The Government is pouring in $1.6 billion to make tertiary courses free in building and construction, agriculture and manufacturing to help people who have lost their jobs retrain.
Expanding the current fees-free scheme - which gives people one year of free study fulltime or two years in an apprenticeship or industry training - now appears to be shelved.
Instead vocational courses in "critical industries" will be made free over the next two years for everyone - not just for those eligible for the fees-free scheme.
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Which industries are critical are yet to be defined, but Education Minister Chris Hipkins said: "It will include courses linked to industry skills needs, in building and construction, agriculture, and manufacturing, and also vocational courses like community health, counselling and care work. The fund will be available from July 1, 2020."
The money is coming from the $50 billion Covid response fund that is the centrepiece of the Budget and will push the Government books into the red for the foreseeable future.
More than 1000 New Zealanders a day went on a benefit last month as the impact of Covid-19 hit.
The overall stimulus package aims to have unemployment peak at 9.6 per cent next month and fall back to 4.2 per cent within two years.
The $1.6b Trades and Apprenticeships Training Package is broken down into:
• $320 million for free trades training in critical industries
• $412 million for employers to keep apprentices
• $334 million for additional tertiary education enrolments
• $276 million for Workforce Development Councils and Regional Skills Leadership groups, which are part of the overhaul of the vocational education sector
• $141 million for high quality tertiary and trades education
• $32 million for 1000 more trade scholarships in high schools from 2021
• $50 million for a Māori Apprenticeships Fund
• $19 million for group training schemes to keep apprentices
• $26 million operating and capital for a new online careers advice system
The current fees-free scheme was originally planned to extend to two years from 2021 and to three years from 2024.
The Opposition criticised the fees-free scheme because, even before Covid-19 struck, the free tuition failed to boost student numbers.
On top of the training package, Budget 2020 also includes $400 million to support the Ministry of Social Development, $121 million for He Poutama Rangatahi to help Maori aged 15-24 at the margins of the labour market, and $19.3 million to place 10,000 people into primary sector jobs.
Hipkins said keeping employers from cutting apprentices was important for industry continuity.
"The last thing we want to see is apprentices and trainees having to be let go when we need really them."
The Government has touted the Workforce Development Councils and Regional Skills Leadership groups - aspects of the vocational education sector reform - as a way to connect industry leaders with what is needed in each region.
But they are untested and controversial, and were criticised by the National Party as taking away the autonomy of polytechnics in the regions.
The funding for MSD includes $150m to cope with extra demand for welfare and $12.1m for remand and recently-released prisoners.
Almost $20m over four years will go to people who want to retrain in the primary sector, which is estimated to need 50,000 more workers in a post-Covid world.
The funding is for 10,000 people, and is aimed at sectors that have been devastated by the impact of Covid-19, including aviation and hospitality.
"There is no shortage of international demand for our high quality food and fibre," Agriculture Minister Damien O'Connor said.
"There are jobs going all over the country ranging from hands on work in orchards and on farms to professional roles in engineering, science and management."
Cabinet papers released last week revealed that some students who had lost part-time jobs in the Covid crisis had withdrawn from their courses and moved on to welfare because they could no longer afford to study.
Educational institutes are already adapting to Covid-19.
On its own initiative, Canterbury University is offering grants of up to $7500 to cover course fees for 1000 workers whose jobs have been reduced or ended due to Covid-19. Workers must have ongoing employment and be nominated by their employers.
Wellington's Victoria University is offering free study in the second half of this year to people whose jobs or lives have been upset by the pandemic. It has had more than 1500 inquiries since announcing the offer on March 20.
Dairy NZ is also offering short "farm-ready" courses for people wanting to take up 1000 vacant jobs in dairy farming.