A rescue plan for financially struggling polytechnics has turned into an upheaval for the whole industry training system in the Government's latest radical plan for education.

The plan, unveiled by Education Minister Chris Hipkins today, proposes a single NZ Institute of Skills and Technology to replace all 16 existing polytechnics and to take over most of the country's 145,000 apprentices and industry trainees.

It goes way beyond any of the options discussed in consultations with training bodies and employers last year, but follows a pattern of "big and bold" reforms already proposed for managing schools and for the National Certificate of Educational Achievement (NCEA).

Tertiary Education Union president Michael Gilchrist declared himself "absolutely happy" with the plan, despite likely job losses, because it would create long-term security for staff in what have been financially shaky regional polytechnics.

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"We've had 60 staffing reviews in polytechnics in the last year," he said.

"We are sure there will be greater job security in the future. It would be almost impossible to create any more insecurity than is currently the case."

But Industry Training Federation chief executive Josh Williams said a proposal to transfer apprentices and industry trainees from industry training organisations (ITOs) to the new institute and other training providers would mean "throwing out the baby with the bathwater".

"Clearly this review began with urgent issues with the financial situation of several of our polytechnics," he said.

"Meanwhile our work-based training and apprenticeship system has been performing well.

"We hoped that the Government would ramp up the model that has been working, bolster that, and as a result bolster our vocational training providers who offer block courses.

"Instead, we see the creation of something where the capacity to support workplace training and apprenticeships would need to be developed - which is ironic because we already have that [in the ITOs]."

Josh Williams of the Industry Training Federation says the proposals would mean
Josh Williams of the Industry Training Federation says the proposals would mean "throwing the baby out with the bathwater". Photo / File

Employers have been more supportive. Business NZ chief executive Kirk Hope said he was "very positive about the change".

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Master Builders Federation chief executive Dave Kelly said he accepted the need for change, but he could not see how the proposals would help his key aims of attracting enough people into the building industry and enabling more builders to take on apprentices.

"We would have questions about whether this is the right model and whether the polytechs have capacity to be more engaged with the business community than they are perceived to be at the moment," he said.

"The ITOs are more focused, they tend to be more focused on their industry. Polytechs have many different kinds of industries they are dealing with."

A consultation document says the proposals are designed to stop polytechnics and ITOs competing for trainees. The current system creates funding incentives for polytechs to keep trainees in fulltime education rather than get them into apprenticeships.

"The system needs to increase the amount of vocational learning that takes place in the workplace," the document says.

It says the new institute would be able to find new employers for trainees whose initial employers run into financial problems, or to transfer trainees to classroom-based learning - effectively reducing the risks for employers in taking on apprentices.

Tertiary Education Union president Michael Gilchrist, pictured when he was a Green Party candidate in 2011, will fight for redundant staff to be retrained or redeployed. Photo / File
Tertiary Education Union president Michael Gilchrist, pictured when he was a Green Party candidate in 2011, will fight for redundant staff to be retrained or redeployed. Photo / File

Gilchrist said his union would fight for all staff whose jobs will disappear in the shakeup to be offered retraining or redeployment.

Polytechnics employed 8150, and ITOs 1300, fulltime-equivalent staff in 2017. The consultation documents do not say how many jobs would be lost, but the scale of deficits facing the existing polytechnics if no action was taken suggest that at least hundreds of staff will have to go to restore the system's financial security.

The plan is open for consultation until March 27.