10. Question No. 10—EducationPENNY SIMMONDS (National—Invercargill) to the Minister of EducationQuestion No. 10—Education10. PENNY SIMMONDS (National—Invercargill) to the Minister of Education: What if any is the net financial deficit of Te Pūkenga forecast for 2022 and how much more or less is it than the actual Institutes of Technology and Polytechnics sector deficit in 2019 prior to the establishment of Te Pūkenga?Hon CHRIS HIPKINS (Minister of Education): Before we commenced the reforms of vocational education that brought the 16 existing polytechs and institutes of technology together under the Te Pūkenga umbrella a range of potential deficits for the sector without reform were projected. The highest of these was $156 million in 2022. I am advised that Te Pūkenga group is currently forecasting a deficit of $110 million for 2022 consistent with the mid-range of those earlier projections. Forecasts must of course however be treated with caution. In 2021 last year Te Pūkenga forecast a deficit of $46 million but actually delivered a small surplus. In 2019 the sector produced a deficit of $49 million.Penny Simmonds: Does he consider that a deficit of $110 million—approximately $60 million more than prior to his mega merger when the deficit was $48 million—means the sector is better or worse financially?Hon CHRIS HIPKINS: I don't believe it's an acceptable level of deficit and that's the reason that we are reforming the sector because the range of projections going into the reform programme could have been significantly worse if we had not undertaken reform.Penny Simmonds: What concerns if any have the Tertiary Education Commission (TEC) expressed to the Minister regarding Te Pūkenga not meeting the expectations he outlined to Te Pūkenga in July 2020 to improve efficiency and effectiveness"?Hon CHRIS HIPKINS: It'd be fair to say the Tertiary Education Commission have been giving a range of quite frank advice on the Te Pūkenga change process. It is a work in progress. Based on the TEC advice the board of Te Pūkenga commissioned some independent expertise as well to review their change processes so far that have made some quite robust recommendations about that. It is still a work in progress. There is still a lot more that needs to be done. I still have confidence in Te Pūkenga undertaking that change process but it is a complex programme of change and it does have risk associated with it.Penny Simmonds: What is his response to the report produced by the Auditor-General that notes "It is important that Te Pūkenga address the underlying problems with financial viability within its network. The lack of a detailed plan about how it will do this is concerning."?Hon CHRIS HIPKINS: I agree with the Auditor-General and similar concerns have been raised by the Tertiary Education Commission. Te Pūkenga has only been in existence for a relatively short period of time and they have inherited a sector that was in a great deal of difficulty. So we do have to give them time and support to make sure they are getting to the bottom of the structural problems that they inherited from the 16 component organisations that make up Te Pūkenga to make sure we get the sector back into a viable state. I would note that they continue to deliver educational outcomes for their learners whilst they are undertaking this reform programme. In fact there are some very good indicators there including the fact that the number of people engaged in work-based learning which now also comes under the Te Pūkenga umbrella has been continuing to increase including a 50 percent increase in the number of building and construction apprentices for example.Penny Simmonds: Does the Minister think the public of New Zealand will consider the $120 million of taxpayer money spent on merging polytechnics into Te Pūkenga has been well spent when Te Pūkenga has made the institutes of technology and polytechnics (ITP) sector less financially viable?Hon CHRIS HIPKINS: I absolutely reject the premise of the member's question and if she'd listened to my primary answer she would know that the assertion in her own question is wrong. In fact the deficits were being forecast before the reform programme was undertaken. There are transitional deficits as this reform programme is being undertaken as were projected when the reform programme was announced and started. We do expect that we will see the delivery of a significantly better sector but that is going to take some time. It is a complex programme.Hon Grant Robertson: Does the Minister recall the number of times he went to the Minister of Finance when he first became the Minister responsible for the ITP sector to have to bail out polytechnics because they were going under?Hon CHRIS HIPKINS: Yes in fact I do. Over $90 million had to be put into the existing institutes of technology and polytechs within the first couple of years that we were in Government just to keep the lights on and the forecasts were indicating that that would run into the hundreds of millions of dollars if a reform was not undertaken."