Global Development
Regulatory environment: 1988-1999
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- Bu səhifədəki naviqasiya:
- Regulatory Environment
- Current Developments
- The Way Ahead
- Obstacles, challenges, successes and triumphs
- A Profile of Three Polytechnics
Regulatory environment: 1988-1999 Under this new regime, each institution is required to publish a set of goals and objectives together with quantifiable performance measures. A formal annual report by each institution is required to be published as a public document and presented to each member of Parliament. Annual reports must include financial reports based on full accrual accounting and comply with standard accounting practices. In addition the report is required to contain the institution’s performance against its stated objectives. The 1990 amendment to the Education Act addressed the entire area of academic quality assurance.106 The legislation provided for the oversight of academic quality assurance in the tertiary sector, apart from the universities to be exercised by the New Zealand Qualifications Authority (NZQA). The Act also allowed NZQA to delegate these powers to a body established by institutions other than universities107. In the case of the polytechnic sector such a body existed in the form of the Association of Polytechnics in New Zealand, since renamed as Institutes of Technology and Polytechnics of New Zealand. The Association successfully sought such a delegation in 1992 and established the New Zealand Polytechnic Programmes Committee (NZPPC)108 to discharge that responsibility. The NZPPC became operational in 1993. Another significant piece of legislation pertinent to the reform process was The State Sector Act (1988). This Act designates the chief executive of a polytechnic as being the employer of all staff and faculty109. The Council or governing body of each institution therefore employs only one person, the chief executive. The decision to designate the chief executive as the employer of all faculty and staff was based on the principle of clearly splitting the functions of governance and management, governance being the responsibility of the Board and management the responsibility of the chief executive. Employment matters were clearly seen as management issues. While the reform process in the tertiary education sector had a primary focus on matters academic including mainstream academic tertiary qualifications, it did not stop there. It also included industry training. The Industry Training Act (1992) allowed for the establishment of Industry Training Organisations (ITOs). Which were established by groups of employers on an industry basis and mandated under the Industry Training Act110 to:
Within a few years 53 different ITOs had been registered. These ITOs covered more than 85% of the country’s workforce. By way of supporting industry training the government appropriates a level of funding each year for industry training and distributes this money through detailed contracts with each ITO. The ITOs are free to use this money to ‘purchase’ specific training for people in their industry. Most of this training leads to national qualifications which have been developed by the ITO itself. While an ITO can set standards and develop qualifications it cannot provide the training itself. This in line with the principle of the ‘purchaser/provider split’ referred to above.
The General Election in late 1999 resulted in a change of government and with it a change in policy. The policy of the incoming centre-left government included (a) moderating those aspects of competition that were deemed to be destructive and (b) moving the tertiary education system towards a more collaborative and strategic environment. To provide advice on how to move towards this new direction the Government established a Tertiary Education Advisory Commission (TEAC) in 2000. By November 2001, TEAC had produced four separate reports on how to achieve the government’s objectives. The most significant outcome from the TEAC process was the recommendation to establish a new agency, the Tertiary Education Commission. This recommendation was accepted by government and the Commission was formally established as from 1 January 2003. The Commission itself consists of eight persons appointed by the Minister of Education The functions of the Commission are listed in S159F of the Education Act and include:
Fundamental to the thrust of the reform process is the concept of a Tertiary Education Strategy (TES) and a Statement of Tertiary Education Priorities (STEP). The current government’s Tertiary Education Strategy (TES)111 contains six goals:
The following quote is an extract from the Minister of Education’s comments in the Statement of Tertiary Education Priorities (2005/07) document: “In summary, this STEP focuses on ensuring that students and learners progress to higher levels of study through accessing tertiary education, which is of excellent quality and relevant to the needs of New Zealand. It will be provided by vibrant, highly capable and well-connected tertiary education organizations. It wants tertiary education organizations to build upon their areas of expertise, develop strong strategic links with their stakeholders, and complement their strengths with the strengths of others through partnerships and alliances.”112 The document itself identifies eight key change messages:
Finally the STEP focuses on four major connected themes:
Both of these documents provide a set of signals regarding the current government’s vision for the tertiary education sector over a five year timeframe. Under this new policy each tertiary education provider is required to prepare a charter and a profile. A charter is a high-level document that describes an organization’s role in the tertiary education system and how it aligns with the government’s Tertiary Education Strategy. It covers a long-term time-frame and provides the basis for a Profile. A Profile113 is a document prepared annually by providers which:
