10. Question No. 10—Tertiary Education and SkillsHon Dr DEBORAH RUSSELL (Labour) to the Minister for Tertiary Education and SkillsQuestion No. 10—Tertiary Education and Skills10. Hon Dr DEBORAH RUSSELL (Labour) to the Minister for Tertiary Education and Skills: Does she stand by her statement that Te Pūkenga is a financial mess drowning in debt of over $250 million"; if so why?Hon PENNY SIMMONDS (Minister for Tertiary Education and Skills): Yes. Te Pūkenga has $8.426 million of commercial debt $35.391 million of Crown debt and $207.311 million of intercompany debt amounting to a total debt of $251.128 million.Hon Dr Deborah Russell: Why is the Minister including the $150.6 million of internal debt of intercompany borrowings in that total debt figure?Hon PENNY SIMMONDS: If I can just help the member on that it's $207.311 million of intercompany debt. When Te Pūkenga was set up different industry training organisations (ITOs) and polytechnics came in with different financial positions. Some came in with reserves; some came in with debt. Those with reserves have had to allow their reserves to go to offset commercial debt that was being held by the other institutions. That is real debt.Hon Dr Deborah Russell: Why does she claim that Te Pūkenga is awash with and drowning in debt of over $250 million when at 30 June 2024 total external borrowings were only $45.3 million?Hon PENNY SIMMONDS: As I've outlined there is $207.311 million of intercompany debt which has been taken from reserves of some institutions and applied against the debt that other institutions have. As Te Pūkenga is disestablished that debt will have to be dealt with. It is real.Hon Dr Deborah Russell: Why does she claim that Te Pūkenga is $250 million in debt when of those total external borrowings at 30 June 2024 of $45.3 million $44.6 million is with the Crown and is non-interest bearing and only a tiny portion is external to the Crown?Hon PENNY SIMMONDS: Debt to the Crown is debt and so we have significant debt being held—[Interruption]SPEAKER: Excuse me. We're going to hear the answer in silence thank you.Hon PENNY SIMMONDS: Debt to the Crown is debt just as intercompany debt is real debt. Te Pūkenga has over $251 million worth of debt.Hon Dr Deborah Russell: Why did she tell Radio New Zealand this week that Te Pūkenga was running a $77 million deficit when she told the House just yesterday that it is now forecasting a surplus of $28.5 million?Hon PENNY SIMMONDS: That's the half-year surplus. So when you run a polytechnic or an ITO your income comes early your income comes in the first half of the year your expenditure goes throughout the year. It will bounce around a little bit but that $28 million was their half-year to date surplus.Hon Simeon Brown: Will the Government's reforms for Te Pūkenga include improved financial literacy? SPEAKER: No that's enough. Hon Dr Deborah Russell: Has the Minister been taking—[Interruption]SPEAKER: Just a minute. We'll just wait for everyone to settle. If you could start the question again please.Hon Dr Deborah Russell: Has the Minister been taking lessons in mathematics from the Minister of Finance who seems to think that $12 billion of extra borrowing isn't going to tax cuts?SPEAKER: That is not a question that the Minister needs to answer. It is—[Interruption]. Dana—have you finished? Supplementary question the Hon Deborah Russell.Hon Dr Deborah Russell: Meitaki Mr Speaker. Why given that she was advised that the benefits of the Te Pūkenga merger would take at least five years to materialise is she spending millions and millions against the advice of Government officials and her own special advisers breaking up an organisation that is finally posting a surplus?Hon PENNY SIMMONDS: Te Pūkenga hasn't posted a surplus yet. However I can advise the member that in October 2022 a business case was done that was going to require Te Pūkenga to have over $900 million spent on it to make it fully operational. The Minister at the time understandably rejected that. They came back and said "Oh well over five years it will need over $400 million to be operational." Again the Minister understandably rejected that. This is an organisation that would need to have hundreds of millions of dollars spent on it to make it operational to have its systems interoperable and I am not prepared to see that sort of money be used on setting up a structure when it should be used on tertiary education."