A new future for work skills training in NZ

Nau mai.  Haere mai.

Tēnā koutou katoa.

Warm greetings and welcome to you all. 

It’s a big day for all of us who are committed to the future of vocational education in New Zealand.

Today, I am going to talk to you about the need for fundamental reform.

But before I get into details, some important context is needed.

When the Coalition Government started reviewing our education system in late 2017, I said we wanted to build the world’s best education system for people of all ages – from top to bottom. 

I also said that, to do that, we needed to collaborate across the system – with providers and educators, learners, employers and industry, Māori, iwi and communities.

We need to collaborate to deliver on our government’s clear vision for education.

We believe that every New Zealander, wherever they live and whatever their background, deserves access to quality education and training throughout their lives, so they can realise their potential and participate fully in our economy and society.

The world around us is changing rapidly and will continue to do so. Our education system needs to keep up.

Our vocational education system – the reason we are here today – is a case in point. At a time when we’re facing critical skill shortages, too many of our polytechnics and institutes of technology are going broke.

The strong labour market is encouraging young people to move directly into the workforce rather than continue in formal education, and our system isn’t geared up for the future economy, where re-training and up-skilling will be a regular feature of everyone’s working life.

It’s time to reset the whole system and fundamentally rethink the way we view vocational education and training, and how it’s delivered.

We need to move from a system where educational institutions and on the job training compete with one another, to a system where on the job and provider-based learning is seamlessly integrated.

We need to move away from the cycle that sees course delivery at institutes boom when the economic cycle turns down and then dive when the economy improves, while on the job training providers face the opposite cycle.

Instead of our regional institutes of technology retrenching, cutting programmes, and closing campuses, we need them to expand access to consistently high-quality vocational education throughout the country.

We need a model where businesses, industry, iwi and local government in every region play an active role in driving skills development.

We need to shift from the current approach where they ask their local education providers: “what can you do for us?” to one where they say “this is what we want from you”.

We need a system of training and skills development that responds faster to global and national trends, so we can get people with the right skills into the right jobs much faster.

Our thinking needs to shift from the idea that the ultimate goal of senior secondary schooling is to prepare young people for university to add a much greater focus on the career pathways of the two-thirds of school leavers who do not go on to study degrees.

Our Government is committed to delivering a step change.

Last year I instructed the TEC and the Ministry of Education to begin working with our polytechs, institutes of technology and the wider community to identify options for structural change, and to undertake a system review of vocational education.

The Government has reflected deeply on the problems, as well as the opportunities, with the current system and we have come up with proposals that we think would tackle them decisively.

The proposals go further than the early advice we received. We weren’t convinced they were sufficient to drive the change the sector needs.

We want a system where learners get good educational and employment outcomes from vocational education and training that responds to their needs.

We know we need to do a better job serving the needs of Māori and Pacific people, who are too often under-represented and aren’t getting the opportunity to gain the skills they need.

We want a system that allows employers to recruit and develop the skilled, productive people their businesses need to thrive.

We want those working in vocational education to collaborate to support people, communities and regions to flourish.

And we want the system to adapt quickly to changes and to new educational models.

In the future more people will change jobs and careers frequently over their working lives.

Access to high-quality, responsive and flexible vocational education throughout their lives will improve their resilience and wellbeing, their employment security and life outcomes, and will help to reduce social inequities.

Right now, our vocational education system falls well short of the Government’s vision for the future.

I acknowledge the hard work and smart thinking being done by people in the sector. But we all know the system works against innovation, responsiveness and collaboration, and its current structure stops it from realising anywhere near its full potential.

That means learners, industry and employers across New Zealand are not being properly served.

The change we are proposing has three main components:

Our first proposal creates clearer roles for industry and providers

In engagement during 2018, we heard from you that the vocational education system is too fragmented.

It is difficult for organisations to collaborate, and for learners to move between or combine on-the-job and off-the-job education and training.

The role of business is unclear and its ability to influence is inadequate.

Despite the best efforts of many vocational education professionals and organisations, structural features of the current system drive them to compete over funding.

New Zealand needs clear and complementary roles for all organisations in the vocational education system.

We need a system in which industry and providers have strong, distinct roles. Each need to be positioned to act collaboratively to develop the skills that people and industries need to flourish.

The system needs to draw more strongly both on industry expertise in setting expectations, providing leadership, and setting standards, and on provider expertise in delivering education and pastoral care.

To achieve this, the Government’s first proposal is to give industry an increased leadership role in vocational education and reshape ITOs into industry skills bodies that will focus in four key areas:

  • One - skills leadership and coordinating industry efforts to plan for future skills needs,
  • Two - setting standards and approving qualifications, for both on and off-job learning,
  • Three - working with new ‘Centres of Vocational Excellence’ to support high-quality programmes and core curricula, and
  • Four - advising the tertiary Education Commission (TEC) about purchasing decisions.

ITOs would have the opportunity to apply to be recognised as Industry Skills Bodies.

