Guest Post – The Facts about Funding for PTEs

August 15th 2014 at 1:42pm, By Guest Post

This guest post is from Feroz Ali, Chair of Independent Tertiary Institutions (ITI). ED Blog welcomes guest contributions.

Following on from my previous opinion piece defending the educational performance of commercial and not-for-profit Private Training Establishments (PTEs) and the ability of the private sector to contribute to better outcomes for New Zealand, I now want to examine the Tertiary Education Union’s (TEU’s) comments regarding taxpayer funding for PTEs.

In general, taxpayer funding going to PTEs (particularly commercial PTEs) seems to make the TEU very “angry”.  National President Lesley Francey told the 2013 TEU conference “we’ve got a lot to be angry about.”  In particular, she said “it makes me angry that our taxes are being used to create private profit and not public good.”  I would argue strongly that the education that PTEs provide to learners and graduates is a clear example of public good.  Again, we should be focussing on outcomes and not ownership.

This attitude is not new.  The TEU’s negative view of PTEs was clearly set out in their 2011 policy on PTE funding.  The key section reads:

“The TEU does not support public funding for private training establishments.  We believe that New Zealand’s small population base and constrained national tertiary education budget renders public funding of private training establishments economically inefficient and educationally unsound.  Continued public funding of PTEs has resulted in duplication of provision, inefficient use of limited resources, and the establishment of providers that lack economic and educational viability…  Continued public funding of private training establishments may eventually lead to the erosion of our national system of public tertiary education institutions. First and foremost therefore the TEU will always advocate for public funding to be allocated to public tertiary education institutions.”

One of the main priorities in Te Kaupapa Whaioranga – the TEU’s current Blueprint for Tertiary Education – is “spending public, taxpayer funding on public education not private companies.”  Literally, recommendation 1.1 states the Government should focus on “ensuring taxpayer funding goes to publicly owned tertiary education providers.”   The 2011 policy bluntly stated “the TEU does not support public funding for private training establishments” and, while the 2013 version is slightly more nuanced, that appears to remain the ultimate policy aim.

If implemented, this policy would send a message to 75,079 PTE domestic learners and 11,994 international students (in 2013) that “you chose your education provider incorrectly and will therefore receive no Government support for your studies.”  The message to thousands of PTE staff would be “sorry, maybe you should apply for a job at the Polytech where the roll is declining.”  In reality, the Government provides relatively modest support for PTEs (given the $4 billion plus tertiary education budget) and in return receives a generally strong return on their investment.

There are three key assertions in the TEU’s position which I wish to dispute.  They assert that PTEs are “economically inefficient.”  I believe the opposite is the case.  PTEs are often required to provide the same (or better) education for less funding support.  The funding rates have traditionally been lower and PTEs have not had access to large numbers of supporting funding pools or capital funding.  ITI is keen to document this and later in the year we hope to publish research confirming that PTEs provide genuine value for money for the Government.

The second TEU assertion is that PTEs are educationally unsound.  Putting aside the huge professional insult to all PTE staff, including, we are told, some TEU members, this cannot be allowed to stand.  PTEs perform strongly in the universal Educational Performance Indicators (EPI) and our results compare favourably to public providers.  PTEs are also subject to NZQA’s External Evaluation and Review (EER) process, TEC’s Financial Viability checks, as well as registration and accreditation processes.  PTEs are a heavily scrutinised and quality assured sector.  Many of these requirements do not apply to public providers.

Finally, there is the claim that “continued public funding of private training establishments may eventually lead to the erosion of our national system of public tertiary education institutions.”   This massively over-states the amount of taxpayer money which goes to PTEs.  Any money “saved” from disestablishing PTEs would be quickly swallowed up in the public education system and I doubt it would make much impact for providers, far less students.

Additionally, we consider the diversity of PTEs to be a strength – they are able to work in specialist fields of study and provide a range of learning environments.  Small class sizes and practical training are also positive in many fields.  These are all reasons why PTEs are consistently ranked highly by employers in Business NZ surveys.

In the next post I will examine the realities of the new contestable funding process for Level One and Level Two qualifications and debunk the deliberate myth that funding has been cut.


