23 Aug 2018

Unitec and Whitireia need massive government bailouts

3:37 pm on 23 August 2018

Extreme financial difficulties have prompted multi-million-dollar government bailouts for two more polytechnics, Unitec in Auckland and Whitireia in Porirua.

Minister for Education and Leader of the House Chris Hipkins.

Education Minister Chris Hipkins says both Unitec and Whitireia have asked for urgent financial help. Photo: VNP / Daniela Maoate-Cox

A $50 million loan to Unitec and a $15m capital injection for Whitireia were announced by the government today.

This follows a $33m bailout for the West Coast's Tai Poutini Polytechnic in February and the replacement of Unitec's council with a commissioner last month.

All three institutions lost money last year after falling student enrolments.

Annual report figures showed Whitireia lost $8.4m last year after full-time student enrolments fell by 540, with 200 fewer international students.

Unitec's deficit totalled $30m and it lost 600 full-time students, most of them domestic students.

Education Minister Chris Hipkins said both Unitec and Whitireia had asked for urgent financial help.

A financial advisor to Whitireia had been appointed. The government was now considering dismissing the board Whitreia shared with the Wellington Institute of Technology (Weltec) and replacing it with commissioner.

Many polytechnics had suffered a drop in domestic enrolments because of the strong labour market, Mr Hipkins said. Some had also lost foreign students, but Whitireia's situation was exacerbated by a major building project.

"Whitireia and Weltec jointly have also invested a significant amount of money in the new Wellington campus that they have recently opened and the result of that is they have ended up seriously short of cashflow," Mr Hipkins said

Weltec's financial position was not as serious as Whitireia's, but the government was watching it closely, he said.

"Weltec's financial viability in the medium-term is also a very serious question."

Whitireia would not have to repay the $15m capital injection, but Unitec was expected to repay its $50m loan.

Mr Hipkins said he was reasonably confident that no further bailouts would be required this year or early next year.

"We're going to be monitoring the whole sector very closely. We know that we need to get the polytech and institutes of technology sector as a whole on to a much more stable footing."

The government was designing a new system for vocational education and training that would put the institutes on a much more stable footing.

"That is likely to require some quite significant change," he said.

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