Part Two: Priorities

2.1 The Government's tertiary education priorities for the next 3-5 years

The economy has contracted significantly due to the global downturn and local recession, curtailing government income at the same time as increasing the costs of social welfare and debt servicing. The recession is also raising demand for tertiary education. In this economic environment, the Government will ensure the tertiary system achieves the best return on the public’s investment. We will do this by:

• increasing the number of young people (aged under 25) achieving qualifications at levels four and above, particularly degrees
• increasing the number of Māori students enjoying success at higher levels
• increasing the number of Pasifika students achieving at higher levels
• increasing the number of young people moving successfully from school into tertiary education
• improving literacy, language, and numeracy and skills outcomes from levels one to three study
• improving the educational and financial performance of providers
• strengthening research outcomes.

2.2 How the priorities will be achieved

In a tight fiscal environment, the Government is unable to provide significant funding increases to meet the growing demand for tertiary education. We will need to move funding away from low-quality qualifications (such as those with low completion rates or poor educational or labour market outcomes) to fund growth in high-quality qualifications that benefit New Zealanders and contribute to economic growth.

Providers will need to manage costs, continue to seek efficiency gains, ensure the qualifications they offer best meet student and employer needs and explore additional sources of revenue. A key driver to improve the efficiency of public investment in tertiary education is to improve course and qualification completion rates.

The Government is committed to maintaining reasonable fees for students, but will explore ways of giving providers some additional flexibility to raise revenue.

The Government has identified the approach we wish the sector to take to achieve our short-term priorities and long-term direction. We have decided to:

• target priority groups
• improve system performance
• support high quality research that helps to drive innovation.

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2.2.1 Targeting priority groups

Although we are committed to retaining broad access to tertiary education, in a constrained fiscal environment, we will need to give priority to the following groups of learners and types of study.

More young people (aged under 25) achieving qualifications at levels four and above, particularly degrees

There is a significant wage premium for people who complete higher-level study, particularly bachelors degrees. Skills are regarded as one of the Government’s six key productivity drivers. For New Zealand to increase its rate of productivity growth, a change in the skill level of the working population is needed. We need more people completing degrees (including applied degrees) and advanced trade qualifications (typically at levels four to six).

Qualification completions by level, 2001 - 2008

Increasing the number of people achieving higher-level qualifications remains a key challenge. Although the number of people completing tertiary education in New Zealand has increased significantly since 2000, most of the increase in qualifications completions has been at levels one to three. The number of people completing degrees has remained largely constant since 2000.

The Government will therefore be looking at funding settings to create incentives for more young people to achieve qualifications at levels four and above. In a capped funding environment, this will involve reducing government funding for some qualifications at levels one to three that do not assist students into higher-level learning or employment, or do not improve their literacy, language and numeracy skills.

More Māori students enjoying success at higher levels

All tertiary education organisations need to take responsibility for strengthening Māori education, creative activity and research outcomes.

The participation rate for Māori students in levels one to three qualifications (10%) was nearly double that of the other ethnic groups in 2007. By contrast, participation rates for Māori aged 18 to 19 in degree level study remain at less than half the rate for all students, and the completion rates for Māori at bachelors level are also lower.

Tertiary providers and ITOs need to focus on improving their pastoral and academic support and the learning environment, and must adopt teaching practices that are culturally responsive to Māori students. Particular emphasis is needed to improve progression to, and achievement at, higher levels of study.

We also want to strengthen the delivery of high quality te reo Māori provision. Improving the quality of te reo Māori in initial teacher education programmes will be important in helping Māori to achieve success throughout the education system.

More Pasifika students achieving at higher levels

The tertiary education sector can also play a key role in meeting the development needs and aspirations of Pasifika peoples in New Zealand.

While the last five years have seen a greater proportion of Pasifika people in tertiary education studying at bachelor level or above, they are still over-represented in lower level study. Completion rates for Pasifika students are lower than for any other group.

Tertiary education providers and ITOs need to focus on how they can assist Pasifika students to progress to and achieve at higher levels of study. This will involve working with Pasifika community groups and improving pastoral and academic support, learning environments, and pathways into tertiary education.

More young people moving successfully from school into tertiary education

The Government wants to have more young people engaged in and successfully completing tertiary education. Completing a vocational or professional qualification early in adult life has a higher return for both the individual and society. Those who enrol in tertiary education directly from school are more likely to complete a qualification than students who enter from the workforce or unemployment, largely because school leavers are more likely to study full time and have fewer other commitments. Targeting young people can therefore improve the return on public funding.