Feroz Ali, Chair of Independent Tertiary Institutions (ITI)

Guest Post – Standing up for Private Training Establishments

July 31st 2014 at 10:20am, By Dave Guerin

This guest post is from Feroz Ali, Chair of Independent Tertiary Institutions (ITI). ED Blog welcomes guest contributions.

In Budget 2014, the Minister for Tertiary Education, Steven Joyce, confirmed that private providers would be funded at the same level as public providers for delivering the same courses.  There had previously been a gap, sometimes significant, in the funding rates and Minister Joyce worked carefully over several Budgets to remove this discrimination.

The move was understandably welcomed by the Private Training Establishment (PTE) sector as it eliminated an inequality which was created largely for ideological reasons.  Private institutions feel it is fair that students receive an equal amount of Government support for their education.  The focus should be outcomes for the learners, communities and employers – not the ownership status of the institution.

Not everyone was quite so happy.  Perhaps the most vociferous group criticising the PTE sector is the Tertiary Education Union (TEU) which represents a number of staff at tertiary institutions, including some PTEs.  In a series of opinion pieces, I’m going to tackle a few myths about private tertiary education which are perpetuated by the TEU.

In this piece, I’m going to look at the TEU’s view of the PTE sector and private education.  I take issue with their characterisation of the sector being “for profit” and their central assertion that private ownership and/or commercial activities are incompatible with quality tertiary education.

The TEU usually refers to PTEs as “private for profit companies”, “private companies who make a profit off students” or even “private companies that want to make a profit from selling education.”  While TEU does occasionally concede there “there are some great PTEs in New Zealand and some great staff working in them,” these glimmers of praise are almost always followed by a “but” or a caveat which shows what they really think about PTEs in general.  The language is hostile and loaded.

Private tertiary education is described by the TEU as “ensuring profit for business owners or shareholders,” and as shareholders trading education “back and forth in the hope of making a profit.”  Sandra Grey argues most PTEs are companies which “believe education is a service to be bought and sold for a profit.”

I take great issue with that characterisation.  Firstly, not all PTEs are companies or for-profit so the assertion is immediately false.  There is a wide range of ownership structures in our sector including charitable trusts, community trusts, not-for-profit organisations and charities.  These non-commercial providers are sometimes acknowledged by the TEU who seems prepared to give them ‘honorary’ public education status, presuming they don’t get in the way of public providers. Their “place” in the TEU scheme of things is described as “supporting the public education system.”

Secondly, even in commercial operations it is important to remember that PTEs are first and foremost educational providers.  Some certainly look to make a modest profit but running a PTE is not an easy way to make money.  People run PTEs and work in PTEs because of what they achieve for learners, the community and employers.  This involves working efficiently, in a similar way to universities and polytechnics that have to ensure their books stay in the black and they meet the requirement to run a surplus.

TEU head Lesley Francey is adamant that private tertiary education “cannot and must not replace the public system.”  I would agree.  I think everyone would.  The diversity of our tertiary education sector is a strength.  There is absolutely no suggestion from the private sector to take over – even if such a move was actually possible.  However, the TEU sees a deliberate Government policy “directly transferring both students and public money out of high quality public institutions, and into private companies.”  We see a Government supporting student choice and educational success, wherever it occurs.

The main problem the TEU has with PTEs is that they seem to believe the private or commercial model is fundamentally incompatible with education.  By definition, they believe no PTE can deliver education to the same standard as public tertiary education.  In their submission opposing changes to university governance, the position is laid bare:

“Those working in the tertiary education sector understand that tertiary education institutions have distinctive characteristics that differentiate them from organisations in the private or commercial sector, such as the need to maintain close relationships with the communities they serve…”

I disagree with this claim.  Private providers have a strong record of building close relationships with communities and with industry.  Not only is this the best way to raise educational performance, but PTEs have to remain connected and relevant because, unlike public providers, we can be allowed to fail.  The Government will not bail us out of any predicament.  Relationships are critical for PTEs and they have every incentive to perform.

Next time I will examine the issue of Government funding for PTEs, including new contestable funding at the foundation level which has caused some controversy.


