Hon Dr MICHAEL CULLEN (Minister for Tertiary Education) : I move, That the Education (Tertiary Reforms) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Education and Science Committee.

The purpose of the bill is to implement the Government’s reforms of the system for the planning, funding, and monitoring of the provision of tertiary education. These reforms will develop a tertiary system that will fulfil better the country’s needs in terms of national identity, economic transformation, and support for families young and old. At the same time, the changes to the tertiary education sector will help to provide better value for the investment by taxpayers, and contribute to an even better education for tertiary students.

The Government is committed to a quality tertiary education and training system that is relevant to the needs of New Zealand. A key aspect of these reforms is the placing of national goals and priorities at the centre of the tertiary sector’s focus. We want a tertiary education system that produces the right mix of the skilled graduates needed to support economic transformation. We need a tertiary education system that delivers research relevant to the needs of our businesses and industry, our communities, and the country. The reforms are introducing an investment system that aligns planning, funding, and monitoring, and that focuses on investing in priority areas identified at national and local levels. The funding mechanism underpins investing in a planned approach. This investing in a planned approach is at the very centre of the reforms and changes.

The bill being read today for a first time provides the legislative mechanisms needed to give effect to the reforms. It will provide tertiary education organisations with a simpler, more streamlined relationship to central government. As the explanatory note of the bill states: “The public policy objective of the Bill”—and the reform—“is to ensure that the tertiary education sector contributes towards tertiary education outcomes that are more closely aligned with the social, economic, and environmental interests” of the country.

Under the new system the Government will be responsible for setting the sector’s long-term strategic objectives and the current to medium-term priorities for the tertiary education strategy. This is a simplified process compared with the current process of both a tertiary education strategy and statement of tertiary education priorities. The Government will also be responsible for determining the overall level of investment in the provision of tertiary education, and how it will be allocated between the different subsectors, and between teaching and learning, research, and organisational capability building. This will be achieved by the responsible Minister, who will issue funding mechanisms that the Tertiary Education Commission will implement.

The Tertiary Education Commission will be responsible for issuing guidance on how different tertiary education organisations can contribute towards achieving objectives in the tertiary education strategy. The commission will be responsible for approving plans submitted by tertiary education organisations for funding purposes, and for determining the amount of funding to be allocated. The commission will have the discretion to approve plans in whole or in part for funding purposes. The commission will monitor the performance of tertiary education organisations in meeting specified outcomes in accordance with specified quality and performance measures, and in working with tertiary education organisations to address performance issues as they arise. I do not underestimate the difficulty of specifying appropriate quality and performance measures in the tertiary education sector, but the English have made considerable progress in that regard.

The Tertiary Education Commission will be building the capability of tertiary education organisations to achieve the outcomes specified in their plans. Tertiary education organisations will be responsible for preparing proposed plans in consultation with their stakeholders, for submitting them to the commission for approval for funding purposes and, of course, for implementing those approved plans, including amending, reviewing, or replacing them as necessary over the plan’s 3-year time span.

The reform process is already well under way. In December last year the Government issued a new tertiary education strategy that sets the Government’s expectations and priorities for New Zealand’s tertiary education system over the next 5 years. Universities, wānanga, polytechnics, institutes of technology, industry training organisations, private tertiary establishments, and other tertiary education providers will each prepare a plan, in consultation with their stakeholders—students, local businesses, local councils, and their communities—on how they intend to meet their needs and contribute to the tertiary education strategy.

The plans will include information about what education will be provided, and performance commitments in relation to that. The key difference—the core, as I said—is linking funding with the delivery of the plan. This will give the public more confidence in the value of taxpayers’ investments in tertiary education. Confidence in the last decade, I think it is fair to say, has not always been available to the public. The plans will be multi-year ones, and this will give the Government and the sector more certainty in terms of funding. Prior to the submission of plans to the Tertiary Education Commission for approval, organisations will have actively engaged with the commission over the development of their plans. This will allow for any potential issues to be identified early, with a view to resolving them before approval is sought. The bill expressly provides for organisations to develop the content of their plans in collaboration with the commission. The commission will consider and approve for funding purposes the final plans for each organisation, and determine the level of funding allocated to each organisation. The commission will then monitor the performance of the tertiary education organisations in meeting specified outcomes in accordance with those specified quality performance measures, and work with them to address performance issues as they arise.

One of the aims of the reforms is to provide our tertiary education organisations with much clearer boundaries. Universities, wānanga, polytechnics, institutes of technology, industry training organisations, and private training establishments all have distinctive and important roles to play in education, training, research, and higher scholarship, and in building knowledge and understanding. I think that the current model, started by the 1989 Education Act, led to organisations pushing their boundaries without sufficient reference to each other or to the impact on the system as a whole. These reforms place clearer boundaries around what different types of organisations should be focusing on, and how they should be collaborating to provide more choice and better quality to students—in other words, concentrating on their distinctive contribution as opposed to each trying to emulate the other.

For all tertiary education organisations the new system will provide more certainty, so that organisations can plan ahead and focus on delivering a portfolio of courses and qualifications that meet the needs of students and employers, regions and communities. Although the new system will bring greater control to the way we invest in tertiary education, it is not about limiting access to tertiary education. Instead, it is about ensuring that tertiary education resources are focused towards education that meets social and economic priorities. We want organisations to focus not only on managing fluctuating demand for individual courses but rather on managing changes based on the needs of their communities and the country. We have seen enormous fluctuations in rolls over recent years in some tertiary education establishments.

There is also a risk that a system of plan-led funding may be perceived as a move towards the centralised control of provision. That is certainly not the intention. In fact, we are moving to a system that requires organisations to reflect better the realities of New Zealand as a whole, and the different skill and learning needs of regions and students. Students will have the confidence of knowing that the tertiary education environment is more settled, secure, and focused on achieving goals and objectives. They will know that the courses they are studying, the research they are undertaking, or the skills they are learning are a response to the needs of industry or to regions of the country. I say that that should be interpreted broadly, particularly in the great range of humanities. They will be more likely to undertake a qualification if they have greater confidence that their new skills will be relevant to their preferred career.

The research sector, employers, and communities can have confidence that their needs will be far better addressed by the sector. We are looking for greater cooperation, stronger linkages, and more general interaction to ensure that research courses and training are focused on the right areas. Perhaps most important, New Zealanders and taxpayers will be reassured that they are investing in a tertiary education sector that is both relevant and accountable, focused on quality, and more streamlined and efficient.

I want to make one personal point. This is not a system that I want to see become a purely utilitarian system of education. The Prime Minister, who is an ex-lecturer in political studies, a Deputy Prime Minister who is an ex-lecturer in history, and a Minister of Education who is an ex-lecturer in sociology are scarcely going to place great stress only on those courses that lead to immediate practical employment, producing widgets. That would be a rather strange denial of our own collective past. But the reality is that at the moment we have an enormous duplication of courses that are leading neither to an expansion of knowledge and understanding nor to direct employability. On the other hand, we also have significant underproduction of skills for which there is a great need in our communities, and of which we have a great shortage in terms of supplies to employers. That mismatch of investment and needs is one that needs to be addressed by a more focused approach towards investing in a plan by the Tertiary Education Commission and tertiary education organisations. I commend the bill to the House.

Dr PAUL HUTCHISON (National—Port Waikato) : Thank you for the opportunity to speak on this very important bill, the Education (Tertiary Reforms) Amendment Bill. I must say that I am pleased to hear that the mismatch that Dr Cullen was talking about will be addressed by this bill, given that he, the Minister of Education—Steve Maharey—and the Prime Minister are former university lecturers. I myself was a lecturer in medicine at the University of London at one stage of events, but I have also spent 25 years doing a practical, tangible job in surgery, which helps give the perspective—

Lindsay Tisch: The edge.

