Minister Steven Joyce: Speech on the Direction of NZ Tertiary Education (full text)
Speech to the Wellington Chamber of Commerce
9 March 2010
Good morning – it’s a real pleasure to be here.
This is my first speech as Minister of Tertiary Education – I’m going to give you an overview of where we’re coming from, and focus in on one or two areas of particular interest right now.
First I’ll take you through where tertiary sector fits into our wider plan for growth.
The John Key National-led government was elected at the end of 2008 with a clear mandate. A mandate to secure a brighter future for New Zealand by creating the conditions that allow our country to grow faster so that we can successfully compete in the wider world and afford the sort of first-world services that our people depend on.
We live in very challenging economic times.
As a country we are hauling our way out of a recession that started here before the global financial crisis hit the rest of the world – and came at the end of some pretty anaemic growth before then that was built on large increases in government spending.
The John Key-led government is acutely aware of how important better educational outcomes for our young people are to strengthening our economy for the future.
- The questions we have to continually ask ourselves are:
- Firstly, does our tertiary education sector produce all the skilled people we need for our economic well being?
And secondly, is the sector able to compete internationally for the high quality staff and students we need in order to keep delivering?
As a government we are very keen to ensure that New Zealanders from all educational backgrounds have the right opportunities to gain – at a level that suits them – world-class skills and knowledge to allow them to get ahead in life.
In order to achieve that, we must get the balance right between having much-needed certainty about overall levels of spending, while at the same time freeing up education providers to be able to come up with innovative initiatives and respond to economic and community needs.
As a country we spend about $4 billion each year on tertiary education – including student support. That’s about 1.6% of GDP.
In Australia it’s 1.1% of GDP and the OECD average is 1.3%.
So alongside comparable countries we certainly aren’t tight in the tertiary area. That’s a relief because it is highly unlikely that there will be any significant cash injections in the foreseeable future.
That’s just economic reality – additional money simply isn’t available.
Putting on my Associate Finance Ministers’ hat for a second – borrowing even more money as a country than we are already doing to spend even more on tertiary or anything else will simply lead to higher interest rates and higher exchange rates.
This will serve only to choke any benefits we’re trying to get for the higher borrowing.
Therefore, my focus as Minister for Tertiary Education will be on improving the quality of expenditure and getting more bang for the taxpayers’ buck.
That’s what boosting productivity is all about and we’re going to be all about that in tertiary over the next little while.
I’m not talking massive change – just lots questions asked (and answered), research checked, more questions asked.
We need to ensure that we have kicked the tyres on everything we do across the whole tertiary sector to make sure we are getting the best overall results we can.
And of course tertiary education is a diverse sector and one size doesn’t fit all. That applies to both students and institutions – whether they are universities, wananga, Polytechs, PTEs, ITOs or OTEPS. (Acronym city)
Our guiding influence is the Tertiary Education Strategy which cabinet signed off on late last year.
That signalled a focus on a number of key areas:
- Increasing the number of young people achieving degrees
- Increasing the success rate of Maori and Pasifika students
- Increasing the number of young people successfully moving from schools to tertiary
- Improving the outcomes of level one to three study
- Improving the educational and financial strength of providers, and strengthening the research outcomes.
To make these improvements within the confines of the money we have, we’re going to have to be pretty tight – as a sector we are going to have to do constant head checks on everything we are doing
We are going to have to make sure we minimise the friction in the system by making our funding approach as simple as we can while achieving the best results;
We are going to have to strengthen our focus on results rather than inputs;
We are going to have to make sure that students get the best information we can give them about what to study and what sort of job they can expect at the end of it;
We are going to have to ensure student support works well, and gives students the right incentives to get ahead;
We are going to have to get our investment in export education working as efficiently as possible; so we stand tall with the other countries we compete with for those international students.
We are going to ensure our skills training is matched to the needs of industry; and industry has fully bought in to the benefits of up-skilling staff.
This will all take time – but I for one am up for it – today’s students are the future of our economy and we can’t afford to get this wrong.
My three first priorities for action in the short term are:
- Tackling course completion rates – because we’re concerned that, as a consequence of previous ad-hoc policy changes, there are a large number of tertiary programmes, particularly below degree-level, that have course pass rates as low as 30 percent, and that some of these programmes fail to properly equip students for the jobs they seek.
- Ensuring qualifications are meaningful and recognisable – for both students and employers (here and abroad)
- Ensuring Value for money from student support
As a first step, in terms of ensuring our qualifications are meaningful, before I took over the portfolio, Anne asked the New Zealand Qualifications Authority to carry out a targeted review of qualifications.
