Tertiary education - a system tied up in knots


Draft report on new models of tertiary education now available.

The Productivity Commission released its draft report “New models of tertiary education” today.

The report is a detailed inquiry into how well New Zealand’s tertiary education system is set up to respond to, and take advantage of, trends in technology, internationalisation, population, tuition costs and demand for skills. As part of the inquiry, the Commission was asked to identify potential barriers to innovation.

“A good tertiary education system is one that meets the needs of all learners – including those from diverse backgrounds and with diverse goals. Our current system serves many students well and does many things very well. However, its design and operation constrain innovation and perpetuate certain inequalities - even though there have been some improvements” says Commission Chair, Murray Sherwin.

“Over time, additional rules and regulations have been added to the system as new fiscal and political risks have emerged. The result is a tightly controlled and inflexible system. This report and its package of recommendations seek to cut through regulatory and administrative knots.”

Key recommendations include better quality control; making it easier for students to transfer between courses; abolishing University Entrance; enabling tertiary institutions to own and control their assets; making it easier for new providers to enter the system; and facilitating more and faster innovation by tertiary education providers.

While the Commission believes that those changes would enable the tertiary education system to be more innovative and better cope in the face of emerging trends, it also believes that such changes would be vulnerable to reversal without a substantive change to the current funding system. 

That’s why the Commission is seeking feedback on the concept of a Student Education Account – a student-centric model which shifts purchasing power of the Government’s current tertiary education spend of about $2.8 billion each year from providers to students.

Mr Sherwin says the Student Education Account is a high level concept that warrants further discussion and development.
“A Student Education Account would reorient the system around student needs and preferences. This would provide a model that embraces innovation rather than stymies it. All students, including those who currently miss out on the opportunities of a good post compulsory education, and those adult students seeking retraining as job markets change, would have access to funding to meet their needs. 

“Instead of the Government channelling funding through subsidies to providers, the same money would go directly into individual student accounts – potentially up to $45,000 for every young person turning 16 years of age – enabling purchase of approved training from licensed providers. 

“While the Commission is confident its recommendations can help to make the tertiary education system more open and responsive to emerging trends, the Government needs a different regulatory and funding model if it is to cut through the inertia and facilitate the development of innovative models of tertiary education. This report aims to provoke discussion on how that can best be done.”

Next steps

The Commission is seeking submissions from all interested parties. Submissions are due by 21 November 2016, and the Commission’s final report to the Government is due February 2017.

The draft report and details on how to make a submission are available at www.productivity.govt.nz.

About the inquiry

The Government has asked the Productivity Commission to carry out an inquiry into “new models of tertiary education”. The inquiry takes a whole-of-system perspective, considering how trends – especially in technology, tuition costs, skill demand, demography and internationalisation – may drive changes in business models and delivery models in the tertiary sector.

Inquiry timeline

21 November:             Due date for submissions on the draft report
February 2017:            Final report due to Government


Contact: Sally Aitken, Communications Adviser 029 770 8697