New Zealand also has relatively low participation rates in all types of education at ages 15 to 19. Seventy-four percent of 15 to 19 year olds in New Zealand were enrolled in education in 2006 (compared to the OECD average of 81.5%). A key factor in this is low school retention rates, although in part this is offset by above average enrolment rates in post-school education. Many young people (particularly those with lower school qualification levels) fail to successfully make the transition from schooling to tertiary education. Completion rates in lower level tertiary study are also poor, and there is little progression to higher level study.

A range of factors affect the engagement of young people in tertiary education, including:

• how the Government funds institutions and students
• school achievement levels
• the information and advice students and their families receive on study paths and options for higher education
• the learning environment at tertiary organisations, including the effectiveness of teaching, and the academic and pastoral support students receive.

We will be looking at all of these factors to identify ways to improve young people’s engagement and achievement in tertiary education. As a first step, we are providing fees-free tertiary study for some 16 and 17 year olds through the Youth Guarantee programme. In a constrained fiscal environment, targeting more support towards young people may require the Government to re-examine the level of assistance for those people who have already been supported to undertake tertiary education.

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Improve literacy, language, and numeracy and skills outcomes from levels one to three study

Many level three certificates are essential qualifications for trades and vocations and offer the people in the workforce the opportunity to upskill. Level one and two certificates offer people with low school qualifications, or with literacy, language and numeracy needs, the chance to re-enter the education system. Improving literacy, language and numeracy skills is a priority as it provides a foundation for further study or employment.

Informal education provided by the adult and community education sector can play a key role in literacy, language and numeracy learning, in particular by targeting people whose initial learning was not successful.

Intensive literacy training in the workplace engages hard-to-reach learners and provides productivity benefits to employers. Including literacy, language and numeracy education in industry training, apprenticeships and training for unemployed people improves their success.

For tertiary study to be effective for second-chance learners, the quality of teaching and learning needs to improve to raise completion rates. Students who need to improve their literacy, language and numeracy skills should be able to do so. Informal and lower-level certificate study needs to offer clear pathways through to higher-level tertiary study and skilled employment.

We will:

• look at how we resource and support lower-level tertiary education
• reduce the proliferation of provider qualifications
• continue to work with providers and ITOs to embed literacy, language and numeracy in levels one to three qualifications
• continue to support intensive literacy programmes in workplaces
• prioritise qualifications that link strongly to higher-level learning and skilled employment.

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2.2.2 Improving system performance

The Government, students, and their families invest significant resources in tertiary education. They need to be sure that qualifications are high quality and relevant for their requirements.

In the 2009/10 financial year, the Government is forecast to spend over $4 billion on tertiary education. Some $2.9 billion will be invested directly in tertiary education organisations, while the remainder, $1.1 billion, will be spent on student support.

The Government wants to see ongoing improvements in the performance of the system. In particular, we want providers and industry training organisations to be more responsive to the demands of both students and industry and to make better use of scarce resources. We expect to see better course and qualification completion and progression rates for students as a result of higher quality teaching and learning, and more effective and culturally responsive pastoral care. Public tertiary providers need to ensure they are financially viable so they can provide quality education on an ongoing basis.

To improve sector performance, we need to:

• enhance quality assurance
• provide better incentives for providers to respond to students and market signals, by:
  - making provider level performance information publicly available
  - linking funding more closely to performance
• support and encourage student performance
• strengthen collaboration and shared resources for greater efficiency
• continue to build international linkages.

Enhance quality assurance

The Government will continue to put in place the new quality assurance framework for tertiary education, which focuses on providers being accountable for, and continuously improving, their educational outcomes.

The quality assurance framework must give students and industry confidence in the quality of tertiary education. Reports on the external evaluation and review of a tertiary education organisation will be published, and will contribute to funding decisions.

We are also taking steps to reduce the proliferation of sub-degree qualifications. The number of qualifications has increased considerably, due to individual providers developing their own qualifications. These provider qualifications have significantly increased the number of certificate and diploma qualifications in particular subject areas. We will strengthen the role of national qualifications and manage the growth of provider qualifications. This will ensure that students and employers have access to a simpler qualifications system with strong links between lower and higher level qualifications.

Provide incentives for providers to respond better to students and market signals

We are moving, over time, to make meaningful performance information about individual providers and ITOs widely available. This will allow students and employers to make informed decisions about tertiary education, and create an incentive for providers and ITOs to improve performance.

