Um, on what do students’ associations, the Vice-Chancellors and other associated rent-seeking lobbyists think the whole Student Loan Scheme is predicated? Investment in higher education generates (but in NZ doesn’t always) greater life-time earnings through positive economic rates of return. From what I could gather through “night and fog” that is NZ media reporting, all the Minister was saying was that Government had some (imperfect but actually much better and more comprehensive than he is letting on) information on these employment returns; and these should be made available and taken into consideration in student decision-making; and that the Government had an intention to hold TEOs accountable for outcomes (including graduate outcomes) through funding at the margin. Did I miss something, or rather am I not drawing a particularly long bow?
If the Minister, however, is suggesting direct funding accountability to institutions through employment/salary outcomes then bring it on (well at least the discussion thereof). As I have said forever, a problem with the interest-free student loan scheme is that all of the actors (students, employers, and most of all the universities, polytechnics and PTEs) have the consequences of decision-making shielded from them at the point of enrolment, and in the case of TEOs (apart from reputational risk and future alumni contributions) have little stake in the long-run economic performance of graduates.
A possible model would be a graduate tax (to replace a significant portion of the Student Loan Scheme) in which individual TEO funding would be linked to the amount of tax take generated by graduates (in effect ring-fencing tax take). That model also has the advantage of incorporating the autonomy that the universities and the English-speaking peoples cherish. It is all about the incentives people. I’m sure the learn’d readership of ED can suggest other lines of enquiry.
Finally, what is also pleasing by these and other comments from Minister Joyce is the emphasis on student decision-making and their outcomes. Of the many appalling stumbling mis-steps (the previous Labour administration made (too many to list here but do Google gentle reader), amongst the worst was to focus decision-making in Wellington at the “centre” with twelve of the “great and the good” (who would know the national welfare through their intrinsic greatness and goodness) and then their “will” brilliantly executed through 360 bureaucrats.

Well Paul not totally in jest; but my point (perhaps not well made) was that with all this jumping up and down by student “representatives” (I wonder exactly how many of the VUWSA membership aren’t interested in graduate outcomes and are doing study for the “joy and public good of it all” btw) and our dear friends the NZVCC was: If Ministers were really serious about making TEOs accountable for the long-run economic success of students (as envisaged in the SLS) then there are some models “out there”. Hence the word “possible”.
On your second point Paul: whatever the intention of Maherey/Cullen, there was total “crowding out” by officials of decision-making; and then, of course like day follows night, TEO provider capture of those officials. It was so predictable that, shock some people even predicted it. Smile. As you know it got so bad in 2008 that the CEO of TEC was forcing himself to use the word “students” in meetings. Of course any responsible government should and must “incentivise/influence” the direction of tertiary education (on behalf of the long-suffering kiwi taxpayer). Should the left in politics do this through “command and control” or should they use other social democratic mechanisms such as those being advocated by the Obama Administration around learnings from behavioural economics? It was that so much was placed on the TEC Commissioners and then officials, and the ignoring of the 250,000 decision makers with skin in the game (except for $14m to Career Services for the BT&TDM project and $20m funding for Ako Aotearoa: both of which have been great uses of funding and might have hinted to Labour where to locate discussions) whilst over the nine years not employing the levers that the EFTS funding system and student allowances and the Student Loan Scheme affords to the taxpayer to “nudge” student decisions.
Like Mr Choat it gives me no satisfaction that the Tories are making a better fist of this; but it is because they are using the more effective levers.

Chalk one up: We are might be in total agreement Paul (I think). And certainly not the CEOs. Of course the minute the focus of decision-making was moved from students (poorly informed/incentivised as no doubt many were) to Commissioners (then quickly to officials as TEC operated more and more like a govt dept) naturally provider capture of TEC’s decision-making was of the utmost highest priority for TEOs. CEOs are lots of things but naive, unpolitically connected to their communities, and in at least the case of VC’s stupid, they are not. Images of rats, very confined spaces and abultion blocks are coming to mind.
Of course the current over-enrolment/demand thing is draining any remaining influence of customers (students) towards university senior management in particular. But solving that is for another day. Perhaps leave it there.