In preparing their Charters and Profiles each institution is required to take into account both the Tertiary Education Strategy and the Statement of Tertiary Education Priorities. In short the primary function of the Commission is to ‘steer’ the tertiary education sector towards the achievement of the TES and at the same time have regard to the STEP. Apart from the charter and profile documents, funding will act as the primary steering instrument. As outlined previously the existing bulk funding system is a relatively simple ‘subsidy’ system which is based on providing subsidies to institutions on the basis of the number of equivalent full time students (EFTS) enrolled. Apart from tuition fees (which are linked to enrolments) and some modest revenue from industry training there is no other source of funding available. The funding model was designed for a ‘demand driven’ system to encourage increased participation and has served that environment well. Inherent in every funding system is a set of incentives, intentional or otherwise. In the case of the EFTS funding system the major incentive was to grow, to grow in absolute terms and to grow at the margins. Every student in a given cohort may attract say $US 5,000 by way of subsidy plus another $US 2,500 in tuition fees. The same level of revenue, $US 7,500 could be earned for every additional full time equivalent student enrolled. The marginal benefits are considerable. Can the existing funding system, designed as it was to serve a demand driven system, serve the needs of a system which is now looking to ‘intervene’ on the supply side? Probably not, as the incentives in the existing system do not necessarily deliver on the priorities. For sure the government can, through the Tertiary Education Commission impose a form of rationing by refusing to fund certain programmes on the grounds of low relevance or quality but it is not well placed to ‘encourage’ the delivery of programmes where the market demand may be marginal. In any event attention will need to be given to encourage participation by students in areas of low demand but high national priority. So, incentives will need to be devised to (a) encourage institutions to engage in high priority activities and (b) encourage students to enroll in such programmes. Current Developments The policy decision made by the government in 1998 to remove the cap on funded places led to a series of responses by some providers which produced the most significant policy issues facing the polytechnic sector for decades. That decision to remove the cap on funded places was based on the premise that the potential for significant growth in tertiary education participation was likely to be modest in the foreseeable future, so the risk of a serious fiscal blow-out was low. This assumption was based on two observations, (a) participation in tertiary education had been steadily growing over the previous two decades to more than the OECD average and (b) that there is a natural limit to participation in higher education and that limit had probably been reached. While those assumptions may have been valid they did not complete the picture. For sure, participation in higher (degree) level qualifications had indeed reached a plateau but the potential for growth in lower level activity was almost unlimited, especially in those areas where there were no academic entry requirements. Having regard to the opportunities open to institutions that lay behind the policy it should have come as little surprise that sooner or later some provider(s) would find a way to maximize the opportunities for growth which were inherent in the policy. They did. The area identified by a number of providers as having the greatest potential for growth was community education. This category of delivery did not have any entry prerequisites nor did the courses necessarily have any assessment requirements. In addition, community education courses did not necessarily lead to a qualification. All of these factors allowed providers to offer low intensity, low cost courses to a wide public with almost unlimited potential for growth, especially if offered on a zero fee basis. At the same time such courses attracted the same level of subsidy as higher level qualifications which included intensive learning and assessment. By way of illustration, some providers offered basic computing for free and attracted many thousands of learners. The combination of low cost and relatively high subsidies resulted in healthy ‘profits’ from such ventures. By the beginning of 2003 the government had estimated that the provision of ‘community education’ courses had, over a period of just two years, risen from fewer than 3,000 equivalent full time (EFTS) students to more than 26,000 at an additional cost of more than $US70 million. In the face of widespread political and public criticism, the government then moved to significantly reduce its exposure in this area. In July 2005 the government announced a series of decisions diverting expenditure from ‘community education’ to areas more in line with the government’s strategy and priority areas. The 1998 policy decisions to (a) remove the cap on funded places in tertiary education and (b) to allow private providers access to the same level of subsidies as State institutions were driven largely by a firm belief that a fully competitive market environment would deliver optimum results. The centre-left government elected in late 1999 certainly did not subscribe to the view that a highly competitive market environment would produce optimum results and its policy position reflected that view. It was noteworthy however, that the same government did nothing to reverse the 1998 decisions despite its stated opposition to a market model and its commitment to removing the more destructive elements of competition. Whatever the reason for its inaction, the 1999-2005 administration was happy to see participation increase and did not become concerned until both the scale of the increase and the nature of it became evident. In short the government failed to appreciate the capacity for players in the marketplace to respond to market opportunities.
