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Big changes to tertiary education: What, why, and impact on the IT industry

Paul Matthews, CEO, IT Professionals NZ. 15 February 2019, 1:57 pm

A massive shakeup of the Institutes of Technology and Polytechnic (ITP) space has been announced by Education Minister Chris Hipkins this week. 

But what are the underlying problems that led to this? And what will this change mean for delivery of IT-related programmes?

With one third of students studying IT-related qualifications coming from ITPs, this change is going to affect our industry. ITPNZ CEO Paul Matthews talks through the background and some of the opportunities and threats for our sector.

Before we get into the detail, it's worth noting that "ITP" standards for "IT Professionals" (in the context of our organisation) and "Institutes of Technology and Polytechnics" (in the context of education provision). To reduce confusion, on this page ITP means the latter and ITPNZ refers to us. 

A bit of funding history

One of the key rationales for this change is the financial security of the sector and the fact that it's operating in deficit. However it's fair to say that the situation that has led to a crisis in the ITP sector was certainly somewhat predictable.

The fact is, successive Governments have seriously put the squeeze on the sector - pulling out huge levels of funding, plus putting in place other measures that have hampered or restricted growth (such as capping the number of funded domestic students in each institution, reducing funding in real dollar terms, plus reducing access to student loans and allowances).

On top of this, there's a strong cyclical element to enrolments, especially within the ITP sector. As a simplification, when times are tough and unemployment is high, more people study. When unemployment drops, more people go straight to work. This pattern is very evident in enrolments during higher periods of unemployment (such as the early 90s, late 90s, 2009-13 during the GFC) and low periods (such as mid-late 2000s and more recently). So it isn't surprising to see domestic enrolments dropping over the last few years in line with the drop in unemployment.

This "death by a thousand cuts" has taken a big toll and the sector has been in turmoil for some time, with huge pressure put on educators as institutions looked to cut fat from absolutely everywhere. Some of the staffing and management ratios within the sector are fairly insane, with expectations on middle management and front-line staff beyond what is reasonable and teaching load on educators continually increasing.

The outcome now is that there really isn't a lot of fat in the system. While minor savings may be made in the back office, as we know in the IT industry, moving from several standalone systems to a single huge distributed system comes with absolutely no guarantee of cost savings (whatever the shiny salespeople say). Super City, anyone?

But isn't there a financial crisis in the ITP sector? 

As mentioned above, successive governments have really put the squeeze on the sector over a long period of time. To put this in context, this has dropped from 2.3% of GDP in 2010 to just 1.6% of GDP in 2018 - with a large chunk of this in student support.

Funding has been in significant decline, and the ITP sector has felt the brunt of this. It is now at its lowest point in New Zealand's modern history.

 

 tertiary

Funding for tertiary sector as a percentage of GDP (Source: Education Counts)

One of the big rationales for this overall change is the fact that the ITP sector lost a combined $53M last year, plus four institutions received bailouts of a total of around $100M. This sounds like a lot of money - and is - but given we spend $4.56B on tertiary education, an amount that has spent a decade diminishing in real terms, the fact polytechs need 3% more funding to function isn't a disaster in itself.

The reality is, this isn't a financial crisis in ITPs. It's a funding crisis.

International vs Domestic 

Unsurprisingly, in this squeeze ITPs (as with other providers) turned to focusing their efforts on the only area they were allowed to grow revenue - international students. This change in focus has seen a 70% increase in international student numbers since 2010, partially offsetting a larger (by the numbers) drop in domestic students. 

In fact, every institution except Whitireia (who had large earlier success) have increased international numbers, many substantially (eg Northtech 753% increase since 2010, Otago Poly 635% increase, Weltec 177% etc). Unitec have the most, with over 2000 international EFTS (Equivalent Full Time Students) as of 2017.

That's starting to dry up now, with numbers dropping in part due to moves by the previous and current Governments to tighten up on international student visas. Essentially international students have been subsidising domestic provision in the wake of cuts, but now that subsidisation is decreasing.

Meeting industry demand

A large part of this domestic drop is also as a result of ITPs moving up the "value chain". The drop has been almost entirely at NZQF Levels 1-3 (equivalent to school NCEA levels) as ITPs have focused more on industry skills. Degrees and higher have been a focus as well, with a 24% increase in Level 7 (Bachelor level) students offsetting the 31% drop in Level 1-3 students.

But here's the thing - this is a Good Thing™. ITPs were responding to market demand and government's intent to focus more on the needs of industry, rather than what some might deem (relatively unfairly) "hobby classes". Smaller PTEs have generally taken up the slack at the lower-end.

Will the sector remain responsive to their communities? 

Diversity and innovation in course design is massively important for our industry. Things change rapidly in tech, and even within New Zealand, different regions have vastly different requirements from tertiary providers.

One of the strengths of the current structure is that local institutions can (and are) responsive to the needs of their community. This is especially the case for smaller regional polytechnics - they are generally directly engaged with their local industry and tailor their offerings to meet their needs.