The problem with the tuition side was that it became too complicated with very unclear incentives, and few clear outcomes. The blame for that lies all over the place, with quite a bit in the Beehive.

I can’t comment on that so I won’t. I will though say that what annoyed me in the time I worked in the new environment was that many actors couldn’t or wouldn’t self moderate in the way that, say WelTEC or MIT did, and couldn’t see beyond their institutional goals to national ones. Perhaps this is attributable to a lack of clear incentives, but was also due to poor leadership and governmance.

Paul, of course your point is captured brilliantly many a VC noting that “universities are over 700 years old (so that is from where they get their teaching methods) and are older than the nation state”. I am unsure as to your family’s station circa 1230AD but think from this you are to infer that your pesky national goals are all well and good, so long as they are consistent with the higher more worthy institutional goals.
A useful retort I found was noting that it is generally accepted that the modern comprehensive English taxation system was formed under the Tudors (Henry VII) and quite understandibly I accept their generous offer not to partake in its largesse.

Jim, I think I can understand your reticence but I’d really appreciate a broad comment since you led one of the sectors most harshly affected.

“universities are over 700 years old (so that is from where they get their teaching methods) and are older than the nation state”

I seldom heard that, surprisingly.

I do however, recall a specific discussion where clear, unequivocal and expert industry advice was ignored because it would have required a program to reorganised and that was inconvenient to the academics.

I also recall Karen Walker bemoaning all the fashion grads who didn’t have basic skills in construction or manufacture but could draw beautifully…

And while we’re at it, I’ll indulge the critic and conscience of society when unis stop delivering MBAs… even Les Holborow struggled to explain them as anything more than a cash-cow.

NMG: I wasn’t suggesting that the TEC should be a certain size, just that if you set clear policies and goals, you can get better performance from people. My goals would be different than others and involve fewer people at the centre but I was getting at the principle of good policy design.

On funding legislative roles, I’d be happy to either abolish them or fund those that exist, but just writing legislation that doesn’t mean anything is a waste of time.

Well, of course I agree with that!

Well Paul, the reality is that institutions will never believe that they ever get sufficient funding. That being the case there is a powerful inclination for institutions to think of ways to maximise the benefits they can get from any given funding system, in short ‘gaming’. It’s like death and taxes.

The scenario goes along the lines of move by institutions and countermove by the funding agency. This goes on for a number of years until one of two things happen: (a) an instance of gaming moves from being an irritant to being a front page news story or (b) the move and countermove process gets to the point where the rules binding the funding system become too complex to manage. Ironically, the more complex the rules become, the more gaming opportuinites there are.

I do believe, however, that there is a solution (short of offering zero subsidies). The best way to avoid the tedious, endless cycle described above would be for institutions to be funded by way of a single line of funding which is formula-free. It would not be too dificult to calculate a reasonable amount of funding for any institution of a given size with a given profile. We now have twenty years of good data on every institution.

This funding could be negotiated on a rolling three year basis and delivered with a plus or minus 3% (say) tolerance. There would be clear expectations with respect to ‘deliverables’ by the institution and it would then be allowed to get on with its business.

There would be no ‘rules’ manual, just a relatively short list of KPIs.

The reality is that there is no ‘right amount’ with respect to funding and we shouldn’t be wasting time pretending that there is. There is, however, a ‘reasonable’ amount of funding but this can’t be arrived at by way of a formula that covers a wide range of situations. It can, however, be calculated on a case by case basis to achieve a fair and transparent result.

For sure, the system would have to transparent, well designed and skilfully managed by people of integrity. Surely we’re capable of that!

“There would be no ‘rules’ manual, just a relatively short list of KPIs.”

I mean no more than 6 pitched at a high level, otherwise it would be no different to having a plethora of funding streams and would generate the same creative responses.

Dear NMG
I might take issue with the statement “We all were very naive”. Some even tried to first challenge the mad uncapped funding system (which was doomed to failure without appropriate QA and changes to the perverse incentives inherent in the EFTS funding and Student Loan Scheme: and then the Skill NZ centralised takeover of the TEAC recommendations. Many (but not enough and not enough in the right places) were perfectly well aware of was what likely to and did in fact happen.