Responding to the Tertiary Education Strategy

Improving System Performance

In addition to the TES priority initiatives already mentioned, the TEC undertakes a number of other initiatives aimed at improving system performance. These range from incentivising strong educational performance to encouraging cost-effective practices.

Competitive funding pool for foundation learning at Levels 1 and 2

In 2012 the TEC announced that it was introducing a competitive allocation process for SAC funding at Levels 1 and 2 on the NZQF, and that it would invest an increasing proportion of this funding pool via a competitive process over successive funding rounds. In 2014 the TEC ran the second round of the competitive process and is investing almost $54 million per year for the 2015–16 Investment Plan period (up from $38 million per year for 2013–14). As a result of the 2014 process, the TEC funded 42 TEOs from the competitive funding pool, comprising 15 ITPs, 26 PTEs and one wānanga, to deliver approximately 7,058 EFTS in each year.

Provision purchased through the competitive process is fees-free for learners and provides foundation education that enables learners to progress to further study and employment, while building literacy and numeracy skills. Performance information for 2014 indicates that students at TEOs funded through the competitive process achieved better results overall than similar provision funded through the normal Investment Plan process: 78 percent course completion was achieved through competitive funding, compared with 73 percent course completion in TEOs with non-competitive funding.

More information about the 2014 competitive process, including the results of an online survey of applicants, can be found on the TEC website.

Capital Asset ManagementTop

The aim of Capital Asset Management (CAM) is to deliver services in the most cost-effective manner through the management of assets for present and future customers.

Cabinet Office Circular CO(15) 5 sets out expectations for asset management in departments and Crown agencies, including TEIs. (This recently superseded CO(10)2.)

As at 31 December 2014, TEIs collectively owned or managed assets with a net book value of around $9.4 billion. This made TEIs’ assets collectively the fourth-largest social-asset portfolio across government. The majority of assets were held by universities ($7.27 billion), followed by ITPs ($1.84 billion) and wānanga ($0.27 billion). The largest asset category across the sector is land and buildings.

The value and importance of these assets to the social, cultural and economic well-being of New Zealand reinforces the need for TEIs to set high standards when it comes to managing their assets.

In 2014 the TEC continued to work with tertiary education sector bodies and individual TEIs to further embed the integrated CAM Monitoring Framework. This framework articulates how the TEC will monitor CAM plus provide advice and guidance to TEIs where appropriate.

Achievements during 2014 included the following.

TEI Crown asset transfer and disposal policyTop

As at 31 December 2014, 19 of the 25 eligible TEIs had submitted applications for the transfer and/or disposal of the Crown assets that they manage under the TEI Crown asset transfer and disposal policy. The policy enables TEIs to acquire full legal title to assets (land and buildings) in Crown title that they have managed since 1990 and that they require for ongoing educational purposes, providing there are no over-riding reasons to retain the asset in Crown title. The policy also allows TEIs to retain for reinvestment the net proceeds of disposal of those Crown titled assets that they no longer require for educational use, subject to a satisfactory business case for the reinvestment.

The intent of the policy is to:

Applications are assessed against criteria agreed to by Cabinet, which include that a TEI must demonstrate ongoing educational need and incorporate the Government’s capital management expectations into the TEI’s strategic, financial planning and reporting systems. During 2014 the Minister of Tertiary Education, Skills and Employment and the Minister of Finance jointly approved the transfer of all Crown-titled assets at a further six TEIs. One transfer was fully completed and six were at various stages of the transfer process by year end.

Industry training initiativesTop

New Zealand Apprenticeships

New Zealand Apprenticeships were introduced from 1 January 2014, replacing the Modern Apprenticeship scheme. New Zealand Apprenticeships allow all apprentices, regardless of age, to receive the same level of Government support. These apprenticeships have a strong theoretical component and provide high-quality vocational pathways, setting up people of all ages for a career in their chosen industry. On average, around 1,130 apprentices and apprentice-type trainees1 enrolled each month in 2014, up 19 percent from 2013.

Apprenticeship Reboot

The Apprenticeship Reboot initiative aimed to raise the profile of apprenticeships and opportunities for careers in trades. Over the period it ran, from March 2013 to 31 December 2014, 20,374 (14,688 in priority trades or 72%) apprenticeship trainees received the Government’s payment of $1,000 (or $2,000 for priority trades), with employers eligible to receive the same amount.

Direct Funding Scheme

Introduced to encourage competition and drive innovation, the Direct Funding Scheme allows employers to be funded directly for training their employees. A small number of employers and organisations tested the implementation of the Scheme in 2014, with the lessons from this initial testing informing a number of refinements. An evaluation of the Scheme is running alongside its implementation.

Performance-linked fundingTop

Performance-linked funding is one of the TEC’s approaches intended to improve both educational outcomes for students and employers, and value for taxpayers. Effective from 2012, a maximum of 5 percent of a TEO’s total SAC funding is at risk of being recovered based on its educational performance in the previous year. The TEC’s performance-linked funding calculator enables TEOs to model the impact of performance-linked funding.

In 2014, $3.76 million in performance-linked funding adjustments were made to the 2014 payments of 89 TEOs. This was an increase on the $2.79 million in performance-linked funding adjustments applied in 2013 to 71 TEOs. For the industry training sector, from 2014 a maximum of 5 percent of an ITO’s funding is at risk if at least 80 percent of its trainees and apprentices do not achieve 10 credits or more in a calendar year.

1Trainees enrolled in Level 4 qualifications of at least 120 credits, but funded at the industry training rate.