ITOs’ role of supporting workplace learning and assessment for work-based vocational education would transfer to vocational education providers, and ITOs’ current role purchasing provider-based courses for work-based trainees would transfer to the TEC.

ITOs’ existing advisory and brokerage functions could be located in a number of places in the reformed vocational education system, and the Government will gather feedback on this during public consultation.

The Government acknowledges that the proposed changes would have an impact on ITOs. However, the risks of not making changes are also significant; disruption now will strengthen the vocational education system for the long term.

We will work closely with ITOs to seek their input on designing the new system and manage the transition from ITOs to industry skills bodies.

The second proposal is the establishment of a New Zealand Institute of Skills & Technology.

The Government wants a vocational education system that delivers more for our regions, so that every learner has more, and better, choices in accessing quality vocational programmes and teaching where they live and work.

We need a system that listens to what learners, businesses, industry and the wider community want and need, and delivers it for them, partnering with schools, employers, iwi, local Government and community groups.   

The Government’s proposals would improve and extend regional access and responsiveness. Making the system more efficient, faster, and more flexible, as well as more embedded in regional labour markets, will mean better service for the regions.

Our proposals would also create a system that makes the public vocational sector sustainable long term and, makes it much easier to grow course delivery at more locations.

Under the status quo, most ITPs will increasingly come under considerable financial stress due to declining enrolments, high fixed costs, and funding that does not reflect their cost structures.

At present, four of our 16 ITPs have commissioners in place and five others face a serious financial risk. This cannot continue.

Without significant educational reform to first stabilise, and then position the ITP sector for growth, the range of vocational education options in some regions will continue to decline. Some existing ITP campuses would not be sustainable.

The Government’s proposal is to create a single New Zealand Institute of Skills & Technology that is distributed across a network to offer high-quality vocational education throughout New Zealand.

It would transform the current regional network of 16 ITPs into regional campuses of the new nationwide institute. This new Institute will offer work-based as well as off-job learning, with the expectation over time that more delivery would resemble apprenticeships, where the learner, provider and employer collaborate to support a learner to combine training with work.

Resources would be freed up to expand front-line, with programme and course design and back office functions distributed across the network. 

The size and scale of the new Institute would allow greater and faster improvements to provision nationwide.

Instead of each campus being limited by what it can afford to deliver, it could leverage the resources of the whole Institute with a mix of face-to-face, online and blended learning.

This will mean local communities and regions have more choice, and – thanks to the Industry Skills Bodies – more confidence that the skills vocational learners develop are the skills that the workforce needs.

Many existing ITPs have special arrangements in the current network and consideration would need to be given as to how these would be translated into the new system.

One example is the Southern Institute of Technology’s offer to learners of zero fees or accommodation funding support. Many ITPs also have contracts, agreements and understandings with communities and stakeholders that need to be honoured throughout any transition.

I want to be clear here, there will continue to be room for regional differentiation, and for a strong degree of regional influence.

Each region of the New Zealand Institute would have a Regional Leadership Group to map out local skill requirements, link with local and regional development strategies, and to advise on what mix of courses should be offered in that region.

The groups would include representatives from local communities, iwi, hapū, schools, industry and local government.

By providing a mechanism for local, connected leadership, we intend to give local communities more say in the education and training that’s on offer in their area. There could be more Regional Leadership Groups than there are current ITPs, putting the local back into the system.

The Government envisages that the New Zealand Institute of Skills & Technology, and perhaps also wānanga, would host Centres of Vocational Excellence focused on areas of particular importance, e.g. agriculture.

The proposed New Zealand Institute of Skills & Technology will also be a major of provider of international education, with the visibility and scale to have a bigger impact in the international market.

And it will continue to deliver foundation and degree-level education as do the current ITPs – but as a much stronger and more efficiently designed nationwide institution.

This is a big change and I know it will take time to process. All change comes with challenges, but the opportunities here are enormous and I encourage you to share our sense of urgency and vision for what the new Institute could be and do for New Zealand.

Proposal three is for a unified funding system

A single funding system is needed to replace two different funding systems that are drawing providers and industry apart. We need a funding system that draws them together.

Creating one funding system for vocational education would ensure learners get the skills, experience and support they need to be successful, providers have the funding they need to be sustainable and to support our regions, and Industry Skills Bodies can fulfil their roles.

The Government will work through the details of the new vocational education funding regime after consultation. We want to hear your ideas about how it could work, and what kind of incentives different arrangements might create.

It’s important to address what the proposed changes mean for learners.

There would be a whole lot of improvements in their learning experience.

If the proposals are adopted, learners will be able to move easily between education providers, and between on- and off-job training, all while gaining skills they can be confident will help them to succeed in work and life.

But for now, nothing will change for learners due to the proposals. For 2019 and 2020 students are encouraged to enrol in ITPs as they normally would

I want to assure all students that you can continue, with confidence, to enrol and study in quality-assured programmes across New Zealand. Any changes, post consultation, will be carefully managed to minimise the impact on current learners.