Dr PAUL HUTCHISON: —or the edge that would be the appropriate end point.

There is no doubt that our tertiary education system is fundamentally important for the optimal growth of social, environmental, and economic outcomes of New Zealand—as is suggested in the explanatory note of the bill. But we hear from Dr Cullen that the Government is committed to an education system that delivers quality education and relevance—in fact, I think he goes on to say quality education, relevance, and value for money. Sadly, the legacy we have seen over the last 7 years has not been that. We have seen literally hundreds of millions of dollars wasted on courses that have not been relevant and that have not shown quality—hence the need for a change. Whether this bill and the reforms that this Government is proposing will achieve it is highly questionable.

If we look at what the Government has done over the last 7 years we can see that it has created a bureaucratic monster—the so-called Tertiary Education Commission. The commission did a job earlier through the Ministry of Education with probably 20 or 30 people. It has now expanded to a bureaucracy of something like 320 people managing these reforms—and it will grow. As Dr Cullen has pointed out in the many, many publications that have been produced over the preceding few months, all sorts of people will be involved in these changes. He has said we will be investing in a planned approach at the very centre of these reforms, with central control.

This is a typical Labour Party Pavlovian dog approach to reforms. It says let us get it organised from the centre and let us grow the bureaucracy. I can see Dr Cullen clasping and steepling over there, but this is the fact: we have seen a massive bureaucracy arise under Labour through the Tertiary Education Commission over the last few years. We have seen massive poor-quality spending. What guarantees have we got that the end points of relevance, quality, and value for money might occur?

I think it is worthwhile to look back a little to what Dr Cullen’s predecessor, Maharey, said about education reform in 2001. He said there were problems with the equivalent full-time students system, that there was a need for responsiveness to economic and social needs, and that the quality of teaching and research must be taken into account in the future. Of course they must. The Government has had 7 years to do that and it has clearly failed, despite working on it over these years. I think that point had better be made right now. Maharey said in 2001 that the Government was going to form a Tertiary Education Commission, that charters would be extended to all publicly funded providers, and that: “Government has agreed to all of these, with the sole exception of the functional classifications, which I believe the Charters and Profiles Working-Party is advising against.”

So Maharey was saying: “Yep, this is what we’ll do.”, and the working party has advised against charters and profiles. This was back in 2001. But within about 24 months Maharey was suddenly extolling the virtues of charters and profiles, and saying they would form the centre of these great, new reforms that the Government was planning at the time. Minister Maharey said at the time: “These reforms give the wider community considerable say over how a tertiary education system meets their needs. Their active involvement will be crucial to the success of the reforms … These reforms represent the culmination of the government’s promise to overhaul our tertiary education and training systems.” That was back in 2002. Again, quite some time ago, Maharey said that the Tertiary Education Commission will begin “clear, strategic direction to the system as a whole.” When was that again? That was in 2003—4 years ago.

We have had a fair bit of time for it, and it is somewhat ironic that here we have Minister Cullen now realising that he has to fix up the chronic mess and bureaucracy created by his predecessor, Steve Maharey. What did the Hon Steve Maharey say in July 2003? He said: “Charters, along with profiles, are the tools that will bring the tertiary education strategy alive, and bring about much needed changes in the tertiary education system.” When I look at the Minister’s bill I see that the main components of this new system are as follows. He states that “a tertiary education organisation prepares a plan”. As I understand it the charters and profiles are going to wither on the vine and be subsumed by the new plan of Dr Cullen. I hope that Dr Cullen’s new plan will be a hang of a lot more successful than the profiles and charters of the previous Minister of Tertiary Education, Steve Maharey’s, which clearly were dismally unsuccessful. Dr Cullen goes on to say that the reforms are rewarding and encouraging tertiary education organisations to go out and create cooperative links with their stakeholders. They are now planning to do the very thing that Dr Cullen was saying this time, with these new tertiary education reforms he is proposing.

Dr Cullen has kept the Tertiary Education Commission—that big labyrinth of bureaucratic tangle that is really destined to continue to ensure that inefficiency will reign within the sector, when we want every scarce tertiary education dollar spent well. It is a great worry, because we have seen the Tertiary Education Commission not only decide to reorganise itself after 3 years, at the cost of something like $8 million, but bring in a whole army, a cohort, of new people to manage these reforms. We do not know what these people—the investment managers—are going to be like. Where are they coming from? How much will they be paid? How will they get on with the various tertiary education organisations? Are they going to control them? Are they going to put vetoes on them that affect the traditional autonomy that many tertiary education institutions—particularly the universities—wish to have to a certain degree?

I accept that there must be a balance between academic autonomy and freedom, and the fact that the Government is a major funder, but here in Dr Cullen’s plan and the bill we see a system whereby he has unashamedly said there will be clear, central control. These investment managers will go in and ultimately work out whether courses can go ahead. This is of fundamental importance to our university system.

Dr Cullen says that he wants clearer boundaries between tertiary education providers—the universities, institutes of technology and polytechnics, private training establishments, industry training organisations, wānanga, etc.—and that this is not about limiting access to tertiary education. Well, first of all, in terms of the boundaries, we agree that it is important for there to be boundaries. The Education Act indeed provides fairly clear rules about research-led institutions, teacher-led institutions, polytechnics, etc. But over the last little while we have had some merging of these. We have had a bill from the Hon Brian Donnelly that may well make it even more complicated. I agree that this is one area where clearer definition is important. But Dr Cullen says this is not about limiting access to tertiary education. I would certainly hope that to be the case, because we have seen in the last 15 years an enormous increase in access to education in New Zealand. But what we need is quality, relevance, and value for money, and I do not believe that this Labour Government bill will achieve those.

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.

KATHERINE RICH (National) : It was very interesting listening to that member, Marian Hobbs, who has just sat down. I do not think she could have put any more education jargon into one speech. I say for those listeners at home that the Education (Tertiary Reforms) Amendment Bill is about reforming our system of tertiary education—about planning, funding, and monitoring the provision of tertiary education. Much of what is in this bill is very worthy—in fact, a lot of it sounds a little bit like motherhood and apple pie—but the jury is well and truly out as to whether this bill will make one iota of difference to the provision of tertiary education in this country.

The previous speaker said that this bill would lead to lower compliance costs. I debate that issue very strongly. If we look at the status of the Tertiary Education Commission in this country, we see—as my learned colleague said—that it was an organisation that started off having about 30 staff. It then grew like Topsy into an organisation that has in advance of 300 staff. One of the things I have noted as I have travelled up and down the country is that when I ask universities and other tertiary education providers what the commission actually does, in terms of providing value to the sector, I never get a straight answer. Nobody can actually say what the organisation does, and, importantly, what value it adds to the tertiary education equation.

Another thing that concerns me is Marian Hobbs saying that this bill will reduce bureaucracy. How can that be, when universities in particular will now have to go through an additional process of planning—doing all their internal planning, then sending it to the Tertiary Education Commission for it to then decide who does what?

Although the Government pretends that this reform is some magical announcement, there is also the issue that we are now 8 years into a Labour-led Government and these are exactly the things Labour talked about when it first took over in 1999. These were Labour’s objectives for the tertiary sector, yet the pace of change has been painfully slow. We have seen a large collection of glossy documents. We have seen the establishment of the Tertiary Education Commission, and that in itself has not been without difficulty. The organisation set up offices up and down the country—including in my home town of Dunedin—only to retrench a few years later and close down all those offices. When the commission came before the Education and Science Committee only a few weeks ago, we asked it why it had set up a whole bunch of offices and expanded bureaucracy, only to turn round and do something different. On our side we were absolutely gobsmacked when the commission said it was just that it was not “fit for our purpose”. On our side we found that extraordinary; here we had a new organisation admitting that it had been set up incorrectly and was not suitable for doing the job expected of it. We question the role of the Tertiary Education Commission and wonder what value it is actually providing to the provision of tertiary education.