We currently have around 6,000 qualifications on the books – I can’t believe that all of them are uniquely relevant and accepted by the people we want to recognise them – employers and students.
For example it’s hard to see that, despite the obvious importance of the tourism industry to this country, there needs to be 123 different certificate and diploma qualifications in Tourism studies. But that’s what we have currently.
This is the first significant look at our qualifications framework for more than a decade.
Since that time there has been an ongoing proliferation of qualifications. And now we have about 6,000 on the NZ Register of Qualifications- a significant number of which are unused or used only by the provider that set them up.
Finland – which has a population slightly larger (5.3 million) than ours – has about 500 qualifications on offer.
I don’t think we need to get it that low, but 6,000 certainly seems too high for a country of our size.
The goal is to cut out duplication, up the quality and reduce the number of new qualifications being added to the system unnecessarily.
I also want to see tougher pre-assessment of proposed qualifications before these go through the process of being added to the New Zealand Qualifications Framework.
Central to this will be questions about whether or not the qualifications have the support of the industry or the sector they’re set up to support.
I’m also announcing today that tertiary institutions will soon receive some of their current funding based on how well they perform academically by preparing their students for life after study.
In short, starting in two years time, we are planning to move from a system that funds purely on enrolments to one that funds both on enrolments and results.
The performance-linked funding model will provide financial incentives for institutions to continually work to improve the educational performance of their students.
Educational performance will be measured using indicators like successful course completion, qualification completion and student progression.
The details of how each measure is applied for each institution and each type of institution will be worked through by the TEC, the Ministry and myself over the next while.
The proportions of funding linked to performance will be low to start with so everyone has time to adjust, but linking some funding directly to academic performance is on its way.
I’m confident that this approach will encourage institutions to provide more support for their students and achieve better results for individual students and for the country. Most institutions are doing that now but there is nothing wrong with stretching it a bit further.
So that’s a couple of starters for ten, but there will be more fine-tuning of the system over the coming months as we seek to maximise the return from our country’s investment in tertiary education.
For example, it’s been well-signalled that we’re looking to make some changes around the edges of the current student support package.
New Zealand is unique in that we provide a very considerable amount of our total tertiary spend in assisting students directly in their studies.
If we take into account student allowances and the student loans we lend to students to pay for fees and living costs, we spend a total of 42% of our total tertiary budget on student support.
That makes us a pretty big outlier in the overall scheme of things.
In comparison, Australia spends about 31% of its tertiary budget that way and the OECD average is 19%.
A big reason is the way we handle our student loans. With the current policy settings, when you take into account interest write-off, bad debts and administration costs, taxpayers are currently writing off about 48 cents in every dollar that is advanced on a student loan.
Given that fact – and we’ve all accepted that this is the policy – we need to be sure that taxpayers’ generosity is not being taken for granted by people who don’t take their tertiary studies seriously, or who show little inclination to transition from tertiary training into work.
Let me be clear that we are committed to the interest free loans scheme but at that sort of cost it can’t be a blank cheque – we need to check that we aren’t setting up any perverse incentives that increases student and taxpayer exposure to debt, without getting a positive education outcome for individual students or for New Zealand.
For example I’d like to see the continued provision of student loans linked to academic progress and I make no apologies for that.
So yes, there will be some fine-tuning of the student loan scheme but hard-working Kiwi students who continue to advance their studies will not notice significant changes.
There is much more to do than the three things I have just mentioned.
Another big focus is to work alongside the Education Minister on the roll out of our Youth Guarantee scheme.
This acknowledges that academic study isn’t for all young people and aims to deliver a range of alternative educational pathways for 16 and 17 year olds in tertiary education.
For the Youth Guarantee, we will be looking for a wide geographical spread, good community support and high-performing tertiary education providers to give students the best outcomes.
You’ll hear more about this in the coming months.
So that’s a quick overview of where we’re at with tertiary education – an area we see as critical to lifting living standards and delivering a brighter future for all New Zealanders.
By necessity of time this is a broad brush picture – I look forward to getting into more of the detail with the sector, students and employers over the coming months.
My observation so far is that we have a dedicated and passionate tertiary education sector that is determined to prepare all of our tertiary students for the challenges of tomorrow.
I don’t see radical change on the cards. What we need is a continued evolution to a more effective and efficient tertiary system that makes the very best use of the $4 billion we taxpayers contribute to it.
I know there are a number of other issues that you’re interested in so I’m happy to take any questions.
From: http://www.beehive.govt.nz/speech/speech+wellington+chamber+commerce+4
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