Education minister Chris Hipkins' announcement earlier this month signaling far-reaching changes to work skills training is causing concern among industry training organisations.

The proposal calls for all polytechs, along with private training establishments and apprenticeships to come under the direction of a central body, to be called the NZ Institute of Skills and Technology.

The 11 existing industry training organisations (ITOs) would be abolished and many of the 1300 full-time-equivalent staff in the ITOs would face an uncertain future. Currently 140,000 people are engaged in apprenticeships or other on-the-job training in New Zealand, just 110,000 are enrolled in polytechs.

"We cannot afford to let the skills gap continue to widen," said Hipkins.

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"Governments can't continue tinkering at the edges, or adding more layers of complexity and 'band-aid solutions' to an already complex system. We need decisive action to safeguard New Zealand's skills pipeline and economic development for the future."

If the proposed changes go through, private sector training organisations will no longer be able to choose the providers of the industry's training courses.

Competenz CEO Fiona Kingsford says the Government's centralised approach looks unresponsive to employer training needs and has overlooked the support and incentives currently offered by ITOs — like the Motor Industry Training Organisation (MITO) or the Building and Construction Industry Training Organisation (BCITO) — to industry.

"Group apprenticeship schemes like the one offered by New Zealand's largest engineering apprenticeship employer, Apprentice Training New Zealand (ATNZ), have been overlooked. These organisations are already hugely responsive to their apprentices' needs, visiting them 10 times a year."

Competenz looks after 20,000 apprentices and trainees across 3500 New Zealand businesses.

Kingsford believes it's a "real shame" that the high-performing industry training sector has been dragged into the plan to fix the under-performance of the polytech sector.

"Research shows that for every $1 million of government investment into tertiary education, the industry training system produces more than 300 qualified people — people who immediately contribute to New Zealand's economy — while polytechs produce about 50. Industry training is a cost-effective model, we need to incentivise more employers to train apprentices and trainees in their classroom — the workplace.

"The current system is complex and there are definitely opportunities to improve it, for example more collaboration, less competition and better funding models. But abolishing ITOs goes too far. The proposed changes are far too radical, with far-reaching consequences."

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At present, each industry chooses how people are trained, and decides whether all learning can be completed on-the-job or whether courses outside the workplace are needed.

"We're concerned that centralising industry training will remove this flexibility and make it more difficult for employers and apprentices. We support a number of industries, for example fire protection, that don't currently use a polytech delivery at all and nor do they need to."

Currently ITOs have two core functions — setting the national skills standards for the industries, and arranging training so that apprentices and businesses can achieve those skills standards.

"The proposal separates out these two functions," says Kingsford, "potentially widening the gap between businesses and how the national skills standards are set. All of a sudden you have a divide between what employers want in the industry skills bodies and what gets developed by a single centralised institution, located somewhere else.

"We're concerned that niche and highly-specialised sectors could get lost.

"Taxpayers are getting a much better return on investment through industry training compared to other tertiary options and it is disappointing that the ITPs (Institutes of Technology and Polytechnics) have dominated the Government's proposed changes.

"In a time of critical skills shortages, the last thing we want is a reform that risks undermining workplace training and apprenticeship programmes."