Another area that is worthy of note is the history of tertiary education provision. The previous member said that these reforms will stop the likes of twilight golf courses and other flimsy courses that we have seen over the last few years. Well, the Tertiary Education Commission does not agree. When the select committee asked it whether there were still courses being provided in this country that were of questionable academic merit, it said it could not guarantee that there were not. When we asked whether there would be further courses of questionable academic merit provided, it said it could not guarantee that there would not be, either. Certainly, in terms of this bill, it is hard to see how these changes will stop the incidents that created such huge public debate, such as the homeopathy for pets course, the book voucher bribes to increase the number of students, the radio singalong courses—people just enrolled and then, supposedly, listened to the radio—twilight golf, and the mismatch between training and actual jobs in the marketplace. We need to think about the question that if the tertiary sector is doing so well, why is the Teachers Council working with our teachers colleges, as we speak, to put in place academic standards for our teacher graduates—standards that require teachers to be able to read and write and know what they are teaching? It does not seem to be a sector that is doing as well as it should be.

We have heard a lot of jargon spoken about the tertiary sector this evening. The idea that what we are talking about here will lower compliance costs is very much open to debate. The Minister of Tertiary Education said that this bill will lead to streamlined efficiencies and a focus on quality. Well, if our tertiary providers are not focusing on quality right now, then I think that is a sad reflection on the present provision of tertiary education. The Minister said that New Zealanders will be reassured by this bill. I think New Zealanders are getting sick and tired of this Groundhog Day scenario, where they are continually being involved in a debate about tertiary education, yet absolutely nothing happens. This Government has had 8 years to make a difference to tertiary education, and we have seen very little change.

References have been made tonight to the involvement of the previous Minister of Tertiary Education, Steve Maharey. He was the person who oversaw the proliferation of a lot of community courses that made no difference to New Zealanders’ learning, added nothing to the economy, and continued to grow like Topsy and cost taxpayers a lot of money. He is probably the only Minister in Parliament who says it is a compliment to have Dr Cullen take over his portfolio. No one in this House would agree that when Dr Cullen takes over a Minister’s portfolio, it is a reflection that that Minister has done a great job in the area.

We have seen a huge amount of discussion and hot air about tertiary education, but very little has happened. It is 8 years down the track and we are still looking at reform. When will it finish? When will Labour say that it has finished its plans and put in place what it said in 1999 it would? What we are discussing here—the likes of enabling the Tertiary Education Commission to more effectively guide the contribution of tertiary education organisations—sounds good in theory, but the impact for a lot of universities and polytechs is a huge amount more compliance and many more costs associated with bureaucracy.

I would like to digress slightly for a moment. If this organisation is doing so well, why did it decide to continue to fund Case Boreham Associates, an organisation that is involved in the training of teacher-aides? Members will have heard some of the allegations that have been made about this organisation. It is an organisation that supposedly trains teacher-aides—but that is very much open to debate—and the allegations relating to the company are along the lines that money has been diverted into property deals and a whole wide range of other things. The Tertiary Education Commission supposedly ensures that there is quality within tertiary education provision, and that when we hand money to it as taxpayers we get what we pay for, and we get a quality outcome. I am wondering why we continue to allow the commission to grow when there is no demonstrable value added to the equation.

The final point I will make is there is a concern about academic freedom. If academics happen to work in a certain area that the Government does not like or is not supportive of, it will be very easy to shut them down, simply through the Tertiary Education Commission not funding that particular area of study. I would like to see protections in this bill so that the Government actually demonstrates that it is concerned about academic freedom. We have seen what the Government has done in the early childhood and compulsory sectors; this measure smacks of the Government trying to gain more control of the tertiary sector and to get it to do exactly what the Government wants it to do, as opposed to the Government trying to improve the quality of provision and make sure our graduates get what they pay for and invest in—what we all invest in, as taxpayers, as well.

It will be interesting to see this bill come through the select committee process. I look forward to submissions and to hearing from tertiary providers about what they really think. In particular, I will be asking them whether this bill adds value to what they do, what changes will be made, and whether they will be burdened by additional compliance costs as a result of this legislation. I hope the next Government speaker will explain why, some 8 years later, we are still talking about the same things that Labour said it would do when it first came into office.

Hon BRIAN DONNELLY (NZ First) : New Zealand First will be supporting this bill through its first reading, although we will be scrutinising closely one or two of its elements during the select committee process. We are supporting it because we believe it does simplify the processes currently in use to steer the system. It streamlines the processes for planning, funding, and monitoring the system. At the same time, these reforms will better align the tertiary education sector and its outcomes with the needs of our society—economic, social, and environmental.

New Zealand First sees this bill as an evolutionary step in a process of reform that extends back to the early 1990s. At that time New Zealand had the second-lowest tertiary participation rate in the OECD, which really hampered our economic development at that time. The only country we in fact bettered was Turkey. So the equivalent full-time student funding—the bums on seats approach—was set in place. It was the market philosophy, as it were, and the effect of this was to create dramatic increases in participation rates. That has to be recognised. But there was very poor alignment with society’s needs, particularly labour-market needs, and the situation was exacerbated by the uncapping of the equivalent full-time student funding. Institutions looked after their own interests first and foremost, rather than met the interests of the students or society as a whole.

The Labour-Alliance Government, when it came into power in 1999, had a Minister of Tertiary Education, Steve Maharey, who was certainly able to identify flaws in the system as it was, but he did not necessarily have the solutions. He put the responsibility for finding those solutions to a review panel, the Tertiary Education Advisory Commission. The key elements of the commission’s proposals were the bringing of all tertiary education funding under one set of policy and funding parameters, and the establishment of the Tertiary Education Commission, which was to be a funding agency to exercise a light-handed authority over the funding of courses in line with separate tertiary education strategy and statement of tertiary education priorities documents. There was no doubt the new system improved alignment, but the system, with its charter and profiles, etc., proved to be cumbersome and bureaucratic and the commission needed to take an increasingly heavy-handed approach to achieve its ends, particularly to reign in expenditure.

The tertiary reform legislation in 2002, in fact, specified that the Tertiary Education Commission would be only a secondary source of policy advice to the Minister; the legislation spelt out clearly that the primary policy advice provider would be the Ministry of Education. But it is worthwhile noting that recent accountability tools for the Tertiary Education Commission specify that it is required to be a primary policy adviser to the Minister, a situation that has shades of Fitzgerald associated with it. This legislation makes such policy primary-explicit.

As the Minister has pointed out, the bill moves away from an annually funded, demand-led, input-based tertiary system to a 3-year, controlled, output-based system. The triennial base as a funding regime in itself will cut compliance costs, and provide greater security for institutions as well as for their staff. Such a change will be of particular benefit to smaller regional institutions and many private training establishments, which thus far have been very vulnerable to vagaries in the system.

The Government will periodically issue a tertiary education strategy setting out the long-term strategy and current and medium-term priorities—in other words, doing away with two documents and bringing them into one. The Government, through the Minister, will also set out the design of funding mechanisms and establish funding levels. We all know about blow-outs, for example, in equivalent full-time student funding through private training establishments, and also 5.1 funding largely through polytechs and technical institutions. So the process will be achieved by the responsible Minister in issuing funding mechanisms that the Tertiary Education Commission will implement.

