Extreme financial difficulty at Auckland-based institute Unitec has caused the Government to begin consultation to have stronger oversight of the institute which is expected to have a shortfall of $19m this year.

Unitec may dissolve its council as The Tertiary Education Commission (TEC) today opened consultation on the possibility of replacing the council with a commissioner, Education Minister Chris Hipkins says.

Unitec is under "extreme financial difficulty and needs urgent financial assistance" and the Government was looking at how to best support the institute.

"Given the size of the likely financial support needed for Unitec, we need to ensure we have stronger oversight of its operations.

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"The consultation will look at whether the best way of achieving that is by dissolving the council and appointing a commissioner," Hipkins said.

The consultation follows advice from an independent financial adviser appointed by the TEC in May, estimating a shortfall of approximately $19 million this year and $27 million in 2019.

The consultation was planned to take five days and would be focused on interested parties and the TEC was inviting feedback from Unitec's council, its management, staff and student representatives, iwi, and Auckland Council.

"We will then make a decision quickly because it is critical that we provide certainty to students and staff. We will be working to secure that and ensure existing students do not have their studies disrupted and future students have confidence to enrol," Hipkins said.

Unitec interim chief executive Merran Davis said the institute had been impacted by declining Equivalent Full Time Students over several years and the shortfall in revenue coincided with a period of strong investment to modernise Unitec's buildings, teaching and learning, and systems.

Spending was now largely complete and the organisation carried no debt following the sale of surplus land earlier this year.

"Unitec is New Zealand's largest ITP, generating revenue of more than $128m in 2017, and provides a wide range of vital programmes which help to drive our economy. However, the organisation has not responded rapidly enough to the challenges facing the sector as student numbers and revenues decline.

"We are working with the TEC to identify further cost savings and develop a sustainable model. Unitec remains absolutely dedicated to our core business of student success as we work toward a return to surplus."

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In March, Housing Minister Phil Twyford announced a new housing development that would see three to four thousand new-builds pop up on Unitec land to tackle Auckland's housing crisis head-on.

Unitec is condensing its campus, and 29ha of its land will be transferred from Unitec to the Crown.

Building for the new-builds was expected to begin in 2019.

Unitec's Mt Albert campus would be condensed and facilities from around 20 or 30 separate buildings shifted into the central part of the institute.

Alastair Carruthers, interim chief executive of Unitec from January to June 2018, described the announcement as a "midpoint" in a transition that had been going on for some years.

He said the development would be a "win-win" because the money gained from the "surplus land" sold to the Crown would be put back into rebuilding the campus.

Tertiary Education Union national president Sandra Grey said the proposed dissolution of the council and appointment of a commissioner to run the institution temporarily was, regrettably, a necessary step to ensure future generations can continue to access "life-changing learning opportunities at Unitec".

"It speaks volumes about what the last National Government did to our sector that our current Education Minister has had to step in to clear up the mess.

"In many ways it should affirm his decision to change the way our sector is funded, and his work to push for a broader systemic change that will prevent decisions like this having to be made in future."

Grey said National was responsible for "laying the ground for many of the terrible decisions Unitec management has made over the years".