teaching and learning. The system has been modified somewhat as a result of the 2002 reforms. While still free to set and charge tuition fees, institutions must now maintain those fees within certain limits (still established at subject rather than programme level).

The research component is being progressively withdrawn from bulk funding, and being reallocated from a Performance Based Research Fund (PBRF) based on the outcomes of a periodic research assessment exercise. The government is exploring the possibility of allocating part of the remaining bulk funding on the basis of measures of teaching quality, but this remains a complex and controversial area. Finally, funded enrolments in private providers are now subject to capping, and the capital component has been withdrawn from the bulk funding provided to such organisations. Tuition fees are covered by a government loan scheme with concessional interest rates (no interest accrues during active study) and income-contingent repayment. Students can also gain access to a living component of the student loan that operates in a similar manner.

However, some students also qualify for student allowances, which is a benefit and not repayable by the individual student. Grants may be available instead of loans in some cases, but are subject to stringent income and asset tests. GOVERNANCE STRUCTURE Public institutions are governed by their own Councils, constituted on a representative model, but with a reasonable measure of freedom for the specific needs of institutions to be reflected in the constitutions of their Councils.

All institutions in receipt of government funding are subject to public sector accounting processes. The Council of each institution has power to make statutes governing the conduct of the institution and to decide its strategic directions and priorities, within the constraints of the Charter and Profile negotiated with TEC. TUITION FEES International students enrolled in undergraduate programmes must pay the full cost of those programmes, and the annual fees can vary considerably depending on the number and level of subjects taken. A typical range might be from around 12,500 NZD for a business degree at a polytechnic to 40,000 NZD for a medical degree at a university. In all cases, additional fees are likely to be charged for course materials, buildings, student services and assistance, amenities and other administrative services. International students must also have insurance to cover health care costs. Some scholarships may be available.

Domestic students pay substantially lower fees, since government provides bulk funding as previously described. High levels of competition within the sector mean that there is much less variation across the sector than might be expected and the imposition of maximum fees will probably cause even tighter grouping in the future. A typical range might be from around 3,500 NZD for a business degree to 10,000 NZD for a medical degree.

In all cases, postgraduate fees will be higher, but substantial scholarships are much more likely to be available than at undergraduate level, at least for research-based programmes. AUTHORITIES AND ORGANISATIONS The Ministry of Education is responsible for government policy and monitors the financial performance of public institutions.

The Tertiary Education Commission is responsible for funding most, but not all tertiary education offered by universities, polytechnics, colleges of education, wananga, private providers, foundation education agencies, industry training organisations and adult and community education providers. TEC also oversees the implementation of the Tertiary Education Strategy. At the highest levels it connects tertiary education with the national goals for economic and social development, environmental sustainability, Maori development, infrastructure and innovation. It is the key implementation agency for the Tertiary Education Strategy (TES) as it relates to the central issues raised in this paper in respect of business relevance, quality and mechanisms for steering the tertiary sector towards desired outcomes The New Zealand Qualifications Authority is responsible for the over-arching quality assurance of the national qualifications system. The New Zealand Vice-Chancellors Committee promotes the interests of the universities, administers scholarships, fosters international linkages and is the body primarily responsible for quality assurance in the university sector. A body now known as Institutes of Technology and Polytechnics New Zealand (formerly the Association of Polytechnics in New Zealand) acts as an advocate for nineteen of the twenty polytechnics and institutes of technology, maintains quality through the sector, and promotes polytechnic education and training.

The Association of Colleges of Education in New Zealand is the co-ordinating body for the colleges of education. Several bodies have been established to represent the interests of private tertiary education organisations, particularly in their relationships with government and government agencies. The most influential is the New Zealand Association of Private Education Providers.

The Industry Training Federation co-ordinates 42 Industry Training Organisations (ITOs) in circa 30,000 businesses employing 130,000 learners through vocational training. While not offering tertiary education per se, they provide a brokering connection between training providers and industry stakeholders. They play a leadership role in identifying and meeting future skill needs in their industries and in promoting training to employers and employees in order to meet their needs. In this role they arrange training for a significant portion of the New Zealand workforce. Http://


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