The Tertiary Education Commission will issue guidance on how different tertiary education organisations can contribute towards achieving the tertiary education strategy, in relation to content, requirements of plans, and the criteria under which plans will be assessed, etc. The bill sets out the general requirements for plans, and the Tertiary Education Commission will specify detailed content requirements in the investment guidance documents. The commission will monitor the performance of tertiary education organisations, and work with them to address performance issues and build the capability of the organisations. The important point is that the model is meant to be a collaborative one, in which the Tertiary Education Commission will work constructively with tertiary education organisations. The commission will have some flexibility to amend, review, and replace their plans. The commission will be able to propose amendments, or request that a tertiary education organisation review its plan with a view to amending or replacing it. If required, the commission itself can amend plans—and I want to make that point: the commission is being given the powers to amend the plans of individual institutions.

This is the source of New Zealand First’s concerns. The legislation makes it quite clear that in the event of a disagreement between the Tertiary Education Commission and a tertiary education organisation over a plan, the commission will be the final arbiter—no questions asked. This is potentially problematic where there is the possibility that this part of the legislation may run up against two principles, associated in particular with university education, and those are the principles mentioned before of academic freedom and institutional autonomy.

The complexities of applying those principles to a largely taxpayer-funded system was exquisitely delineated by former MP and university lecturer, Liz Gordon. The Education and Science Committee—I think it was in about 2002—was carrying out a financial review of the Southern Institute of Technology and the institute was asked upon what criteria it determined whether to run a course. The institute responded by saying that it would run a course if it had employment outcomes. Liz then posed a question that had the institute gasping. It was this: “In other words, if Tim Barnett’s bill gets through, you would run courses on prostitution?”.

I think in that question she encapsulated that fundamental conundrum that exists as a result of institutional autonomy, academic freedom and, in fact, the responsibility of Government to taxpayers, in terms of what they will fund and what they will not fund. As far as New Zealand First is concerned, tertiary institutions do not have untrammelled institutional autonomy in which they can demand taxpayer funding for any programme they wish to offer. The idea of academic freedom is more full of fish-hooks. Universities have an important role as society’s conscience and critic. They have an obligation in this respect, and this role is fundamental to the protection of our democratic freedoms. Without them, as I say, we could be in serious trouble. The question is whether the Government should have the power to shut down the teaching within certain courses of holocaust denial or claims of the intellectual inferiority of certain races. However uncomfortable we might be with the assertion, New Zealand First strongly opposes any suggestion that a Government should have such power.

The question that has to be asked is whether this legislation is giving such power to an institution, or to one of its agencies such as the Tertiary Education Commission. That is a question I think we will need to tease out through the select committee process, because if it is allowing those powers to be exercised, then New Zealand First would certainly oppose that part of the bill. We will certainly be looking carefully to see that the absolute powers being established for the commission cannot be used as a means of unacceptable control by Government over what is taught in our tertiary institutions. I thought Marian Hobbs explained it quite well by saying that, in fact, what we are talking about concerns the ideas that are taught within courses. We have no truck with the idea that institutions should be able to demand that taxpayers fund whatever courses they wish to run. However, we also would oppose any mechanisms that could be used to shut down the explorations of ideas simply because they are uncomfortable to the Government.

I just want to make one little point before I finish, which is that it is notable that within this legislation there is no reference, at all, to the principles of the Treaty of Waitangi. If members have a look at the wording that is used, they will see that it is about meeting the development needs of Māori people, which was put in the last bill by Nanaia Mahuta, but it also goes on to mention the needs of other population groups. I take credit for putting in that other part. It seems to me that the issues that need to be addressed through the so-called principles of Treaty of Waitangi clause are very much meant by the clause used within this legislation. Therefore, I reiterate that New Zealand First will support the bill going to the select committee. We will look very carefully at those certain elements of the bill during the select committee process.

METIRIA TUREI (Green) : The Greens will support the Education (Tertiary Reforms) Amendment Bill going to the Education and Science Committee, because we have long been saying that the funding system for tertiary education needs to be reformed. Demand-led funding leads to what we consider to be quite perverse outcomes and significant negative consequences for staff and students.

We were pleased to see that the proposed system is both outcome and evidentiary-based. We were also pleased to hear the recent announcement of extra funding for wānanga, polytechs, and some of the other institutions, because they will need support to deal with some of these changes. A “bums on seats” model—the equivalent full-time student funding, which is what the current system is—follows, in our view, an uncontrolled market-led approach to the provision of courses. It was interesting to hear the issues raised by some people who were concerned about the Government controlling what is taught in universities, and equally concerned—in fact, it is probably more of a concern—about industry making demands as to the provision of courses. I think that is what is happening in the current situation, and I am not sure that that is going to change under this legislation.

Currently, there is a massive increase in marketing by universities, because of the fierce corporate-type competition for individual bums on seats. Millions of dollars go into useless marketing, and those millions of dollars are coming from students, the Government, and taxpayers.

We have seen the situation where institutions offer courses that are most popular to students, and this can lead—and has led—to the elimination of well-established disciplines in some universities. Courses in humanities, women’s studies, religious studies, and Islamic studies have been cut because, comparatively, the student numbers are low in those courses. Many universities require each department to operate as a stand-alone business unit, and place unrealistic funding targets on those departments. The failure to meet those targets leads to the reduction in size of that department or the elimination of courses. It is not that these departments run at a loss; they are paying their own way, but they are just not meeting the profit targets set by the university. It is those kinds of corporate requirements—business-type requirements—on a public tertiary education system that seriously erodes it. The current kind of funding model reduces the range of options for students because of that industry-led approach. It also plays far too heavily towards the job market, rather than developing and maintaining a system that promotes education for public and societal benefit.

There remains, of course, a very large elephant in the room: student fees should be addressed as part of these reforms. The fee maxima system does not manage to control fees as it was promised to do. That is because the institutions have been seriously underfunded for a very long time—well before the time of this Labour Government, but this has continued through its term—and the universities have been managing the shortfall through students and the student loan scheme. Of course, that underfunding has driven student debt to a level now well over $9 billion. So a new funding mechanism and a new management mechanism for the sector is very welcome, as long as it comes with better funding, as well.

That said, we do have some concerns about the bill. Again, we are not so concerned that the tertiary provision is being controlled by Government but, rather, that the industry-led approach is being retained in this bill. The reforms are heavily dependent on the tertiary education strategy. We have criticised this strategy in the past for being too heavily focused on meeting the needs of business, developing commercial opportunities, and achieving economic growth. Those things are all fine and laudable in their place, but they should not be predominant.

We remain concerned that there is no priority goal that would enhance the strength of civil society, enhance the strength of our democracy, or foster environmental sustainability. This is coming at a time when the Prime Minister is publicly promoting her goal of New Zealand being carbon neutral and sustainable, so it is disappointing that the strategy is so weak on the contribution that tertiary education would make in achieving those goals. We believe that every aspect of Government policy must embrace sustainability, but it is perhaps most important that our education sector provides students with the knowledge and the skills that they need to combat the serious environmental challenges we face now and will continue to face well into the future. We need an education system that does not just meet the needs of business but provides for all New Zealanders to have access to public education that benefits the whole community. The needs of business are important, and they do matter. Having a highly skilled workforce is also very important in filling the gaps where they exist. I agree with Michael Cullen that that is an important goal too, but these goals must not come at the expense of a broad and well-funded public tertiary education system.

The strategy is very thin on valuing the role that arts and humanities play in New Zealand. We are concerned that these reforms may further undermine some of those already much-depleted departments—some of which I have already described. A system that is based so closely on this strategy requires that the strategy be of the highest quality. It requires a strategy that prioritises the cultural, social, and environmental goals of the community—and prioritises them at least as highly as the economic ones. Economics and economic growth, and all of those things, are tools for the well-being of the community as a whole, not end goals in themselves. But that is not yet the case in this strategy, and until that changes we will continue to have the same sorts of problems in our tertiary education sector that we are seeing now, despite the reforms.

