by ROGER SMYTH

Around 12 years ago, just as the Australian government was preparing for the introduction of demand-driven funding for HE, I was invited to speak at a conference on the implications of the impending change.  My topic was “How did demand driven funding of tertiary education work in New Zealand and why did NZ abandon the system?”

And then, in 2015, as a new Australian government moved to deregulate fees, allowing universities to set fees based on their own assessment of demand and cost, I was invited to speak at another conference. My topic – “How did the deregulation of tertiary education tuition fees work in New Zealand and why did NZ abandon the system?”

Both of those policies were introduced in New Zealand in the 1990s, when I was working in a senior management/ analytical/ policy role in a university. By the time they were wound back by the NZ government, I was a manager in the tertiary education group of the Ministry of Education. So I saw these policies from both a sector perspective and from a policy/government perspective. I knew what I was talking about. And I had written on the recent history of the NZ tertiary system. That’s why the conference organisers thought my contribution would be useful to attendees from the Australian HE system.

Those attending the conference listened politely but were more focused on the serious business of how to make these proposals work in the Australian HE system. During a tea break, one respected professor assured me that the problems and risks that had led the NZ government to abandon demand driven funding in favour of demand led funding simply couldn’t occur in Australia. Australia, he assured me, had all the checks and balances in place; demand-driven funding would endure, he predicted confidently.  Indefinitely.

Common solutions to common problems

There may not be any formal official trans-Tasman policy exchange in tertiary education. But often, the two governments mirror the other – consciously or unconsciously. The NZ government adapted and adopted Australia’s income contingent loan scheme. Equally, many Australian tertiary education policy ideas, good and bad, have followed measures tried, with or without success, in NZ.

Now we have déjà vu all over again!

After nine years of radical, but sometimes ill-considered policy ideas from a centre-right government, an incoming Labour government set up a think-tank of experts to reimagine the tertiary education system, to advise on how to reshape the strategy for the system and thus, rebuild the trust of the sector and of the public. That was New Zealand 1999. And also, Australia in 2022.

In NZ in 1999, the incoming government had tapped into sector and public disaffection with the system. The previous National government had introduced a range of measures that built on a restructuring of the system by the previous Labour government – deregulated fees to complement progressive cuts in funding rates, broadening private sector access to tertiary education funding, a transformation of workplace-based vocational training, moving to demand-driven funding … . But as the 1990s advanced, they looked for further, more radical policy change. They used a series of green papers to set out a bold – but potentially destabilising and certainly unpopular – reform package, much of it not implemented when National lost power[1]. And institutions had become used to the charms of unregulated fees, resulting in higher student loan balances (that were subject to a market-related interest rate), causing concern to parents and grandparents as many graduates fled the country to escape repayment. The incoming government set up a body – the Tertiary Education Advisory Commission (TEAC) to help it sort out the problems.

In Australia in 2022, after the 2015 reforms failed to get through the legislature, you were left with the Job Ready Graduates scheme plus a threat of a ministerial power of veto over research funding grants. So now, you have the Australian Universities Accord.

How the NZ advisory commission reforms played out

The TEAC developed reports that led to thousands of submissions and, finally, to a set of proposals for the system, many of which the government adopted. There was a new approach to setting the strategic direction for the system, with the government required to consult on and publish a strategy for tertiary education[2]. A new provider-planning process was created (that owed more than a little to the Australian approach) that requires providers to demonstrate how they aim to advance the goals of the government’s tertiary education strategy.  Research funding was transformed.

A new agency was created – the Tertiary Education Commission (TEC) – that was given responsibility for administering all types of post-secondary education – workplace-led VET, institution-led VET, higher education, adult literacy and numeracy, community education, active labour market programmes. The lot. Plus ensuring that funding is allocated in ways that support and further the government’s current published tertiary education strategy. And for allocating funding, within policy parameters set by government.  And for monitoring the performance of institutions. More about the TEC below.

Separately, the government moved to re-regulate fee-setting, to control (and eventually eliminate) interest on student loans. And it shifted from demand-driven funding to a demand-led system (where there is a funding cap adjusted annually to meet anticipated demand).

