The days of tertiary institutions being funded using a "bums-on-seats" formula are numbered after new Tertiary Education Minister Michael Cullen criticised the system and said alternatives would be announced within four months.
Dr Cullen yesterday told the Association of University Staff conference that the current system is "unsatisfactory in a number of regards".
The equivalent full-time students (EFTS) funding system, introduced in 1990, rewards institutions for the number of students they enrol.
The system has been partly blamed for the increase in low-quality courses - such as twilight golf and "singalong" courses - introduced by some institutions to qualify for state funding, causing the Government political embarrassment.
Dr Cullen said the EFTS system encouraged large class sizes, low- level teaching and limited flexibility for learning styles.
However, he said he could not yet discuss the available alternatives, saying it was a case of "watch this space".
But a spokeswoman for the minister said later he planned to announce a preliminary outline of the changes in March. He wants them implemented in this term of Government.
National education spokesman Bill English said Dr Cullen was simply saying the same things as former Tertiary Education Ministers Steve Maharey and Trevor Mallard.
Mr English said 70 per cent of students who enrol in a diploma never complete it.
"Polytechnics, in particular, are drowning in a toxic mix of low-quality courses, growing deficits, debt and terrible Government policy."
Association of University Staff national president Professor Nigel Haworth said some members considered the EFTS funding model to be the best of a bad lot.
"It is probably an appropriate time to reflect on the funding system and we are glad the minister is open to this discussion."