As well as publishing the findings of external reviews of providers, we will make other quantitative and qualitative performance information about providers available to students. This information will include retention and completion rates, and information on the employment outcomes of study.

At present, most performance information available to the public is at a sub-sector level, for instance comparing universities and polytechnics. Publishing performance information for individual tertiary education organisations can:

• strengthen the accountability of providers and ITOs who receive public funding
• provide information that can be used by students, prospective students, their parents, families, whānau and their advisors
• provide information to employers about the outcomes from particular qualifications.

The Government wants a tertiary system that rewards successful providers who demonstrate that they meet the needs of students and employers, for instance through their connections with firms. The system will also reward providers who respond to market signals, including the changing skill needs of industries.

Funding allocations to tertiary education organisations will be linked to their past performance. Initially this will be focussed on results achieved by students but will include outcomes, such as post-study employment, as this information becomes available.

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Strengthen collaboration and shared resources for greater efficiency

For students to successfully progress from lower to higher level study, it will often make sense for them to transfer from one provider type to another. For example, a student might move from a polytechnic to a university, from a polytechnic to an ITO or from a university to a wānanga.

Better enabling students to transfer among the different sub-sectors is both beneficial for students and a more efficient use of resources, as it reduces the need for students to repeat prior learning. Providers and ITOs should therefore work together to create integrated pathways for students, including shared delivery of qualifications.

Providers and ITOs should also explore opportunities to share services where such sharing has the potential to deliver benefits for students and greater efficiency for providers.

Support and encourage student performance

The Government wants to provide as much support as it can to students who are doing well. We want students to study at the highest level they can and to complete the qualifications they set out to achieve as quickly as they can.

We need to continue to support students to study full time, as evidence shows this is a big factor in completion rates. Providers also need to focus on the non-academic needs of students and ensure that they have a good environment in which to perform. We expect providers to create learning environments that support progression and completion by a diverse range of students. For example, programmes are successful for Māori students when they employ culturally responsive pedagogies and take a teaching approach that is relevant to experiences of Māori students.

We also expect students to take responsibility for their own performance. Government policy settings will set clear expectations that students should gain qualifications. For example, student allowances currently have a requirement that students pass more than half of a full time qualification in each year of assisted study. We are looking at other funding settings to see if it is possible to introduce further incentives for student performance.

Continue to build international links

Strong international linkages can improve the quality of teaching and research in New Zealand institutions. The tertiary sector has a major role in the inward and outward flow of ideas and people. New Zealand providers and ITOs need to connect and collaborate with overseas institutions and ensure that both students and academics can benefit from these global links.

The flow of international students can boost the incomes of New Zealand institutions and contribute to more diverse learning environments for New Zealand students. The Government will continue to focus on building international confidence in the New Zealand education system. We will support government-to-government relationships in areas of strategic opportunity for the growth of international students, services and broader international connections. We will review policy settings to maximise the contribution of international education to New Zealand's economic performance.

Institutions should ensure that their international education activities are managed to achieve high quality learning for international students, education benefits for New Zealand students and greater financial viability for the institution.

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2.2.3 Supporting quality research that helps to drive innovation

The Government is taking a long-term perspective on research and innovation policies, and believes New Zealand must have a strong contribution to research and innovation from the tertiary education sector. Research-driven innovation will be a major factor in helping New Zealand industries to become more productive.

The Performance-Based Research Fund has been successful in promoting quality improvements in universities, including increasing the number of research degree students, and will continue to enhance research quality. We need to do further work on how best to support research in other tertiary institutions.

As well as underpinning good teaching, high quality research is critical for economic growth. However, public investment in research on its own does not drive economic growth: it is firms’ use of research that increases productivity and improves economic performance. We need better linkages between firms, tertiary institutions (particularly universities) and Crown Research Institutes in order to increase the economic returns of publicly funded research.

Research in universities needs to combine excellence with impact. In particular, we will ensure that the Performance-Based Research Fund recognises research of direct relevance to the needs of firms and its dissemination to them. We will also ensure there are further incentives for tertiary education organisations, other research organisations and firms to work together.

Strong international connections can improve the quality of research in New Zealand institutions and open up opportunities for different types of research to be undertaken. New Zealand tertiary institutions have increased their international connections markedly, and we expect them to continue to foster and strengthen collaborative research.