Yes, in many cases, the TEAC experts came up with mechanisms that were over-engineered and that later had to be simplified and refined[3]. And a number of recommendations were inconsistent with other strands of government’s policy and thus, not accepted[4]. And the initial tertiary education strategies were so long, multifaceted and diffuse that providers were able to reverse engineer their existing plans to demonstrate their fit and hence, avoid having to change – so subsequent strategies were sharper, more directive, more performance-focused.

Crucially, both main political parties ended up buying into the new blueprint. So, more than a decade after TEAC finished its task, much of the underlying system architecture has endured. There remains a broad political consensus on the system design. Overall, the reforms are still working.  Sore points have been soothed. Problems arise; there are changes every year.  There is sometimes controversy.  But the focus now is on marginal improvement within a sound foundation[5].

If settlement – consensus and a stable policy architecture – are all the Australian Accord achieves, that may be progress – a modest gain, but a gain, nonetheless. Literally, an accord.

A tertiary education commission for Australia

Of course, over here, on the eastern edge of the Tasman, ears pricked up at the mention, in submissions to the Accord, of a tertiary education commission for Australia. The TEC is something we Kiwis know all about – we have one of those! Now I have read only a fraction of the accord submissions and of those that I have read, only three have referred explicitly to the idea of a tertiary education commission – the Go8 is in favour and the TAFE directors are against[6].

This would be the third incarnation of an Australian tertiary education system national commission.  The first two – the Australian Universities Commission and the Commonwealth Tertiary Education Commission having both long since departed[7].

Machinery of government is a devilish tricky business.  So it is useful to describe our NZ TEC, point out how it is similar to (and how it differs from) a proposal from the Group of Eight and comment on the strengths of (and risks arising from) a commission.

The TEC in New Zealand

The New Zealand TEC, created out of a recommendation of TEAC, is a statutory public service organisation; it is what we, in NZ, call a Crown agent (meaning it is required to give effect to the minister’s directives). So while the TEC is sort of “at arm’s length” from the minister, it’s actually not a very long arm.  In fact, it’s a very short arm.

What it does

When it was established, the TEC absorbed the tertiary resourcing division of the Ministry of Education and the Education and Training Support Agency (dubbed Skill NZ, responsible for the administration of adult literacy and numeracy education, active labour market programmes and workplace-led VET – but not polytechnic/institution-led VET).

The TEC does not have a policy role; policy advice is provided to the minister by the Ministry of Education. The TEC is directed to create operational policy to give effect to the government’s broader policy decisions – for all post-secondary education. The TEC then applies that operational policy to divide up the government’s funding pots among institutions. The TEC also monitors the performance of every provider of funded post-secondary education – universities, polytechnics, wānanga[8], private providers.  The TEC is responsible for almost everything.  Everything except quality assurance and registration of providers.  And except policy.

Which is not what TEAC wanted

What we got is decidedly not what TEAC asked for. In his retrospective evaluation of the TEAC process, one of TEAC’s Commissioners, Jonathan Boston, states the recommendation was for the TEC to be independent of government but to have a role in policy advice[9]. In effect, they were asking the government to create the TEC as an Independent Crown Entity (ICE) or an Autonomous Crown Entity (ACE) independent from government. But TEAC also asked for the TEC to have a policy role.  However, in New Zealand machinery of government law, an ICE is “generally independent of government policy”; most ICEs[10] exist to hold government policy to account, while ACEs[11] are required to “have regard for” government policy.

Put like that, you can see the problem. In 2001, when I was working on a submission to TEAC for the university where I worked, my chancellor (who had previously been a cabinet minister) pointed out to me that no government could ever agree to delegate policy-making rights in a strategically critical and potentially contentious area (such as education and skills) to an autonomous body. Apart from anything else, when things turn ugly, the public will always turn on ministers and expect the government to fix it up; ministers would inevitably intervene. Commissioners, experts, mandarins, are not subject to electoral accountability.