Secondly, the new role of the Tertiary Education Commission involves it using tertiary education organisations to piece together a jigsaw for fulfilling the strategy. This is a much more important and demanding role for the Tertiary Education Commission, and we have concerns that it will neither be properly resourced nor properly prepared to manage those new demands. We would expect that the adjustment process—presuming that the legislation is passed in some form—will cause real problems as the adjustments are made. We want to investigate, through the select committee process, how that adjustment period will be managed in order to reduce the strain on an already highly strained tertiary education sector.

Finally, the tertiary education organisations that have ballooned under the demanding system are likely to be told to limit places and courses that are deemed by the Tertiary Education Commission to be of lower value in achieving the goals of the strategy. Although in some limited cases this might be a good thing, it will also mean that some students will be denied entry into courses they choose. They will be denied not because their grades are too low for them to manage the content but simply because there will be no places available for them. Some of those students may enrol in a different course of study, but some may decide not to pursue tertiary education, at all. So there needs to be a system that will manage the discrepancy caused by the change in the system and will reduce the risk of the exclusion of students—that needs to be managed very carefully.

Overall, we are very pleased that the bill has finally come before the House. We are very interested in exploring it more, because reform is absolutely necessary. But, again, our concern is not that the Government will control the content of courses but that the continued pursuit of economic growth will, above all else, continue to cause the sector enormous damage. We would like to see some of that reformed, too. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) :Tēnā koe, Madam Assistant Speaker. Kia ora tātou katoa e te Whare, a tātou e hui neiiteneipō. If there is one concept that any party would like to support in tertiary education, it would be strategic relevance. Today we are encountering systems upon systems of arrangements to plan, to fund, and to monitor the tertiary education sector. We have the Tertiary Education Commission—the TEC—which is the lead agency to steer the system. We have the tertiary education strategy, known as the TES, and we have the statement of tertiary education priorities, known as STEP, which is two documents that will be cut down to one single document—the tertiary education strategy—by the Education (Tertiary Reforms) Amendment Bill. We have the tertiary education organisations, known as TEOs, which currently submit two types of documents to the Tertiary Education Commission, namely charters and profiles, which this bill proposes to whittle down to a single document called a plan.

A person could get very confused with all the acronyms alone—TEC, TEOs, TES, STEP, and the like. Let me add one more to the mix: EMRG. Or two more: MTEF—Māori tertiary education framework—and the Māori TES. For Māori we have the Tertiary Education Commission’s external Māori reference group, known as the EMRG, whose purpose is to provide the commission with a collective Māori view of all the streams of tertiary education at a strategic level.

In the midst of all these arrangements, the proposal to simplify and streamline the system is obviously really welcome, but simplicity is one thing, cultural competency is quite another. The Māori Party’s key concern in relation to the Education (Tertiary Reforms) Amendment Bill is how tangata whenua will fare within the staged system of reforms of the tertiary system instigated by the Tertiary Education Commission. So we come to the bill knowing that only a society that knows where it comes from, and the forces that shaped it, is in any position to understand itself and know where it is going.

A key point we would make is that there is a huge difference between what Māori see as strategically relevant to the survival of Māori as a people, and what the Crown may see as strategically relevant to the economic growth of the nation—a huge difference. An analysis might be brought to us by way of a statement from Russell Bishop and Ted Glynn in 1998, when they said: “If one lesson is clear from the history of our country, it is that the imposition of a model of change from outside of the experiences, understandings, and aspirations of the community group is doomed to fail—failure, that is, if the objective is other than assimilation or the perpetuation of a situation of dominance and subjection.”

When we turn to the previous tertiary education strategy 2002-07, Māori are positioned first as national citizens rather than as tangata whenua. Although the strategy sought to articulate a vision of “a prosperous and confident nation supported by a unified and connected tertiary education system”, it minimised and relegated the relevance of tangata whenua to sideline roles as players in the marketplace.

In another reversal of strategic relevance, Treaty partnerships were not defined as parties to the Treaty but were instead fashioned as merely one of a number of stakeholder groups, and probably last in the line after partnerships with business and industry.

From looking deeper into the detail of what has gone before, we find that in the Māori chapter, Te RautakiMātaurangaMāori, contribution to the achievement of Māori development aspirations, there was a raft of statements about being accountable to Māori communities, and about governance structures and processes that will meet the expectations of Māori communities. But where does it say that these things have been achieved or that they have even been monitored? Nowhere. That is because these things have not been actioned at all—out of sight, out of mind.

Where does this leave the Treaty, then? Does that mean that if it is not written in, it will somehow be included? It is sort of like the references to the Treaty being deleted from the New Zealand curriculum. In the first instance, whoops, a mistake is made, and back in it goes.

These are the questions I have asked when considering the proposal to consolidate the four tertiary education steerage documents into two. On closer reading of the bill, what I have found is missing is any requirement on tertiary providers to demonstrate a commitment to the principles of the Treaty of Waitangi, as was required in the predecessor documents, charters, and profiles. It does not seem to be around.

Under section 181(b) of the Education Act 1989, this is still a requirement. Unfortunately, the Māori Party is a little bit concerned that the Māori MPs in Labour have sat quietly while the deletion of the Treaty has been put in place here and cut out of the policy. We might add this to the report card on the Treaty deletions this Government is clocking up: the Treaty taken out of the draft school curriculum, done; the Treaty deleted from health specifications, done; the Treaty deleted from legislation, in progress; and the Treaty taken out of charters and profiles, in progress.

Fortunately, the public does not support the “slash in silence” approach of this Government and they have acted in ways that seek to restore optimism for the Treaty-based future. So just as health providers have reacted angrily, and schoolteachers flooded the Ministry of Education with their objections, we will be looking to the select committee process for the voice of New Zealanders to be once again heard in upholding the mana of Te Tiriti o Waitangi. But unfortunately again it shows that our Māori caucus colleagues in Labour may be having their voices suppressed. It also makes us suspicious of the nature of the consultation process that the Ministry of Education and the Tertiary Education Commission have, or, more likely, have not, gone through in order to get to this point.

Have they fulfilled their obligations to consult with Māori, hapū, iwi, staff, students, and communities about how best to support and advance the developmental aspirations of Māori, and is this consultation actually apparent in the bill, in the new tertiary education strategy, or even in the promised but yet to be seen Māori strategy? Or have they succumbed to what the renowned educationist Paulo Freire called domestication—being trained to obey—rather than what he believed education should be doing, which was about liberation, to be able to explore and think freely and to think for oneself?

Our consultation as the Māori Party with Te Mana Akonga, the national Māori tertiary students’ association, tells us that in far too many instances the tertiary education organisations are failing to adequately consult with Māori in developing charters and profiles, despite the legal requirement to do so. In some instances consultation with Māori students has consisted of a letter informing them of what has already been determined. In other instances the content and concerns raised in submissions and hui have been inadequately reflected in charters and profiles, or not reflected at all. But when this lack of consultation has been raised with the Tertiary Education Commission, there has been no evidence of any action having been taken.

I have taken a little bit of time to outline some of the important background to this bill. Whilst we support moves to clarify and simplify procedures, the overriding concern is that the new changes will be beset by the same problems as the parent documents. The key limitation with this new set of reforms is that until there is a clearly outlined and specified relationship between both the tertiary education strategy and the yet to be released Māori tertiary education strategy, particularly in relation to provider compliance and Government monitoring, there is always the risk of disconnection.

We in the Māori Party have a particular reason for concern when I think back to some of the questions I got to put to the Tertiary Education Commission at the Education and Science Committee recently. I asked questions about how one would judge whether courses are relevant, and received the answer: “TEC does not judge cultural relevance.” Further, they do not have any criteria, any systems to assess cultural relevance. Under those conditions, is it likely that courses that are seen by Māori as relevant and about the survival of Māori language and culture are accepted? Probably not. Yet the Tertiary Education Commission is charged with the role of planning, monitoring, and funding the tertiary sector specifically in relation to relevance.