Some small examples of this - GCSB works with Weltec to produce good security graduates. A specialist database company works with NMIT in Nelson to ensure a good flow of graduates with database skills. And this is repeated across the country, especially in the regions.

Whether this will continue under the proposed model is questionable. The structure of the new combined NZ Institute of Skills and Technology calls for more of a centralised approach to programme design - Centres of Excellence basically designing programmes for the whole country, potentially limiting the ability of each institution to respond to their community's needs.

Obviously there will be input from across the country into programme design, but large national committees designing programmes isn't necessarily a recipe for a good local outcome. With a larger bureaucratic process around programme design there is a risk that the process will be slowed even further - again, with greater than average impact on our sector.

 

What this all means for Computing/IT delivery 

Across New Zealand there are around 4,500 Equivalent Fulltime Students studying IT-related qualifications in the ITP sector, a little under 2/3s of them domestic students.

This is around a third of all IT students in New Zealand so these changes are likely to have a significant impact on our sector for many years to come.

The good:

Our sector hasn't done as well as it could have in workplace-based learning for IT. This has traditionally been the domain of Industry Training Organisations (ITOs), however the ITO model doesn't suit our sector (for a number of reasons, the largest being that the skills and knowledge requirements for our sector are higher than the ITO model provides for). 

One of the changes being proposed is combining the in-class and workplace-based learning responsibilities and vesting this in the new mega-polytech. This could be a very good thing for our industry - gaining more of a focus on workplace-based learning but without the constraints and drawbacks of the ITO model.

ITPNZ, NZTech and others have been exploring ways to bring an apprenticeship type model to IT, with a mix of in-school and workplace learning. This may well accelerate this work - once the new structure is up and running.

Separately, once the dust settles there really is some good opportunities in this model - especially around quality and currency of courses. This is really important for our industry.

The bad:

Everything now stands still. Yes, the Minister said it shouldn't. Yes, life needs to go on. But the reality is that the uncertainty is going to impact enrolments (domestic and especially international), no course development work is going to progress now (why would it?) and the next few years, one of the most innovative parts of our tertiary education sector will be in standstill.

The real winners, ironically enough, will probably be the Private Training Establishments. They essentially compete with Polytechnics now and will be hoovering up students. So we'll quite possibly see a sizeable transfer of students from the public education system to private providers. Ouch.

The ugly:

Wow, implementation starts now with the new mega-Polytechnic in place from next year and transition soon after. The timeline is fairly extreme and the subsequent risks associated with rushing this are high.

Even bringing together the employment arrangements from 16 large employers, all with different conditions, into a single entity is a daunting task that will take years. Some institutions that merged at a far smaller scale still haven't achieved commonality. It's just a really big, complex job. We're not just talking about different pay rates (although that comes into it too). There's a massive variation of conditions, study leave arrangements, pay, holiday arrangements and 100 other things that can't be brought together overnight. If they're standardised, the Government is picking a massive fight. And if they're not, what's the point?

So somehow this is all going to be negotiated out across New Zealand and everyone transferred to a new entity. Just don't mention Novopay. 

Conclusion

The fact is, the jury is still out on this. Not nearly enough detail is in the public domain and while it's easy to poke holes in a change this large, more information is needed before a full assessment can be done. So we'll reserve judgement.

First and absolutely foremost in our mind is protecting the delivery of computing and IT programmes throughout New Zealand. Our industry needs the ITP sector, and needs both the diversity of offerings provided by that sector and the level of quality to be maintained.

The fact that most ITPs have now successfully become accredited to the international Seoul Accord standards is a great example of the quality of education provision from this sector. And that quality must continue in the face of these changes.

We also need to consider the Industry Skills Bodies being proposed and the role ITPNZ (and partners such as CITRENZ, the collective of IT schools from the ITP sector) can play in this area. Funnily enough, the model is similar to how our industry and sector works currently; with ITPNZ working closely with NZQA on programme approvals, setting standards for sub-degree qualifications (as Qualification Developer with NZQA) and accrediting degrees (albeit to an external standard).

Whether it's appropriate or desirable (or even possible) for ITPNZ to continue in that or a similar role in future will become clearer over time. Our concern isn't whether it's us, but whether this is run by people who actually understand both the unique needs of our industry, and the strengths of the ITP sector provision.

One thing is very clear though: thanks to working closely with the ITP sector over many years and a great relationship with Government, ITPNZ is perfectly positioned to contribute to protecting provision for our sector, in partnership with CITRENZ and others. 

But when you consider everything, it's hard to not come to the conclusion that all that was really needed is just a bit of a top-up of funding. Not even really an increase in funding over the long term. More of a restoration to the level we've invested in tertiary education throughout the history of New Zealand.

But regardless, this change is happening so we need to get used to it, and focus on making sure it's a good change for our industry.

Please do head over to the Ministry's site, read about the changes in detail and submit a response. Feel free to let us know what you think too - we'll be making a submission to the consultation in due course, plus seeking to meet with officials and the minister to discuss the impact on our sector in more detail.

Paul Matthews is chief executive of IT Professionals NZ, the professional body of the tech sector.


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