New Zealand Association of Private Education Providers

  • Wyatt Creech

Introductory remarks Thank you for inviting me here today to speak to the Annual Conference of the New Zealand Association of Private Education Providers. I am pleased to be invited to speak on the theme of this year's Conference "Future 2000".

I intend today to highlight the Government's goals for tertiary education, and re-emphasise details about new resourcing arrangements for the tertiary sector, especially what these changes will mean for private providers. The future tertiary environment The tertiary sector in New Zealand has expanded to meet the growth in student numbers over the past decade. The reforms to the tertiary education system of the late 1980s, however, have been shown to be far from a complete answer to the issues raised. There are still complaints, for example, about the way our qualifications meet employer requirements. In the sense though that the growth in capacity has met the substantial growth in student numbers, while providing a considerable growth in the range of courses and programs, the system has responded. Some tertiary education will become increasingly the norm for all, over the next 20 years. There are three major reasons for this. Firstly, there is recognition of the greater need for higher level skills to meet the needs of the economy. Widespread qualifications will improve. Tertiary education improves economic growth that in turn will help provide sufficient employment opportunities, improve productivity and social cohesion. Secondly, the bulge of primary/secondary student numbers that shadows the baby boom currently in the late primary years will over the next decade roll on through to the tertiary sector. The tertiary sector will need to grow to provide for the needs of those young people when they leave school. Thirdly, there will be increased internationalisation of education and growing technological influences. The diversity of demand from students and employers will increase. More people will need to return to tertiary education periodically to update their skills. As a result of these influences life-long learning is becoming a reality for more and more people in the workforce. The tertiary education review Given the Government's desire to ensure that the New Zealand tertiary sector is as well-positioned to serve our needs in the 21st Century. The Government decided in 1997 that a comprehensive review of the tertiary education sector would be undertaken. The Green Paper on tertiary education released on 12 September 1997 raised a number of issues and asked for submissions on a range of options. The Paper covered the goals for tertiary education, taxpayer resourcing of tertiary education, the legislative and regulatory framework for the sector, research and governance and accountability of public institutions. We also published a Qualifications Policy Green Paper. The Ministry has received 379 written submissions including one from the New Zealand Association of Private Education Providers. There was a fairly wide range of opinion and views expressed in these submissions which have played a role in informing Government decision making. Many were in fact organisations' submissions and predictably reflected the expected views of those organisations. While it is natural that organisations submissions will reflect their vested interest, this is an area where all must take the wider view. We must never confuse institutions' interests with those of the young people of New Zealand long term. Often they coincide but not always. The main thrust of the tertiary review has been to ensure that the tertiary sector will be: q Responsive to the future needs of the economy, society, and students q Flexible and adaptable to change q Diverse, catering for a wide range of needs q Striving for better educational outcomes q Efficient, minimising waste The Tertiary Review Green Paper identified a number of concerns within the current tertiary education system that unless addressed will impede the ability of the sector to meet the challenges ahead. These include unnecessary barriers to provision, poor incentives too, and mixed rewards for good performance, and complex administrative demands and processes. Meeting the goals for tertiary education Key Government goals for the tertiary sector including improving the opportunities for involving young people in the tertiary sector, especially the participation and achievement of currently under-represented groups. We want to work too to improve the quality of qualifications and learning programmes. Finally we have to encourage value for students' and taxpayers' financial contribution to the cost of a student's tertiary education. The decisions arising from the tertiary review encompass policies on resourcing, quality assurance, research, information and governance and accountability of state-owned tertiary education institutions. Each of these aspects of tertiary education affects the operation of the others. The tertiary review decisions are, therefore, being designed as an integrated comprehensive package of measures. We announced our resourcing in the 1998 Budget. These changes were significant for private providers. An effective and efficient resourcing policy will encourage a tertiary sector to be more responsive to the needs of students. The resourcing system requires a credible quality assurance system so we an be certain the investment of taxpayers', students' money and students' effort is being well used. To ensure sound decision-making on what course to take and where to take it, students rely on the availability of quality objective information. The final resourcing package subsides access to all quality tertiary education opportunities for everyone who wants it. All students studying in quality courses provided by financially viable providers will receive taxpayer support. This will encourage greater diversity of high quality tertiary education. In order to earn the dollars providers have to attract the students. This will increase the responsiveness of tertiary providers to student and employer needs and quality should be improved. I will discuss this in more detail in a moment. Other parts of the review will see the accountabilities required of state tertiary education institutions clarified. Better governance will enable these institutions to make the quality strategic decisions that meet the challenges of the future. The package will introduce incentive effects that reward good educational practice, good strategic thinking, and high quality decision making. The existing resourcing system for Private Training Establishments (PTEs) The previous funding arrangement for students studying at PTEs provided only a relatively small amount of government funding ($7 million p.a.) out of a total pool of $1.2 billion for tertiary education. As a result, students enrolling at PTEs have had less taxpayer support and have had therefore to pay higher fees. This has not only constrained the growth of the PTE sector, it also means that some young New Zealanders get less taxpayer support for their post compulsory education than others - that is unfair - inequitable. Submissions on the tertiary review indicated certain aspects of Government's resourcing policy for PTEs that were of particular concern. These included: q Government subsidies were allocated on a pro rata basis according to provider bids, rather than meeting student demand.

q Total funding usually covered less than a third of PTE bids. q That there was no robust basis for deciding on priority categories of courses and programmes for funding. It was a Ministerial preference. q That courses of less than 12 weeks duration, extramural, or conducted at times other than 8am-5pm were excluded from consideration. This ran contrary to Government educational policy of encouraging providers to be responsible and flexible in meeting student needs. These fixed hours, fixed days arrangements do not suit people, usually women, who are at home due to family responsibilities. A more diverse and flexible arrangement will work better for more New Zealanders. The new direction of tertiary resourcing As part of the 1998 Budget, Government announced the way in which tertiary education and training providers are to be resourced in future. Key decisions so far are that: q From 2000 all students taking an approved course will be able to access the Universal Tertiary Tuition Allowance.