The Māori Party has more questions than it has answers about this bill. We have questions such as whether without a specific Māori focus or Māori chapter in the new tertiary education strategy, will Māori issues fall off the table? When can we expect to see the proposed separate Māori strategy document that was meant to be released at the end of April 2007? What will be the level of connection between the Māori tertiary education strategy and the tertiary education strategy? How willing will the Tertiary Education Commission be to ensure that tertiary education organisations consult with Māori in the development of their plans, particularly given that they do not have a good record of doing so?

We will support this bill, because we support the general concept of simplifying and streamlining an overly complex system. However, we will be keenly watching the select committee process to assess how well this bill responds to the imperative of delivering what Māori see as strategically relevant to the survival and flourishing of Māori as a people.

JUDY TURNER (Deputy Leader—United Future) : I stand to speak on the first reading of the Education (Tertiary Reforms) Amendment Bill 2007. Let me say straight up that United Future will be supporting this bill going to a select committee because we certainly like the intentions of the reform. These intentions are to reform the planning, the funding, and the monitoring of tertiary education and services. The claim by the Government is that this bill will streamline the system—and we all acknowledge that it sure needs that—and that in so doing it will reduce compliance costs for those who are providing tertiary education.

My experience to date—in the last 12 months in particular—has been as a result of the contact I have had with private providers within the tertiary system who have had some real difficulties in gaining certainty around the continuation of the courses they offer and the funding from the Government.

There seems to be three areas in which planning and responsibility will be identified. The first is the Government’s own responsibility. Its responsibility will be to set up a long-term strategy for the delivery of tertiary education services, and it will, obviously, determine the level of Government investment into this area. As well as determining how much money it will be throwing at tertiary education, the Government will also be determining the allocation throughout the sector, including its role in deciding how priorities are set, balancing priorities such as teaching, research, and the organisational development of providers.

Then we have the Tertiary Education Commission. It will be issuing providers with a set of guidelines that outline the Government’s strategy. It will be approving plans for funding, and will be monitoring performance.

The providers themselves, of course, are the third tier and they are required to prepare plans. The difference is that they will now be preparing those plans in consultation with the Tertiary Education Commission. I think this has huge potential for good. Instead of turning up with a plan they hope will get a tick from the commission, providers will be working with staff from the commission from day one, and will be demonstrating how their priorities can integrate with Government priorities. It is in everybody’s interests for that to happen. The plans will clarify what funding is required and how outcomes will be demonstrated to the commission and to the Government, which is a good thing. The collaborative way in which plans will be developed will reduce the risks for providers so that they no longer have to try to second-guess what the Government is looking for.

We are also pleased to see a move towards 3-year planning cycles, which should give a lot more certainty to providers. However, the Tertiary Education Commission is not obliged to approve the full 3-year plan, and United Future will be keen to hear what submitters say in response to that. Will that provision undermine the new promise of certainty? The ministry has stated that this new 3-year cycle will create greater flexibility so that organisations will be able to amend, review, and replace their plans during a cycle without risking funding projections, because, of course, those amendments and changes will be made in consultation with the commission. So it has some potential for flexibility.

The bill also aims to simplify accountability arrangements that improve transparency. We have heard a number of horror stories over the last few years that signal we need to make some changes in this regard. Providers now have a single relationship with the commission. This certainly sounds like an improvement. I have had contact with providers who were selling their tertiary business but the sale was held up because they were waiting for the Minister to rubber-stamp the charter, which had remained unchanged for years and was still in its original form. They could not sell the business and they could not get approval from the commission for the new owners until the charter was re-rubber-stamped. Delays often made for real difficulties, so I am sure providers will appreciate having one relationship, particularly as this relationship is to be collaborative.

United Future, however, would like to signal one caution over this single point of contact with the Tertiary Education Commission. It includes no independent arbitration provisions. So when disagreements arise, the Tertiary Education Commission will be the final arbiter. This is particularly concerning when considering the fact that the commission can suspend or revoke funding. Although the Government says this will be a last resort provision, we would like some reassurance. It concerns us that the Tertiary Education Commission becomes a powerful agent to determine the future of a provider that may have been considered a valued contributor up to that point where a disagreement arose. So although we are happy to see this legislation move to a select committee, we, like other parties, want to hear some feedback from submitters around that particular issue. We wonder and question whether there may be a need for an independent body to arbitrate between the commission and the provider when a disagreement arises, so that there is a fair and equitable outcome. Providers will have negotiated at least a 3-year plan, and to have the funding rug pulled out from underneath them because of a disagreement over some matter seems to be unfair and of great concern.

As with the New Zealand First speaker, Brian Donnelly, United Future agrees that not everyone who wants to be a provider can just put up his or her hand and expect to get Government funding. The Government needs to be wise in the way it allocates money. It needs to make sure that all of the tertiary education sector lines up with things such as the workforce needs within the labour market, and, certainly, that it is future-proofing certain professions. We have some real concerns around the direction that some of the medical sciences have been moving, in regard to future planning. We seem to be exporting a lot of our talent. We are very interested to see the kinds of things that come back from submitters during the select committee process, However, we are very pleased at this stage to support the bill at its first reading.

MOANA MACKEY (Labour) : I am very happy to take a brief call in the first reading of the Education (Tertiary Reforms) Amendment Bill. I think most of the issues have been canvassed very, very well and repeated often during this debate. Certainly, I think members in this House are very aware that this is incredibly significant legislation. An awful lot of work has gone into preparing this bill. The tertiary sector is a sector that, of course, covers many, many varying types of organisations that have different interests. I am sure that it has not been easy throughout the process of working with them on this bill to come up with a model that provides for all the types of institutions that we are talking about and does not treat them unfairly.

I look forward to this bill coming to the Education and Science Committee, which I am on. I am sure it will have much robust debate and I am sure we will get many, many submissions. Knowing the way our select committee works, I can say there will be a genuine will on the part of the committee to make the bill better in any way we can and to ensure that we can get as much support for it in this House as possible.

On that point, there does appear to be genuine consensus in the House, even from parties not supporting the bill, that changes need to be made. Some concerns have been raised that will need to be picked up by the select committee around some of the aspects of the bill in terms of the powers of the Tertiary Education Commission in disagreements. That appears to be a point of concern amongst parties in the House, and I think it will be a point that the select committee will look at. There does seem to be genuine consensus that something needs to be done in this sector, though obviously there is some slight disagreement over whether this bill is the vehicle to do that.

I believe that this bill will go a long way towards addressing many of those concerns and towards ensuring that taxpayer investment in the tertiary education sector is providing outputs of quality and not simply of quantity in terms of students. It is important to acknowledge that we have a lot more students going into the tertiary education sector now. That has had its good and bad points. Students are also now coming out of tertiary study with big debts, which have provided other challenges the Government has had to address in terms of the way we look at student support funding and, of course, interest-free student loans. It has had a lot of spin-offs. I believe this bill will go a long way towards addressing some of those issues, as well.

One of the comments I hear most often from people who come in to discuss tertiary education issues is their concern over the amount of money that appears to be spent by institutions on advertising and on competing with each other, which we have seen in the past, in order to get the students—the bums on seats. If that money was not being spent on advertising, and if we had far better understanding and cooperation within the sector, where could that money go? Could it go towards reducing the cost to students of tertiary study, towards salaries for the staff who work in the institutions, or towards more research and development work in some of those institutions, as well?