Having regard to the experience of the competitive market, it is highly unlikely that any future government will risk the unexpected outcomes which are inherent in such deregulated environments. Having said that, it is extremely unlikely that any future government will wish to return to the type of ‘command and control’ environment that existed prior to the 1990’s. The universities were never in a position to compete in the ‘mass market’ even if they wished to and the experiences of the uncapped period basically passed them by. During this period the universities operated as they had for many decades and it is safe to assume they will continue to do so in the coming decades. In contrast to the universities the future for polytechnics and institutes of technology is more likely to be influenced by change. While degree programmes will continue to be a feature of polytechnic provision it is unlikely they will represent a growing component of that provision and it is extremely unlikely that any polytechnic other than Unitec will pursue university ambitions. Polytechnics will be actively ‘steered’ towards reinforcing their vocational missions and the imperative to grow in order to compete let alone survive, will be moderated. This new redirection will be aimed at strengthening the links between polytechnics and their particular geographic regions. This process will be designed to cement the role of the polytechnic as an integral component in regional economic development. The structure for achieving this synergy between polytechnics and regional economic development is now in place through the Tertiary Education Commission and some of the tools it will use have been designed. At the time of writing (August ’05) there is still work to be undertaken in developing a range of instruments that will produce the desired behaviors. The key element to this new environment will be the funding system. There is little doubt that the existing system whereby funding is driven almost exclusively by the choices of hundreds of thousands of individual students, will be moderated. Those individual students are likely to be largely immune to high level government strategies or priorities. The institutions, for their part will continue to keep a sharp focus on that student market. The challenge facing the present and future governments will be to introduce a variation to the funding system that will act to ‘steer’ institutions in the way desired and at the same time acknowledge the fundamental fact that students will make individual decisions based on what they believe is in their own best interests. It is highly likely that the new system will involve some element of the appropriated funding being made available to the Tertiary Education Commission to (a) allow the smaller institutions in particular to operate without the relentless pressure to seek growth and thereby achieve critical mass and (b) ‘encourage’ institutions to engage in high priority activities that otherwise would not be delivered on pure economic or business grounds. In addition, the Commission is likely to see the need for it to have access to funds that will enable it to facilitate some rationalization, at least of programmes if not of institutions. Obstacles, challenges, successes and triumphs: The most obvious characteristic of the reform process that began in 1991 was the move from what had been a highly centralized system to a more devolved and competitive one. While competition was a key component in the policy mix during the ‘90s, the fact was that the relatively tight rationing that existed up to 1999 acted as a strong counterbalance against excesses. Despite the rationing constraint, or perhaps because of it, three polytechnics experienced insolvency and at least two universities experienced serious financial difficulties. The environment was, if nothing else, challenging. The 1998 decision to remove the cap on funded growth dramatically changed the equation, at least for those parts of the sector other than the universities. For four years (1999-2002) the tertiary education sector experimented with a true market model, probably to a greater extent than any other country. The experience of that particular experiment proved to be interesting. A number of institutions, in moving to maximize the benefits that flowed from the uncapping decision generated significant surpluses but in doing so strayed from their more traditional academic roots. Demonstrably successful business decisions turned out to be liabilities when measured against political and public opinion. The reality was that no political party was prepared to accept a true business environment once they saw the reality. The challenge now facing government and policy makers is to find a way back from the highly competitive environment towards a more collaborative and strategically focused one. It is certain that, while many of the leaders of the institutions will voice their support for a less competitive system, they are likely to balk at any moves that restrict their autonomy and