Education Minister Chris Hipkins says proposals to reform the "broken" vocational education sector could mean job losses, but it is irresponsible to speculate that 1000 people would lose their jobs.

But National Party tertiary education spokesman Shane Reti stood by the 1000 figure yesterday, saying the number was leaked from multiple sources across multiple sectors.

Next week Hipkins will release Government proposals to overhaul polytechnics and institutes of technology for consultation.

The proposals are expected to aim for greater integration and collaboration between polytechnics to serve the skills shortages in local communities.

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The current system is seen as too competitive, inflexible and profit-driven at the expense of delivering the skills that local industries need.

In her State of the Nation speech yesterday, Prime Minister Jacinda Ardern said the vocational education sector was in need of urgent, far-reaching reform.

"How is it, for example, that at a time when we're facing critical skill shortages, our polytechnics and institutes of technology are in many cases going broke?

"Over the last two years this Government has been forced to spend $100 million to bail out four polytechnics ... That is not the sign of a healthy and sustainable sector."

She said after her speech that Government intervention was necessary to stop job losses and the closure of polytechnics in the regions.

A report by KPMG into the financial viability of the sector, released last year, found that most polytechnics and institutes of technology would have insufficient funds to be viable by 2022; in a worst-case scenario, no institute would be in surplus from 2019 onwards.

Reti said the Government's discussion document would recommend amalgamation of some institutes and setting up regional hubs for centralising core functions, which would see job losses and the potential closure of some regional polytechnics.

Hipkins conceded that the document to be released next week would have "implications" for people's jobs, but said National had plucked the figure of 1000 job losses from thin air.

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He called on the National Party to "put up or shut up" and explain where the figure came from.

Reti confirmed the figure had not come from any leaked documents, but from "several sources in the sector and cross-referenced across several sectors".

"It would seem to be robust. It might be inter-sectorial non-government discussion ... but that seems to be a consistent number."

He said it shouldn't come as a surprise that a plan for mass amalgamation and centralisation might see some regional institutes close.

"Whitireia and WelTec is a good example. It's highly likely, and in our view sensible, that they will amalgamate. And that would be WelTec being the senior partner, and Whitireia losing its identity.

"MIT (Manukau Institute of Technology) and Unitec is another example, where MIT would subsume Unitec, in which case Unitec would be abolished."

Tertiary Education Union national president Michael Gilchrist conceded that more cooperation and collaboration between institutes could lead to job losses.

"For example, recruitment and enrolment processes are something that are reproduced at great expense at every institution. That could involve job losses in a centralisation process."

But he said the current system needed to be reformed because it was too competitive, focusing on offering courses that delivered a profit instead of what local industries needed.

"A competitive funding model that is seriously underfunded is a recipe for disaster. It is fundamentally mismatched in terms of providing communities with what they need in terms of skills and training.

"A commercial model creates an imperative for the most profitable courses, and cutting staffing whenever there's a lack of students for any period of time.

"We say the Government must support and listen to staff in that change process. We are concerned about how we get from here to there."