A radical upheaval of polytechnics and apprenticeships has drawn a surprising welcome from the main employer groups, despite fierce criticism when the reforms were first proposed.

Business NZ, the Employers and Manufacturers' Association Northern (EMA) and some sector groups such as Horticulture NZ have cautiously welcomed a decision to merge all existing polytechnics and most industry training into a single mega-institute.

However some trades groups said the expensive changes, costing taxpayers up to $400 million in transition costs alone, would not do anything to solve a desperate shortage of employers willing to take on apprentices.

The reform was fiercely opposed by all 11 existing industry training organisations (ITOs) when it was first proposed in February because the ITOs would be abolished, with the job of arranging training passed to the new mega-polytech and other training providers.

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But Industry Training Federation chief executive Josh Williams has now accepted the changes.

"We will work alongside the Government and vocational providers through the next stages of these reforms to ensure industry continues to have a strong voice in training," he said.

Education Minister Chris Hipkins has agreed to phase in the changes over the next three years. The new national institute will be established next April but will keep the 16 existing polytechs as subsidiary companies initially and will only gradually take over industry training.

Chris Hipkins has agreed to a phase-in period and says the new institute's head office won't be in Auckland or Wellington. Photo / Mark Mitchell
Chris Hipkins has agreed to a phase-in period and says the new institute's head office won't be in Auckland or Wellington. Photo / Mark Mitchell

He has also bowed to regional opposition by deciding that the institute's head office will not be in Auckland or Wellington.

Business NZ chief executive Kirk Hope welcomed a decision to create between four and seven business-led "workforce development councils" which will define what training is needed and will be able to direct the Tertiary Education Commission to fund it.

Each council will control training for a sector such as: construction and infrastructure, manufacturing and technology, primary industries, service industries, social and community services, and creative industries.

"They are taking account of new industries that are developing, say in ICT," Hope said.

Kirk Hope says the new structure will accommodate sectors left out of the current industry training system, such as information and communications technology (ICT). Photo / Mark Mitchell
Kirk Hope says the new structure will accommodate sectors left out of the current industry training system, such as information and communications technology (ICT). Photo / Mark Mitchell

Business NZ's submission on the reform said there was a "system failure" in the existing arrangements where ITOs and polytechs compete for trainees in established trades but other sectors such as ICT have no industry training structure.

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Auckland builder Ross Faulkner, who employs nine apprentices in a staff of 27, said the new sector councils could end the current "fragmented" structure where key building trades such as carpentry, electrical work and air conditioning are run by different ITOs.

"For carpentry, there was no need to change, but I don't think the training was very satisfactory in some areas," he said.

Dan Andresen (right) with his boss Ross Faulkner:
Dan Andresen (right) with his boss Ross Faulkner: "You can learn a bit in the classroom, but you learn better on the job." Photo / Simon Collins

Apprentice Dan Andresen, 20, said he was happy with the support he had from the Building and Construction ITO to learn mostly on the job, with an option to attend $250 two-week night class courses run by an independent contractor, Learner Focused Training.

"I did the first two courses but I've stopped - because of the money, and because most of the stuff I'm getting is practical. You can learn a bit in the classroom, but you learn better on the job," he said.

"It did help a lot at the start, it eases you into it, but I feel like I can do the rest here."

However Master Electricians chief executive Bernie McLaughlin said the changes did nothing to help small businesses which couldn't afford to take on apprentices.

"It would easily cost $10,000 a year in non-chargeable time that you can't charge an apprentice out for, the time they spend on two-week block courses and the cost of their training," he said.

"Until you incentivise employers to train, you are not going to push trainees through the training system."

He said even a partial subsidy would make a difference. The Electrical Training Company, owned by Master Electricians, employs more than 700 apprentices but McLaughlin said it was unclear where it would fit in the new system.

Southern Institute of Technology (SIT) chief executive Penny Simmonds said she was also "left in the dark" over whether there would be any regional autonomy in the new mega-polytech.

Invercargill businesses backed SIT financially to abolish fees in 2001 to boost the local economy. Student numbers have grown since then from 1400 to 5000, but Simmonds said there was no guarantee that the policy would survive.

"It will be the new entity that will decide essentially everything that happens for what is now SIT and will be the Southland branch, I guess."