Hobbs Marian: Education (Tertiary Reforms) Amendment Bill — First Reading 
Hobbs Marian: Education (Tertiary Reforms) Amendment Bill — First Reading 
[Volume:639;Page:9068] 
Hon MARIAN HOBBS (Labour—Wellington Central) 
: 
 I rise to support the first reading of the Education (Tertiary Reforms) Amendment Bill. I am pleased to report that the tertiary education reforms for which this bill provides the required legal mechanisms have since March last year been consulted upon widely—very widely—with the tertiary education sector throughout New Zealand. There have been speeches seminars and developments—all sorts of things. 
There is general support for the reforms from the sector—and I hope the Opposition member Paul Hutchison who has just spoken is listening to this—particularly for the way the system will be simplified and streamlined because that is what the sector sees. In fact I found something that Dr Hutchison said to be quite interesting. He said that investing in a planned approach was pure social democracy—pure Labour. I say to the National Opposition that the opposite of that approach is the chaos that the National Government left us with in terms of the A1s J1s and 5.2—the unconstrained system of the former equivalent full-time student - based funding when anybody could apply to run any course with no boundaries no control and no decision-making whatsoever. If that is what Dr Hutchison thinks is a good system—the opposite of the planned approach—then I would far rather have the planned approach. I would far rather support the development of the Tertiary Education Commission with its rules and dialogue than have the willy-nilly anything grows—including mushrooms—approach at any time. 
The tertiary education reforms should be supported because they have the potential to be of considerable benefit to New Zealand. Everyone in this House will agree that raising New Zealand’s productivity levels is crucial to the process of transforming our economy. The New Zealand tertiary education sector makes a unique and invaluable contribution to this from investment in science and technology from research and from higher skill levels whether—I say to Dr Hutchison—they are in the arts or in the sciences. But we need to ensure that the considerable investment that taxpayers make in tertiary education is reflected in the best results possible. 
The key aspect of these reforms is the move from what was handed down to us—an annually funded unconstrained input-based system; members should remember the A1s and J1s—to a 3-yearly constrained and outcome-based system. 
Katherine Rich 
: What does that mean? 
Hon MARIAN HOBBS 
: It means that there is a cap on the budget and that we do not have the system we had—a system that the front benches of the National Party got up and down and told stories about for years although National had been ultimately responsible for setting it in place. That was when the twilight golf courses were allowed to run. We now have the very opposite of what that member’s Government set in place at that time allowed to run and encouraged. This is the change—the vital change—to a 3-yearly constrained and outcome-based system. 
The bill will give effect to the necessary legislative changes to implement the reforms with its primary focus being upon the establishment of a new set of streamlined steering instruments. Legislative action is needed because the current steering instruments for the tertiary sector and the associated administrative requirements are set out in the Education Act 1989. For the new steering instruments to have a legal effect the relevant statutory provisions require amendment. 
The first new steering instrument is the tertiary education strategy which replaces the two-step tertiary education strategy and statement of tertiary education priorities. So it goes down from two to one. This single Government document will set out the longer-term strategic direction and the short to medium term priorities for the tertiary sector. The second new steering instrument is the Tertiary Education Commission’s investment guidance document which translates the Government’s strategic direction and priorities into a basis for assessing individual tertiary education organisation plans. The third new steering instrument is the tertiary education organisation plans themselves which set out how organisations intend to give effect to the Government’s strategic direction and priorities. 
The reforms and the implementation of these new steering instruments aim to bring greater certainty to the way the sector is funded while retaining the flexibility needed to manage changing needs within a 3-year cycle. Under the current Education Act 1989 the Tertiary Education Commission and the tertiary education organisations have limited flexibility to amend their profiles. In respect of plans this bill provides tertiary education organisations with the necessary flexibility to amend or review and replace approved plans. The commission will be able to propose amendments or request that a tertiary education organisation reviews its plans with a view to amending or replacing it. If required the commission itself can amend the plans. 
The bill also proposes changes to the more complex accountability arrangements for the tertiary education sector. Under the current Education Act tertiary education organisations have two direct relationships: one with the Minister through charters and the other with the Tertiary Education Commission through profiles and the allocation of funds. One of the drivers behind the tertiary reforms—and again this is contrary to what the previous speaker said—is the need to simplify accountability arrangements and improve the transparency of decision making. Accordingly under the bill tertiary education organisations will have a direct relationship with the Tertiary Education Commission which is responsible for the approval of plans for funding purposes. The removal of charters will remove the direct relationship between the Minister and the tertiary education organisations. This will increase transparency as tertiary education organisations will have a single relationship with the Tertiary Education Commission. So we will reduce bureaucracy. We will reduce the system from one of charters plus profiles and relationships with the Minister and with the Tertiary Education Commission down to one plan. We have simplified this system and made it far more transparent. 
The Minister will however retain those functions consistent with managing the Crown’s interest and risk. The Minister will continue to have a relationship with tertiary education institutions in respect of the establishment and disestablishment of institutions the appointment of up to four council members intervention in institutions at risk and the receipt of the annual report. 
The increased clarity in the new system will improve accountability. If Opposition members are wondering where that need came from then I refer them back to the education sector review conducted by the State Services Commission in 2005. The need for accountability was a major concern of the review and was spelt out very clearly. This new system will reinforce the arm’s-length relationship between the Minister and the tertiary education organisations. 
As an adjunct to the Tertiary Education Commission’s new power to approve plans for funding purposes the commission has been given express powers of suspension and revocation. The bill specifies the limited circumstances in which these powers may be exercised and makes clear that the effect of suspension or revocation will be the immediate cessation of funding. The powers are intended of course to be used only as a last resort. 
The previous speaker waxed lyrical about academic freedom. I just remind him what academic freedom is. Academic freedom is not a discussion about how many medical schools we have; academic freedom is the ability within the delivery of a medical degree to teach what the professionals want from the degree. That is the difference. It is the same as saying that yes we will have a school of history but it is not the job of the Tertiary Education Commission to decide which elements of history are taught. Therein lies academic freedom. Section 161 of the Education Act 1989 states: “It is declared to be the intention of Parliament in enacting the provisions of this Act relating to institutions that academic freedom and the autonomy of institutions are to be preserved and enhanced.” This remains unchanged. Actually among some of the institutions mentioned in the Act is the New Zealand Qualifications Authority which increasingly has been engaging with the adult and community education sector on quality assurance matters. Parts 19 and 20 of the Education Act are being amended in this respect to confirm the New Zealand Qualifications Authority’s role in undertaking quality assurance of adult and community education providers. 
Currently we have tertiary education organisations receiving funding from the Tertiary Education Commission that must comply with specified financial reporting requirements such as providing the commission with a financial report audited by an independent chartered accountant. There are concerns that these requirements are far too onerous for small organisations particularly those involved in the adult and community education sector that are seeking limited funding. Under this bill the commission will have the power to exempt organisations as appropriate from the reporting requirements. 
In conclusion this bill gives legislative teeth to a system that simplifies and streamlines the relationship that tertiary education institutions have with central government. It also lowers compliance costs and reduces bureaucracy. It does so by moving away from the previous system upheld by National which was based on an annually funded demand-led—often by advertising for students—input-based system to a 3-yearly controlled and outcome-based system. I too commend the bill to the House.