Feroz Ali – Chair of Independent Tertiary Institutions (ITI)

You won’t believe the size of this artwork

May 30th 2014 at 12:30pm, By Dave Guerin

Sorry for the click-bait headline, but this 40m by 11m mural deserved it J I saw this great mural at NZ Management Academies’ Sylvia Park campus when I visited recently. Back in April ITI put a story on their newsletter about it and then I found the video of the mural’s creation. It’s just the thing for Friday viewing.


Are Conflicts of Interest Really Booming?

May 27th 2014 at 4:15pm, By Dave Guerin

Vice-Chancellor Professor Harlene Hayne and Highlanders players Craig Millar and Ben Smith. Photos: Sharron Bennett.

Vice-Chancellor Professor Harlene Hayne and Highlanders players Craig Millar and Ben Smith. Photos: Sharron Bennett.

There have been three claims of conflicts of interest over the last week, each with quite different contexts. It seems people are getting a bit free with their accusations, but practice could be improved.

The weakest allegation related to Otago Uni’s sponsorship of the Highlanders rugby team. 2 of the 3 people on the standing committee that approved the sponsorship had links to rugby (they were the Chancellor and Pro-Chancellor). One used to chair the Highlanders (but left in 2009) and one was on the trust that built the new Dunedin stadium (he also left in 2009). Quite rightly, the Uni said there was no conflict of interest, as there are no current (or recent) interests. One of the two has had no formal relationship with the team for 5 years, and the other never had one.

Otago Uni has an Ethical Behaviour Policy that applies to the council “where the personal, academic or financial interests of an individual improperly affect or could improperly affect” their duties within the Uni. It would be a stretch to say that either of the council members had any interests here (as defined in the policy).

A TEU rep, Shaun Scott, was quoted as saying that it created a “perception” issue, and he’s right. It would probably have looked better if others had been involved in the decision, but overall it’s a beat-up by the ODT (and the Sunday Star-Times).

The second set of allegations was in an article that suggested that AgResearch board members (and a whole bunch of others) were conflicted over restructuring decisions. In relation to tertiary education, the article noted that:

  • Lincoln’s VC was a former AgResearch CE (but of course he hasn’t been CE since 2010, so didn’t make any of the AgResearch board decisions);
  • AgResearch director Andrew Macfarlane was a Lincoln council member (the Lincoln issue is a real conflict and was presumably managed); and
  • AgResearch’s chair used to chair AsureQuality (till Oct 2013), which has a facility at Lincoln that may benefit (we couldn’t see any obvious boost to relevant research at Lincoln under the plan, and a similar AsureQuality lab in Auckland would be further away from the new main AgResearch sites).

Oddly, the article omitted the fact that the AgResearch board included the Hamilton City Council CE (the AgResearch campus in his city will be downgraded). If he voted for a decision that disadvantaged his other interests, maybe it was just a reasonable decision… Overall, the article threw around accusations, but didn’t provide any smoking guns.

The strongest case for conflicts of interest (if still minor) was over academics assigning their own textbooks for their classes, as covered this week by Otago Uni’s student paper Critic. Key quotes are noted below.

The University does not have a policy regarding when a lecturer has a vested interest in the suggested or required textbooks for their paper. Professor Vernon Squire, Deputy Vice-Chancellor (Academic and International) explained that, despite the lack of direct policy, each new paper at the University must pass a “rigorous approval process,”…

Nanette Cormack, Deputy Secretary of the Tertiary Education Union, says, “I would have thought that the institutions would have policies that resources recommended to students would be checked.” Cormack believes that as long as someone else in the department is checking over the materials recommended to the students, she does not see it as a conflict of interest. She says that given the “nature of expertise within New Zealand Universities,” it may well be that the academic staff are the experts in their field, making it “quite appropriate” to recommend their own text.

Otago’s department of physics had several lecturers involved with writing an Introduction to Biological Physics for the Health and Life Sciences. … Head of the Physics Department, Associate Professor Pat Langhorne, says “it was never seen as a money maker” and that there is often a reason lecturers will work on writing textbooks. She explains that lecturers were spending an extensive amount of time writing more comprehensive notes for their students “because no textbook was on the market that fitted [the course],” …

Associate Professor Kenneth Deans is one of the authors of the recommended texts for a 100-level Marketing Management paper. Deans receives the profits, explaining he doesn’t write the book on university paid time, and “I am taxed on it.” He says the financial benefits are “no more than a couple of days of consultancy.” He sees it irrelevant that he authored the book because whether a student buys his book over another book, “it’s still an added cost [for the student].”

