30 Aug 2023

Officials want even more job cuts at Te Pūkenga, briefing shows

7:14 am on 30 August 2023
Te Pūkenga

The briefing showed the Tertiary Education Commission thinks previously-announced plans for 400 job losses did not go far enough. Photo: supplied

A Tertiary Education Commission briefing shows officials want deeper staff cuts at the national polytechnic and workplace training organisation Te Pūkenga.

The June briefing to Education Minister Jan Tinetti showed the commission thinks previously-announced plans for 400 job losses, mostly in back-office and managerial roles, did not go far enough.

It also showed the commission was more worried about Te Pūkenga's long-term plans for transforming the way it operates than about its most recent and current deficits.

The Tertiary Education Union said the commission had overstepped its brief and its statements about job losses had alarmed its members.

The briefing covered Te Pūkenga's operations in the first quarter of this year.

It said the institute's financial situation had worsened and was classed as "high risk" after it ran up an $80 million deficit last year and was expecting this year's result would be worse than the $27m deficit it originally forecast.

Enrolments in the institute's 16 polytechnics had dropped 6.4 percent, leaving them with fewer students than before the pandemic began, and enrolments in work-based learning had fallen 8 percent, it said.

However, the report also said the institute had a strong balance sheet and good access to money.

It said the institute was looking for ways to reduce the size of this year's deficit but more importantly, it needed to plan how it would return to financial sustainability.

"While it was always expected to take time to move to a new financially sustainable model, the key question is how long the balance sheet can sustain a sub-optimal level of performance and a network of provision which is currently unprofitable. If further action is not taken to address its profitability, the current cash reserves will eventually be needed to cover operating losses. This would not be a sustainable approach, especially given the cash reserves are needed to fund the transformation and address capital requirements going forward," the briefing said.

It also said more savings were needed from course-delivery - essentially, teaching at polytechnics.

"We remain concerned that not enough savings are being sought through the new organisation design, especially given the proposed savings in the PBC [programme business case] are focussed predominantly on back office positions. The PBC did not propose any major savings through the delivery function. We understand further savings targets have now been set for the organisation design, but we are yet to understand exactly what those are and whether they are sufficient.

"Given the worsening financial situation, Te Pūkenga needs to be confident that the savings achieved through the new organisation design will be adequate. Fundamentally, the labour model needs to change, given around 80 percent of Te Pūkenga's workforce is on the provider-based side and that is the area that is highly unprofitable due to funding rate changes and continued declines in domestic provider-based enrolments over the past ten years," the briefing said.

The report said it was not yet clear how the institute would integrate work-based, campus-based and online courses, what would be managed locally rather than regionally or nationally, and how students would engage with the institute.

Te Pūkenga's management, governance and development of its operating model had improved during the first quarter of this year, though it remained "medium risk", the report said.

Tertiary Education Union president Julie Douglas said the commission's call for more job cuts at Te Pūkenga was inappropriate and threatening.

"It has already instilled a level of fear in our members. They've been in contact with us feeling very distraught," she said.

Douglas said the institute's current change proposal involving a net loss of about 400 jobs had not yet finished, but the union expected further restructuring going into next year and suspected that would also involve job losses.

"Everybody is thinking the worst to be honest. We keep getting the message that they have to save more money and the fear is that, as what often happens, staff end up having to shoulder the burden of any cuts," she said.

Douglas said the institute should keep its staff so it did not endanger the quality of its teaching and because enrolments would eventually bounce back.

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