4 Jul 2018

Unitec council at risk of being fired with $100m losses forecast

5:47 pm on 4 July 2018

The government is considering sacking Unitec's governing council after it revealed the institute is expected to make deficits totalling nearly $100 million over four years.

Unitec Campus in Mt Albert

A consultation process is underway at Unitec to consider replacing the council with a commissioner. Photo: RNZ / Cole Eastham-Farrelly

Tertiary Education Commission (TEC) today started a five-day consultation process with Unitec staff and stakeholders, including iwi and Auckland Council, to consider replacing the council with a commissioner.

The consultation followed advice from an independent financial advisor that Unitec was heading for deficit of about $19m this year and $27m in 2019.

The institute lost $31m last year and $24m in 2016.

Education Minister Chris Hipkins said the institute was in extreme financial difficulty and needed urgent assistance.

"Given the size of the likely financial support needed for Unitec, we need to ensure we have stronger oversight of its operations," Mr Hipkins said.

"Our message for students at this time is that the government is committed to ensure top quality vocational education and training is available at Unitec and they should have every confidence that its financial issues will be addressed."

Unitec said it had seen declining enrolments over several years.

"The drop in revenue coincided with a period of strong investment to modernise Unitec's buildings, pedagogy and systems. This spending is now largely complete and the organisation carries no debt following the sale of surplus land earlier this year," she said.

Unitec interim chief executive Merran Davis said the institute had made cost savings of nearly $14 million this year, but there was still a significant gap between revenue and operating costs.

"Unitec is New Zealand's largest ITP [institute of technology and polytechnics], generating revenue of more than $128m in 2017, and provides a wide range of vital programmes which help to drive our economy," Ms Davis said.

"However, the organisation has not responded rapidly enough to the challenges facing the sector as student numbers and revenues decline.

"We are working with the TEC to identify further cost savings and develop a sustainable model. Unitec remains absolutely dedicated to our core business of student success as we work toward a return to surplus."

Unitec staff have been highly critical of management decisions in recent years.

In 2016, a staff survey revealed extremely poor morale and later that year the Qualifications Authority downgraded Unitec's quality rating from a one to a two on its four-point scale.

Last year it reversed a controversial decision to outsource the administration of student enrolments to a private company after just a year and then-chief executive Rick Ede left his job a year earlier than his contract was due to end.

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