freedom to act. The challenge of ‘squaring the circle’ between greater collaboration and less autonomy will be considerable and will take great skill and patience if it is to be successfully met. It is certain that the universities will be the most vociferous opponents of any move to reduce institutional autonomy. That in itself will add to the challenge. Any reflection or analysis on the performance of the New Zealand tertiary education system since 1990 will lead inevitably to the question, were the reforms successful? From the polytechnic sector’s perspective the answer would have to be largely positive. Participation in polytechnic institutions has more than doubled and the range and variety of programmes offered by polytechnics have expanded enormously. The introduction of degree programmes into polytechnics has had the effect of improving the academic quality assurance processes across the sector. The establishment of the New Zealand Polytechnic Programmes Committee (NZPPC) in 1993 began a process of steady improvement in the academic quality assurance systems across the polytechnics sector. The NZPPC adopted a formative or supportive approach to academic quality assurance. This process involved requiring each institution to develop and document a comprehensive Quality Management System (QMS). The sector itself, through its national Association (APNZ), developed a set of 12 standards relating to academic quality. These standards were approved by NZQA and became requirements in 2000. With the quality management systems in place and the standards adopted, the NZPPC moved to an academic audit system which audited the effectiveness of a polytechnic’s quality management system in meeting the 12 standards. The audits themselves are conducted by panels of external auditors. If there are no significant non compliances as a result of an audit a polytechnic will be granted Quality Assured Status for a period of four years. In cases where significant ‘non compliances’ exist a polytechnic will receive Provisional Quality Assured Status for one year. This process usually requires the polytechnic to undergo a further full external audit in 12 months. Further information on the work of ITPQ can be obtained on its web page: www.itpq.ac.nz. A Profile of Three Polytechnics The three polytechnics described in this section, Manukau Institute of Technology (www.manukau.ac.nz) Eastern Institute of Technology (www.eit.ac.nz) and Nelson Marlborough Institute of Technology (www.nmit.ac.nz) represent a balance of urban/regional, large/medium/smaller, and north island/south island institutions. The New Zealand polytechnic sector is highly diverse and it is difficult to use the term ‘average’ or the term ‘typical’ with any degree of confidence. Manukau Institute of Technology is, by New Zealand standards a large urban polytechnic located in Auckland, New Zealand’s biggest city which has a population of 1.2 million. In 2004 the polytechnic enrolled more than 10,000 equivalent full time students. Its operating revenue was $US62 million and its asset base was $US75 million. The institution receives just 50% of its revenues from government subsidies with tuition fees accounting for 45% of revenues. Academic activities cover the following areas: Applied Studies, Computing & IT, Electrical & Computer Engineering, Further Education, Nursing & Health Studies, Business, Visual Arts, Maritime, Social Sciences, Technology, and Maori. The institution has three main objectives:
Each of those objectives is broken into more detailed objectives each of which has measurable achievement targets. The Eastern Institute of Technology Hawke’s Bay is located on the eastern coast of the North Island. It serves the Hawke’s Bay region which includes the twin cities of Napier and Hastings which have a combined population of 100,000 people. The wider region has a population of 140,000 and the regional economy has a significant agriculture, horticulture and wine focus. In 2004 EIT enrolled 3,600 equivalent full time students. Its operating revenue for 2004 was $US23 million and its asset base was $US40 million. Government subsidies accounted for 59% of revenues with tuition fees accounting for 30% of revenues. Academic activities cover the following areas: Arts & Social Sciences, Business & Computing, Health & Sport Science, Maori Studies and Science & Technology. The institution has the following goals:
Nelson Marlborough Institute of Technology is located at the top of the South Island with Nelson City (pop. 40,000) as its main centre. In 2004, NMIT enrolled 2,600 equivalent full time students. Its operating revenue for 2004 was $US15 million and its asset base was $US28 million. Government subsidies accounted for 50% or revenue with tuition fees contributing 23%. Academic activities cover the following areas: Arts, Business & Computer Technology, Health & Social Sciences, Technology & primary Industries, Maori. The goals of the institution are related to the various academic departments:
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