While the DVC mentioned that there wasn’t a relevant policy, the Uni’s general Ethical Behaviour Policy provides a clear guide in my view (see s.3). If an academic financially benefits from textbook sales after they assigned a text (as some have admitted above), then there’s a clear risk that it could, or did, improperly affect their duties within the University.

Usefully, Otago Uni’s Policy has a straightforward response, requiring non-conflicted superiors to be advised, and a clearly documented decision to be taken. That gets things out in the open and, in most cases, would probably lead to the same decision being made (ie assigning the academic’s book).

What strikes me most about the Otago Uni situation though is the confusion. The DVC didn’t cite a policy, and two academics seemed unaware of the potential conflicts of interest. The TEU’s Nanette Cormack, however, had a sensible suggestion that pretty much mirrored Otago Uni’s policy.

Given the council and staff issues in this post, it’s probably a good time for a memo to go round Otago Uni about managing interests. The main lesson for me though is that accusations of conflicts of interest are more common this week than the conflicts themselves.

ED Blog is changing and will be providing views on tertiary education, rather than a roundup of news links. Most posts will be shorter than this one!

This is the last edition of the ED Blog news post – from Monday we will be running a similar email as part of our ED Insider service. If you would like a free 2-week trial of ED Insider, contact us for details. Over 70 organisations and over 1,110 people currently use ED Insider in the tertiary education sector, and we’d love to have you join us too.

ED Blog will develop in a different direction. It will become more like a blog again, focusing on interesting tertiary education ideas and events in NZ and offshore.  We will probably publish new posts around the middle of the day and there may be 2-4 posts a week. The frequency of the news posts has limited what else we can do, so we’re looking forward to the change.

Thanks again for your loyalty over the last 52 months of the free news post service – it’s been a good ride!

Dave Guerin

Policy, Management & People

  1. WITT Council Ross Dingle, Cassandra Crowley, and Allie Hemara-Wahanui are new members of WITT’s council board.
  2. Copyright Battle Universities NZ and Copyright Licensing NZ (CLNZ) are engaged in a legal dispute over licensing fees.
  3. Library Loans… of printed books and material at Auckland have fallen from 1.2m in 2005 to 700,000 last year.
  4. Student Loan Repayment NZUSA president Daniel Haines says student loan repayment policies are unfair.
  5. Extras: the TEU’s Lesley Francey criticises budget cuts to public education; SIT’s cleaners and custodians will benefit from a TEU-negotiated collective agreement.


Research & Innovation

  1. African Food Safety Massey and Otago Uni researchers working with global coalition of researchers on $8.8m study of food safety in Africa.

Teaching & Learning

  1. Indigenous Development Canterbury to offer indigenous economic development course.
  2. Extras: a Myanmar refugee family praises Wintec’s Centre for Languages;  NMIT offering free computer classes.

Policy, Management & People

  1. Apprentice Training MESNZ secretary Craig Carlyle on the training of apprentices and an interview with MIT’s Modern Apprenticeship coordinator Larry Wiechern.
  2. University Bill Auckland and Otago Uni V-Cs Stuart McCutcheon and Harlene Hayne were critical in submissions on the Education Amendment Bill.


  1. MUSA Charges Massey’s student association is considering charging a membership fee.
  2. Pay Dispute UCOL president Miranda Orpin says students are pleased that employment negotiations have ended.


  1. Health Precinct Canterbury, Otago Uni and CPIT have signed a formal collaboration agreement with CERA and the Canterbury DHB to form Christchurch’s new Health Precinct.
  2. Apprentice of the Year…competition to undergo format changes.
  3. Extras: the CLL Educational Publishing Award winners were announced; Lincoln held an Open Day to celebrate its collaboration with Northland College.

Teaching & Learning

  1. Organic Education A review of the organic education options available in NZ.
  2. Sustainability Course Otago Poly and The Natural Step offering 20-week course on “Adding Sustainable Value”.