Writing in The Conversation in 2016, Peter Noonan of Victoria University (Victoria Melbourne, not Wellington!) proposed a model of an independent tertiary education authority for Australia, very similar to what TEAC had recommended for New Zealand 15 years previously. Noonan’s design suffered from the same flaw as the TEAC suggestion – it would have seen government retaining the right to set strategy and overall policy objectives but delegating to the independent commission potentially contentious funding policy decisions (for example, the funding differentials between different qualifications, the split between public and private contributions to funding and the split in funding between teaching and research). Like TEAC, Noonan was expecting ministers to hand over decision-making rights on key skills policy[12].   That just wouldn’t happen.

How the TEC worked out

Initially, the ambiguity between TEAC’s aspirations for the TEC and the government’s decision on the TEC’s design and place in the system led to problems.  Some of the early appointees as commissioners had the impression that they were there to transform the system, rather than to govern an agency that had a more limited, mostly administrative, mandate. And in the first few years, there was conflict between TEC staff and the tertiary education policy group as they clarified the boundaries between their respective roles and developed ways of operating. One minister set about adding to the problems by blurring and confusing the agency boundaries.

There were also conflicts between the agencies over roles in data, analysis and the production of evidence. With the creation of the TEC, the ministry set about improving its analytical capability to provide a much stronger evidence-base for policy advice[13].  At the same time, the TEC needed stronger provider performance information. There is no completely unambiguous line between these two functions so boundaries and ways of working had to be established, often with difficulty.

However, over the last 12 or 13 years, these problems have been sorted out.  The leadership of the TEC has focused on improving the performance of the sector, addressing such matters as disparities of access and achievement and how to improve provider performance within the given policy settings, while the staff of the Ministry of Education work in lockstep with TEC staff to ensure that policy advice reaches the minister informed by an implementation perspective.

It works.  Not perfectly.  But it works.

***

[1] To get an overview of the direction of, and response to, the government’s reform proposals of the late 1990s, refer to Roberts P and Peters M (1999) A critique of the tertiary education white paper NZ Annual Review of Education 8, 5-26

[2] The best description of the TEAC process and its outcomes is in Boston, J. (2002) Evaluating the Tertiary Education Advisory Commission: an insider’s perspective NZ Annual Review of Education, 11, 59-84.  Jonathan Boston, a public policy academic, was a member of TEAC. Refer also to the Productivity Commission’s historical overview of tertiary education reforms and to my own overview of the history of the system from 1990 to 2010.

[3] For instance, TEAC’s proposal for the structure of tuition funding system (including a “strategic relevance” component) proved just too hard, despite the enthusiasm of ministers.  The institutional planning system was also over-engineered and impractical, leading to simplification.

[4] See Boston’s paper, cited above, for an account of which TEAC recommendations were not adopted by the government.

[5] Boston, op cit, writing soon after the completion of TEAC’s work, agrees that the “success rate” of TEAC in having its proposals endorsed by government is relatively high.  But his paper, on balance, expresses disappointment with many aspects of the TEAC process.  My assessment, that TEAC laid the basis for two decades of relative peace in the system, has the benefit of hindsight.

[6] The third that I encountered – from Croucher and Massaro of the Melbourne Centre for the Study of HE –presents a clearer, more detailed description of the general proposal.  Therefore, while I use the term “Go8 proposal”, my reading is largely drawn from Croucher and Massaro.

[7] The AUC was created in 1959 and the CTEC in 1974.

[8] A wānanga is a tertiary institution that focuses on ahuatanga Māori (Māori tradition) according to tikanga Māori (Māori custom).

[9] Boston op cit

[10] Such as the Productivity Commission, the Health and Disability Commission and the Electoral Commission.

[11] Such as Broadcasting Commission and the Arts Council – both of which have a mandate to allocate funding on government’s behalf within well-established policy.

[12] The schema proposed in Noonan’s Conversation piece is well represented in the diagram he includes to illustrate his argument.

[13] I need to declare an interest here – I was employed by the Ministry to do just that.

Roger Smyth was a manager at Lincoln University, NZ until 2002 when he went to work in the Tertiary Education Group at the NZ Ministry of Education.  Since 2017, he has been a tertiary education consultant,