We have had an attempt at a market model for a long time in our tertiary education sector, and I guess the problem has been that the right drivers have not been there. Any Government would hope that the drivers in the tertiary education market would be those of economic development, of responding to industry needs, and of responding to the needs and priorities of the Government in terms of growing the economy and providing a skilled workforce.

Unfortunately, I think that in many areas of the tertiary education sector the short-term focus on simply keeping one’s head above water has taken precedence over a long-term focus about what is best in each region and for each regional institution, polytech, or private tertiary education provider in terms of its strategic vision. The long-term has simply not been the focus, and that is why we have seen the proliferation of courses that are cheaper to run, that grab an awful lot of students, but that do not provide the quality for money that taxpayers expect from their investment in the tertiary education sector. After all, we need the right mix of skilled graduates to transform our economy, and at the moment the sector simply is not responsive enough to those needs. We hear that message from employers and from business and industry groups, who tell us they need a tertiary education system that is far more responsive to the needs of the sector and far less focused on simply putting bums on seats and bringing in the equivalent full-time student funding that provides the money for the institution to keep going.

This is certainly something we have seen in our regional polytechs. When I have spoken with regional polytechs, they have been quite candid about the fact that a lot of times they have been focused on their short-term survival. They have had some very good years when they have offered some questionable courses—many of which have been raised in this House. In those years they did very, very well financially. When there is that kind of incentive driving the strategies in the tertiary education sector, it is clear that the model we have is not working.

This bill introduces a law that is needed to give effect to these reforms, and I believe that it will provide the tertiary education sector and organisations with a simpler and more streamlined relationship with Government. I do not believe that anyone would disagree with the need to streamline that relationship. The relationship has developed over time, grown a life of its own, and had add-ons here and there. This complete relooking at the sector is a good thing, particularly for the taxpayers, as well as for the stakeholders in the sector itself.

The bill streamlines the system, it provides a much more simplified set of steering instruments—which I am sure the sector will welcome—and it also provides the Tertiary Education Commission with a broader range of options for guiding the contribution of tertiary education organisations and monitoring their performance. That is something we have had difficulty with in the past. The bill also clarifies the accountability of the tertiary education organisations for the expenditure of public funds. It is only fair to them that we are quite clear at the beginning, when they are doing their 3-year plans, as to what is expected, so they can then have not only the funding security but the security of knowing that what they are doing is feeding into the overall vision of the Government and safeguarding the Crown’s interests in such organisations—which, as previous members have indicated, is not insignificant.

One of the other issues we have seen in some of these institutions is the propensity to move to much cheaper courses. For example, we need a lot more scientists in our workplaces, but, of course, science courses are very expensive to run, because for each student that goes into a science course there are significant costs. If we look at some of the other courses such as humanities courses—and we do not want to constantly pick on the humanities—we see that the same costs can cover hundreds and hundreds of students. It does not matter how many students are brought in; the cost of the overall course remains the same, because we are not dealing with things like labs and all the costs that come with the equipment, the reagents, and everything else that is needed. So we have seen a propensity sometimes to move away from areas like science, which is, in fact, one area where we need a lot more investment and a lot more focus in terms of the needs of our economy over probably the next few decades.

The reforms in the bill introduce a new investment system, and, as the previous speaker from United Future said, planning, funding, and monitoring will be aligned to ensure that the system delivers for all stakeholders. At the end of the day, that is what the bill does.

As I said before, I am sure we will have a very robust debate on this bill in the Education and Science Committee. It is almost hard to stand up and give a speech on the bill now, because I am sure there will be much debate and many changes mooted in the select committee. I look forward to that process. Certainly, we want to encourage anyone to make a submission on this bill. It is of incredible significance. In terms of the economy and economic development in New Zealand it is probably one of the more important bills to go through. We want to ensure that all areas of the tertiary education sector are able to have their say, that this bill advantages as many as possible, and that we are not adversely disadvantaging any areas of the sector. It is a diverse sector and it is a complex sector, and it is not easy writing legislation that covers all of it. This is a very, very good bill, a very, very good first step, and I look forward to the select committee process working on improving it further.

ALLAN PEACHEY (National—Tamaki) : Before I address the particulars of the Education (Tertiary Reforms) Amendment Bill, I will pick up on an admission made by the Minister for Tertiary Education, Dr Michael Cullen, who also happens to be the Minister of Finance and Deputy Prime Minister, in his opening remarks with regard to the bill. He told this House that he was a former university lecturer. He also told the House that the Prime Minister was a former university lecturer, and, what is more, that the Minister of Education himself was a former university lecturer.

Two things occurred to me. One is that that is a pretty thin base of life experience around which to build a Government. The second thing is that it sort of confirmed for me what the good working people of the Panmure and Glen Innes communities of my own electorate of Tamaki tell me when I catch up with them at the weekend. They tell me that the problem is that those Labour jokers in Wellington have lost touch with the working man, and that they do not know what it is like to get a bit of dirt under their fingernails. Maybe that is the problem. The Education (Tertiary Reforms) Amendment Bill is wrongly named. It might perhaps more aptly have been called the “Education (Create More Bureaucracy) Bill”, or, even more accurately, perhaps, the “Michael Cullen Has No Idea (Once Again) How To Clean Up The Mess Bill”. That is what the Government is trying to do with this legislation—to clean up a mess that its own former university lecturers have created in the tertiary sector.

The National Party, on whose behalf I am speaking, is opposed to the bill, just as it is opposed to any extension of bureaucracy, in any form whatsoever. We are certainly opposed to the further bureaucratisation of our universities and of our tertiary sector in general. We know from history the impact that meddling by left-wing Governments has: it is one of mediocrity. That will be the downstream effect of this Government’s continuing interference in our tertiary education system—further Government-encouraged mediocrity.

The Minister, in his first reading speech, made a number of big claims about what this bill will do. Those claims have been supported by subsequent Government speakers. But a couple of questions have not been addressed. For example, how does creating more bureaucracy, as this bill does, improve academic standards? How does creating more bureaucracy, as this bill does, protect and ensure the academic freedom of our universities? For 8 years now we have had a Government whose policy in the tertiary education field has been marked by confusion, by unwise expenditure of taxpayers’ money, and, worst of all, by waste. That, of course, is the problem with left-wing Governments: they waste other people’s money. They spend and tax like there is no tomorrow, and they squander the money of their fellow New Zealanders.

Members should be in no doubt: the big expanded bureaucracy that this bill will create and perpetuate will be expensive, it will be cumbersome, and it will be lethargic. The bureaucracy that has been created will be too cumbersome to be responsive to New Zealand’s changing economic environment, and it will be too lethargic to respond to the changing economic environment in which we find ourselves.

I wonder what happened to those simple times when New Zealand tertiary education policy could be run perfectly competently by half a dozen people sitting around the table and making simple, common-sense decisions. Let me tell the House what has happened. This bill is the work of a Minister appointed after the last general election to clean up the mess left behind by the previous Minister. That, of course, has become the shape of this Government. The Prime Minister reshuffled the deckchairs, and it has fallen to Dr Cullen to clean up the mess left behind by his fellow former university lecturer, Mr Maharey. Talk about a hospital pass! But at least there is some justice in this world. Dr Cullen cleans up after Mr Maharey, and Mr Maharey finds himself cleaning up in education after the mess left behind by Mr Mallard. It is all a bit of a circus, really. Just as Dr Cullen has demonstrated that he has lost control over finance policy and that he has little understanding of the real nature of the New Zealand economy, so he is now demonstrating that he does not know what to do in tertiary education. He actually does not know how to fix up the mess inherited from his predecessor.