They will be able to proceed with your study through any future change process.

Course fees for 2019 won’t change due to the proposed reforms.

Local scholarships and fee support programmes that vocational education providers have committed to with their communities will remain.

The Government’s policy of a Fees-Free first year of tertiary education and training will continue.

For international students in 2019 and 2020, they are encouraged to enrol in ITPs as they normally would. 

Existing courses and qualifications will continue. International students’ visa status will not change, and all New Zealand qualifications will continue to be recognised internationally.

I would encourage prospective students overseas to continue to apply to study at New Zealand vocational education providers with an assurance that the high quality of provision and range of courses currently on offer will continue.

Agencies will be updating overseas stakeholders so they are aware that it’s business as usual here.

The Government sees a strong future for international education in New Zealand and remains committed to attracting and supporting international students seeking a quality education and developing the skills that New Zealand needs.

I want to acknowledge the uncertainty staff in the sector have lived with over a number of years.

We’ve seen major upheavals at TPP, Unitec, Northtec and at institutes around Wellington – and staff elsewhere are feeling the pinch. 

It is time to give them more certainty, with a clear vision of the future and a detailed plan of how to get there. 

The package of changes being proposed is significant. But the risks of not acting are also significant. We need to accept that disruption now will strengthen the vocational education system for the long term.

We’ll be working closely with education providers and ITOs to seek their input on designing the new system and managing the transition.

And we’ll ensure that change processes include robust and proactive support for employees whose jobs may be impacted by change.

As part of the consultation process, agencies will be visiting ITPs and ITOs and discuss the proposed changes with them, including with staff, unions, management and learners.

Contrary to some irresponsible claims that have been made in recent days, the government has no ‘target’ for job losses or redundancies. We want to work with those who may be affected to help them transition. We want to provide retraining and redeployment opportunities where someone’s role has been changed or has disappeared.

In fact that’s one of the reasons we’re doing these changes in the first place. Increasing numbers of New Zealanders across the economy are going to find their jobs changing or disappearing and we need to gear the system up to provide them with much more support to retrain and redeploy elsewhere.

I’d like to say a few words about what our proposals mean for tangata whenua.

A significant weakness in our current vocational system is that not all learners are getting the educational and employment outcomes they want and deserve. The system is overly complex, making it hard for first-time learners, particularly Māori, to achieve good outcomes.

Our proposals seek to strengthen the influence Māori have over vocational education for their communities, through the proposed Regional Leadership Groups of the New Zealand Institute of Skills & Technology. These would aim to complement, with a strong local voice, the direct partnership between iwi Māori and the Crown.

The Government would expect the proposed changes to be focused on delivering high-quality and relevant services to Māori, as individuals, whānau and iwi.

The proposed new system also presents significant opportunities for wānanga. We will work through those changes carefully with wananga, recognising their unique role in our education system.

The proposed changes to vocational education will be supported by a range of other work the Government is doing to create positive outcomes for learners and employers.

We have already taken steps to make post-school education and training more accessible, with our fees free programme, which provides 2 years of free industry training and apprenticeships, or one year of free tertiary education.

We also announced changes to allow greater use of micro-credentials to ensure our system is more accessible and responsive to business needs.

We are also well down the track of developing a careers system that will be much more active and hands-on that the passive, fragmented and piecemeal system we have now. And we’re busy modernising the schooling system through the reviews of Tomorrow’s Schools and the NCEA.

So, what can you expect to happen next?

I acknowledge that the fundamental change being proposed may be stressful and disruptive.

For this reason, the Government will consider all feedback received during consultation and then make decisions quickly on how to proceed – likely in May or June this year. Public announcements will follow shortly afterwards.

We would aim to pass any new legislation during 2019 to enable a new institution to be technically in place from 1 January, 2020. This would occur through a technical merger of existing institutions, with the details depending on the final option adopted.

Final changes will be phased to ensure that disruption is minimised, time is given for new capabilities to be put in place and that the continuing education of learners and trainees is not compromised.

To close, the debate about the vocational education system has been simmering for some years. Over the past year, and in particular the last six months, the calls for change have grown steadily louder and, we know, the time to act is now.

We cannot afford to let the skills gap continue to widen.

Governments can’t continue tinkering at the edges, or adding more layers of complexity and “band-aid solutions” to an already complex system.

We need decisive action to safeguard New Zealand’s skills pipeline and economic development for the future.

The Government’s proposals are both far-reaching and necessary. If adopted as proposed, they would fundamentally change the nature of the New Zealand vocational education system.

This is a once-in-a-generation chance to help design the world class vocational education system that New Zealanders need and deserve – a system that will work for everyone, with strong industry leadership, sustainable ITP campuses, strengthened provision of education in the regions, and flexible funding that can adjust to the changing needs of employers, the economy and learners.

I encourage every New Zealander to participate in this consultation process and share your views about how New Zealand can build a vocational education system that we, as a country, can be proud of.

Tēnā koutou, tēnā koutou, tēnā koutou katoa.