Education Minister Chris Hipkins says a major shake up of the polytech sector will see minimal job losses in the short term, and potentially lead to more jobs in the long term.

But the National Party insists that the reforms will cost thousands of jobs as 16 polytechnics and institutes of technology are transitioned to become campuses of one centrally-run institute.

The reforms, flagged earlier this year and announced today, will affect 110,000 polytech students and 140,000 industry trainees and apprentices.

The seven key changes are:

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• The 16 institutes of technology and polytechnics will be brought under a single national institute, the NZ Institute of Skills and Technology, which will start on 1 April 2020

• New Regional Skills Leadership Groups, made up of councillors, employers, iwi and community leaders, will work across education, immigration and welfare systems in each region to identify skills needs and how to meet them

• Around four to seven industry-governed Workforce Development Councils (WDC) will be created by 2022, setting standards and eventually replacing the 11 industry training organisations (ITOs).

• Holding organisations will be formed to smooth the transition from ITOs over the next two to three years

• Centres of Vocational Excellence (CoVEs) will be established at regional campuses to drive innovation and expertise, and improve links between education, industry and research.

• Māori will be key partners, including through Te Taumata Aronui, a Māori Crown tertiary education group.

• The dual funding system will be unified and simplified to encourage greater integration of on-the-job and off-the-job learning. The current system incentivises providers to keep learners for as long as possible.

The 1300 employees with the 11 ITOs may find that their jobs fit into the new structure, or they will need to look for new jobs within the national institute and WDCs.

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National's tertiary education spokesman Shane Reti counted those as 1300 job losses, and estimated there would be a similar number across polytechs.

He said moving apprentices from ITOs to campuses that were formerly polytechnics would see courses that were not tailored to industry needs.

"Employers are telling us they will cease to employ apprentices next year if apprentices go back to polytechnics. This is a big step backwards especially when our construction sector is crying out for apprentices."

National's tertiary education spokesman Shane Reti says the Government's reforms of the vocational education sector will lead to thousands of job losses. Photo / Mark Mitchell
National's tertiary education spokesman Shane Reti says the Government's reforms of the vocational education sector will lead to thousands of job losses. Photo / Mark Mitchell

ITOs were strongly against transferring responsibility for workplace training and apprenticeships to the national institute, saying it would reduce the quality and responsiveness of on-the-job training and reduce in-training volumes.

Reti said the loss of autonomy was unfair to high-performing providers.

"Under these reforms well performing polytechnics from the Southern Institute of Technology (SIT) to Otago Polytechnic will lose the very essence of their successful and innovative local decision making."

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Hipkins said that those polytechnics would still be able to innovate and distinguish their campuses to attract students, in the same way that SIT currently does through its zero fees scheme.

The Government would also ensure that cash reserves built up over the years by some providers would stay in those regions, while money would be put into others that were struggling to ensure they remained viable while the reforms were put in place.

He said there had been no modelling done on job losses, but he expected none in the short term, and potentially more positions in the long term as demand for skills was growing.

The number of people who might lose their jobs will be "reasonably small" and they will be supported, he said.

The sector needed an overhaul because automation will affect one third of all jobs and, as early as 2022, more than half of all workers will require upskilling and retraining.

"Too many Māori, Pacific and disabled learners are being left behind to achieve at a lower level because the system just won't respond to their needs," Hipkins said.

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"Nearly nine out of 10 of our businesses are not training through industry training. Yet at the same time, 71 per cent of employers surveyed say there is, or will soon be, a skills shortage in their industry area."

The institute will have a statutory duty to ensure local and national stakeholder engagement and consider international learners.

Its charter will include a focus on regional responsiveness and require it to maintain provision in the regions, where the main campuses of the 16 ITPs are based.

The location of the head office is yet to be decided but it will not be based in Auckland or Wellington, which Hipkins said was a symbolic move.

He said the sector will remain mostly the same for the time being while the transition begins, and students should continue to sign up for courses and providers should continue to deliver them.

The Government has already put $98 million towards bailing out Unitec, Whitireia and Tai Poutini polytechnics, and Hipkins has said that more will face financial failure if the Government does nothing.

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A stakeholder advisory group will be formed advise on the reforms, which the Government expects to be fully implemented by June 2023.