So what does he do? Given that he has no idea how to clean up the mess, he falls back on that good old left-wing stand-by: create and expand the bureaucracy. That is how it is for the Government. Look at its history over 8 years—appoint a Minister, create a mess, and then appoint another Minister to clean up the mess. That means an even bigger mess that has to be cleaned up. There is more bureaucracy, there are more bureaucrats, and, most worrying of all in terms of tertiary education, there is more threat to academic freedom and standards and no addressing of the real issues that surround tertiary education in New Zealand today.

How will the huge bureaucratic machine that is being created by this bill produce more of the type of graduates that New Zealand needs? The last Government speaker touched on that. How will this bill help to produce more of the world-class scientists that this country needs if its economy is to grow? How will this enhanced bureaucracy create more of the engineers that we need? Just as important, how will this bill stop youngsters being lured into tertiary courses that sound exciting to them at the moment, but for whom there are insufficient sustainable career opportunities on graduation. This is an expensive waste of an opportunity for those youngsters. It is an expensive waste of an opportunity for our economy, and if there is one thing that we know, it is that increasing and expanding bureaucracy, and the lethargy that that creates, in no way will address those fundamental imbalances.

That is something that this Government just does not understand. How will the proposed massive expansion of bureaucracy that this bill proposes produce world-class universities for New Zealand students? How will the massive expansion of bureaucracy that the bill proposes produce the higher-quality research-based teaching that our students need if they are to be the best in the world and if they are to create the sort of economy that New Zealand will need in order to retain the best and the brightest in the world in this country?

So let us be very, very clear. This is a process of untidy Government. The Education and Science Committee will face a major challenge in working its way through what is really quite a complex, complicated approach to a relatively simple, straightforward challenge. I am looking forward to working on that committee and to receiving submissions, and I live in hope that the quality of submissions that the committee receives and the rigour of thought that members of that committee will bring to that process will produce a bill back here that will be far more significant and straightforward than what is being proposed at the moment. As this bill stands, it will not work, and the National Party opposes it.

DIANNE YATES (Labour) : I rise to speak on the Education (Tertiary Reforms) Amendment Bill. I must say that that was not the most erudite speech on education I have ever heard in this House. In fact, I would say that it was rather devoid of ideas and alternative policy; it was a knee-jerk, negative rant rather than an informed and erudite speech on tertiary education.

Last week the University of Waikato held a stakeholders’ breakfast. That stakeholders’ breakfast is the type of thing this bill is talking about. The university meets with people in the community who are interested in what the university is turning out, the types of courses it is running, the sorts of graduates it will produce, and how it will meet the needs of the community. I congratulate the university on working towards the type of plan that is referred to in this particular legislation.

This morning the Waikato Chamber of Commerce had a meeting, which was addressed by Graham Smith. Graham Smith is the man who is responsible for Katolyst. “Katolyst” is a combination of the words “Waikato” and “catalyst”. It is to do with the Waikato, and is about what actually gets things moving in the Waikato. Katolyst is the economic thinktank, basically, of the Hamilton City Council. One of Graham’s topics was the close relationship that has been built up between the university and its stakeholders. That is an example of what this bill is talking about, how this bill will actually work out in the community, and the types of things that will happen. Employers will come, chamber of commerce members will come, and Export Institute people will come and have a closer relationship with the tertiary institutions—with Wintec, our local polytech, and with the university and other providers—and they will work together. They will provide for the students.

Let me talk about what the bill does, why it does it, and how it does it. This bill will ensure better value for the investment by taxpayers, and contribute to even better education for students. That is what it will do. It will build on our investment in tertiary education. It changes the system for planning, funding, and monitoring the provision of tertiary education. It will put national goals and priorities at the centre of the tertiary sector’s focus. As Michael Cullen has said, that does not mean completely utilitarian tertiary education that teaches only skills, because in order to be a skilful person, one also has to be able to reason. People have to know why they are doing what they are doing, and its purpose. Having been involved in skills teaching in another life, I know that there is research that shows that if people understand why they are doing something, then they are better able to do it and they are better able to cope when things do not go exactly according to the book.

What else will this bill do? It will aim to deliver the right mix of skilled graduates who are needed to transform our economy and to do research that is relevant to businesses, industry, communities, and the country. I know that somebody recently was given a reasonable amount of money to do a PhD on research related to bogans and pop music, as far as I can understand it—heavy metal or whatever—and people asked what on earth that has to do with New Zealand. Well, those people do not understand that music and appreciation of music, at all its various levels, is what New Zealand is particularly good at. I was actually saying in the House that day how bizarre that was, because I was thinking of how much money the song “How Bizarre” had made for New Zealand. It is interesting that New Zealand does have an international reputation in music, and music is an export business.

The bill also introduces a law to give effect to reforms to make things, as has been said by speakers on all sides, simpler and more streamlined.

• Sitting suspended from 6 p.m. to 7.30 p.m.

DIANNE YATES: Before the dinner break I was talking about what the bill does, and I will now go on to why it does it. So we have done the what; now the why. Largely it is because of policy and the fact that prior to this there was little cooperation across the system. In the 1990s we had a very competitive model. I heard Alan Peachey talking before the break about how he did not like this bill and preferred the competitive model. He suggested that under this bill there would be waste. My goodness, what a lot of waste there was under the competitive model! There was lots of repetition, lots of small institutions competing against each other, and lots of Government money going into the private profits of the institutions that were set up. There was a tremendous amount of waste and a tremendous amount of duplication. I think Mr Peachey needs to take a really good look at what was there before. As we heard from his speech, he has come up with no alternatives—just a lot of rhetoric about the system.

We know that the system became more homogenous, we know that the research role of universities was placed at risk, we know that competition drove up the cost of providing education, and we know that trades and technical training were placed at risk. In fact, during question time today we had a discussion about apprenticeships, and we know that, at least, we now have the Modern Apprenticeships scheme, which is part of our tertiary system.

We know that in the 1990s National sought to develop a marketplace in education, and that tertiary institutions became competitive. In fact, whenever I put my head in a university I heard that the universities were wasting so much energy on competing against each other. Students were told that education was substantially a private, not a public, good, and that research was undertaken to meet private requirements and was not available publicly. Commercialisation and eventual privatisation of tertiary education were the National Party’s agenda. That is why we have these changes.

One of the changes in this bill that is very, very pleasing to someone who remembers that there was such a thing as a quinquennium at universities—

Darren Hughes: A what?

DIANNE YATES: A quinquennium—a 5-year system of funding, under the University Grants Committee. This bill brings in a 3-year system, rather than a 1-year system, so that people—

Darren Hughes: The good old days were good after all.

DIANNE YATES: Yes, the good old days were good after all. But now we are going to a 3-year system. That means institutions can plan and are required to plan. That means better recruiting of staff, better retention of staff, and more certainty for students. So I thank the Minister for Tertiary Education for introducing this bill and introducing greater stability in the system. As I have said earlier, the stakeholders will be pleased with that as well, especially as they are involved in this planning process. So we thank the Minister for this bill.

We note that 3-year plans will be put into force, and we also note that there will be a greater emphasis on standards, and the Government’s priority is to ensure that there are more students at higher levels—diploma level and university level—which will create people who are far more employable and have the skills that many employers are crying out for.

I totally support this bill. I think it is, perhaps, long overdue, and we look forward to its implementation. I have already praised the University of Waikato for having a stakeholders’ breakfast last week. Our local chamber of commerce had a stakeholders’ breakfast to discuss many of the ideas that are included in this bill. No doubt it will be making submissions, and I will be encouraging it to do so. We look forward to the input of those submissions on the bill. I am sure that most of the submissions will be positive and constructively support the bill. Once again, I note that we have a bill that sets out to simplify and streamline—those two words can never be bad—the tertiary education system, and to bring about tertiary education reforms that will benefit not only students, staff, the institutions themselves, and employers but society as a whole. It is recognition that education is a public good for the benefit of New Zealand.