I fear we are about to make a big mistake with apprenticeships and vocational education in New Zealand. The currently proposed reforms to the vocational education sector will almost definitely mean less on-the-job training rather than more, and that would be bad for growing our skilled workforce.
Before you say "he would say that", I am not arguing this from a particularly political perspective. The last twenty-odd years of vocational education reform in this country has been remarkably free of inter-party wrangling.
However my vantage point on this issue is probably more unique than most. Yes, I had nearly seven years as New Zealand's Minister for Tertiary Education and am therefore familiar with all the arguments. But the twist is that I have just spent several months advising the Australian Federal Government on the path for their vocational education reform. That's given me a great opportunity to compare and contrast the two systems.
Australia are keen to learn from the existing New Zealand apprenticeship and vocational education system because our current system out-performs the developed world when it comes to formal work-based learning. The irony is that the proposed changes in New Zealand would take our system closer to the Australian model which they are looking to move away from.
There are two key changes. Firstly, that all polytechnics in New Zealand be merged into one mega-polytechnic. And secondly, that the mega-polytechnic takes over the provision of apprenticeships and traineeships currently run by privately run Industry Training Organisations.
Let's start with the polytech merger. I'm certainly not against merging polytechs to create stronger more successful entities. Our government encouraged the mergers of EIT in Hawke Bay with Tairawhiti in Gisborne, the Christchurch and South Canterbury polytechs into Ara; and the two Bay of Plenty-based ones.
But a nationwide single polytechnic is another beast entirely. Leaving aside the issue of transferring the control of hundreds and hundreds of millions of assets out of regional New Zealand to Wellington, there are huge risks in the proposal. Across the Tasman, New South Wales has just done something similar, merging its 16-odd TAFEs (polytechs) into one NSW-wide TAFE, and it is a cautionary tale. The merged entity lost $30 million in its first year, blowing out to $240m in its second. It's now in the process of further reform.
Yes, many New Zealand polytechnics are currently struggling, but that's not unique to this country. When employment is high, vocationally-minded people tend to get into work ahead of going to polytech, and roll numbers drop. It's been made worse here by the sudden squeeze on international enrolments caused by government immigration policy which is contributing to a perfect storm of red ink.
Interestingly however, well-run polytechnics like SIT in Southland, Otago, and the Eastern Institute of Technology in the North Island, have continued to perform and make surpluses. A few board overhauls and the odd regional merger, plus a bit more tuition funding, would do wonders for the others and retain their local focus – and be much less risky.
High employment and more young people in work, brings us to the difficulties with the second proposal. Training people 'on the job' through apprenticeships, traineeships, and other forms of at-work learning, is hugely important. And it is different to all other forms of tertiary education. It requires a unique and trusted partnership between the employers that employ the workers, and the training organisations that arrange training.
The "secret sauce" of this model is employer confidence and trust. If employers value the training, then they can easily be encouraged to train more people. If they don't, if it is inconvenient to their business, or the qualifications are not current and relevant, then the numbers being trained drop away. Employers still train people, but they are less likely to sign their people up for transferable national qualifications.
The New Zealand model of industry training, created nearly thirty years ago, delivers that employer confidence. It hasn't always. Back in 2010 we had to reform the system and tighten the rules. Thirty-nine sub-scale Industry Training Organisations were merged into eleven stronger ones, and since then industry training has gone from strength to strength. Last year around 50,000 New Zealanders obtained national qualifications through industry training which makes it the biggest part of vocational education.
It works because employers and industries control and endorse the ITOs, and the ITOs are responsible for writing the qualifications and arranging the training of each apprentice. They have to follow the rules and hire polytechs and other providers to do the off-job work, but each industry oversees its own end-to-end training channel.
Taking the apprenticeship and training system off the private sector ITOs and giving it to a new national polytech will undermine all of that. Employers will go back to being "consulted" but the system will all be run out of Wellington. Polytechs are naturally incentivised to favour time in the polytech over at-work learning. All the evidence internationally is that employers will steadily become less supportive of the national qualification system as it will no longer be their system, and numbers will drop off.
Australia is keen to co-opt the "secret sauce" of New Zealand industry training and apprenticeships and apply some of the lessons we've learnt in their country. It would be a real loss for New Zealand if we threw our system away at the same time.
Steven Joyce is a former Minister of Finance and National Party MP