Previously only a fixed number of student places were subsidised. The new system is demand-driven. It rewards providers who teach additional students. It will focus providers on improving value for money by putting pressure on providers to contain their costs. q From 2000 all New Zealand students will be subsidised equally for similar courses regardless of their choice of provider. This creates a neutral and flexible operating environment. A provider's income is dependent on the choices students make rather than on a Ministry decision about where the numbers should go. q Actual enrolments will be subsidized, rather than providers' estimates of enrolments. This will mean considerably faster response times in paying providers that succeed in attracting students. q From 2000 the Government will automatically subsidise future participation growth. This is intended to give certainty to tertiary providers about the volume of tuition that government will subsidise, Government'' budget decision-making will focus only on the price. q To make sure students get value for money, tighter controls on quality assurance and the financial viability of providers will be introduced. The policy is to ensure that tuition subsidies do not go to substandard or financially risky providers. As a result of Budget savings made to cope with changes in economic conditions, specially the Asian and other international economic troubles, on 20 July Government announced that the tertiary sector will receive an additional $155 million of taxpayer funds over a three-year period. This will mean that the average level of tuition subsidy will be set initially at 72.5% of total cost. This translates into an average subsidy per-full-time student of $7,300. Because introducing this change is such a huge task especially the need to develop ways to accurately forecast student demand, the need for robust quality assurance and student and government information needs, full implementation of the new policy will not occur until 2000. For the 1999 academic year there would be no changes to the current funding category structure. In the 1999 transition to the new system, a temporary arrangement will apply which, in essence, will put a cap on total government spending while opening up the system to all students who wish to undertake tertiary programmes. In addition, it will allow time for needed infrastructural changes to quality assurance and information collection to be implemented.

Transition arrangements for Private Training Establishments (PTEs) For the 1999 academic year the private training establishment EFTS funding pool will be increased from $7 million to approximately $12 million (GST inclusive). Funding will for this phase still be allocated on a pro-rata basis to qualifying PTEs. The most significant change for PTEs is likely to be the funding of all students and the removal of all the previous funding restrictions. Funding would no longer be restricted to priority subject areas or to full-time courses run between the hours of 8am and 5pm.

In 1999: q funding will be determined on actual 1999 enrolments; q the average per student subsidy is expected to increase but remain lower than for TEI students; and q new quality audit and financial viability requirements will be introduced. The following financial viability and student protection criteria will also be requirements of funding: q Providers would need to submit to the Ministry of Education, an audited set of accounts, accompanied by a review of forecast information and signed off by a chartered accountant. For providers offering multi-year courses, these forecasts would need to be for up to three years into the future depending on the length of the course. q Providers will need to disclose certain information to students such as arrangements for refunds, credit transfer, arrangements with other providers, etc. Areas for subsequent decisions Further consideration is now being given to a number of policy issues. They relate to policy issues for the year 2000 and beyond, such as the future of Study Right and base grants, and how research will be funded.

Mechanisms for assuring the educational quality of providers will be decided as part of the White Paper. We need to prevent Government funds and student resources of money and time from going to substandard providers. Current information requirements are being reviewed with the intention of integrating collection systems, removing bottlenecks and duplications, and improving both the quality and utility of information collected. Governance and accountability arrangements for public tertiary education institutions are also being reviewed. There is a desire to clarify the role of governing bodies in order to improve strategic decision-making. The Government expects to have a range of appropriate interventions available in the event of an institution's financial performance worsening. A new Tertiary Ownership Monitoring Unit has been established within the Ministry of Education to enable better monitoring of publicly owned institutions and to implement any new requirements. Process for announcing remaining tertiary review decisions: Government White Paper The detail of Government decisions will be contained in the White Paper, which we expect to publish shortly. The White Paper will include draft legislation. I hope to see legislation to give effect to these decisions introduced to Parliament before the end of the year. The Select Committee considering the legislation will of course invite submissions on all aspects of the legislation. Concluding remarks The key challenge now facing New Zealand's tertiary education system is to be able to quickly adapt to meet future educational, economic and social needs. Tertiary providers will inevitably face considerable pressures for change and opportunities for growth. Demand for quality education, the increasingly international nature of educational provision, new learning technologies and the scope for strategic partnerships and alliances will shape the sector in New Zealand. The new policies, expected to be fully in place in 2000, seek to maximize the benefits to students and society as a whole from these opportunities. The result of these policy changes will be a more responsive and efficient system. The emphasis is on meeting the needs of students. We expect to see increased student participation and achievement. We want to provide New Zealand with a tertiary education system that will make a full contribution to the future needs of both the economy and the social fabric of our country. It is a high but critically important goal for New Zealand. We intend to meet it.