Community
Opinion: Like hundreds of other concerned Southlanders, I went to the event last Friday at SIT’s Hansen Hall. I listened to Hon Chris Hipkins explain what he was planning for the the vocational training sector and why.
I found his plan and his reasoning very unconvincing.
The issue that the minister has with the current system is that he sees it as inefficient. In his view, because polytechnics are separate entities competing with each other they are both doing similar work that in many cases could be shared.
For example, there are multiple groups across polytechnics in New Zealand who create the same or similar course content or are doing similar administrative tasks. He thinks that inefficiency is the cause of budget overruns at some institutions.
He also has an issue with funding. He thinks that funding should be based on cost and not on outcome.
So instead of allocating money based on the number of students that are put through a course it should be allocated based on what each polytechnic is actually having to spend to produce their courses.
His vision is that polytechnics will start to cooperate if they are put under one structure. He thinks that he will be able to take the best elements of each polytechnic and then share those elements across the wider network.
In his view polytechnics that offer the best distance learning programs (for example) will continue to operate them. He thinks that that will prevent the double-work and efficiency problems. He will then fund institutions based on their actual costs, rather than on a fixed basis.
“The development of courses and programmes would be consolidated, improving consistency and freeing up resources to expand front-line delivery. There will be more sharing of expertise and best-practice, and more use of online, distance, and blended learning.” (Chris Hipkins)
Fundamentally he thinks that competition in the sector is bad, that competition is inefficient because multiple people are doing the same thing. It would be better in his view if people cooperated instead of competing.
The structural change that Hipkins is proposing won’t improve outcomes for students or groups who need vocational training graduates. It will instead limit the study options for students and it will limit industry’s ability to work with local polytechnics to fill skills shortages.
There are two major advantages to competition. Firstly, a competitive environment creates a very effective mechanism to work out what is working and what isn’t. Students will go and do the courses that they see value in. Students and their families are in the best position to decide what they should study and where.
The institutions and courses that provide the most value to students will flourish and the ones that don’t will decline. Polytechnics with declining roles can know quickly that they are doing something wrong and can adapt. Secondly, the institutions that can best use their resources, and leverage off their competitive advantage will succeed.
Both of these factors can be found in SIT’s success. It is clearly producing the sort of courses that people are interested in – both nationally and internationally. And it is leveraging off its resources by aligning itself to community organisations in Southland to maximise the value it produces with its funding.
It is also being very capably managed financially. This is how it should work. The strongest survive because the strongest are providing the best value.
“Much of the social history of the Western world over the last three decades has been a history of replacing what worked with what sounded good.” Thomas Sowell (American economist)
But aside from being a generally bad policy for New Zealand, the policy is particularly bad for Invercargill. There are two reasons for that: firstly, SIT has proven itself to be a very competitive organisation under the current system.
It has used its resources well and it has leveraged off its competitive advantages like being in Invercargill where organisations like the ILT and ICC have got behind it. It has used that to stand out from the other institutions resulting in an influx of talented people into Invercargill. SIT will no longer be in that environment and will therefore lose its ability to stand out. Those talented people will no longer come to Invercargill.
Secondly, it is bad for Invercargill because the structure will inevitably result in centralisation. In his presentation, Mr Hipkins stressed that the management of the super-polytechnic could be spread out across the network of polytechnics. Some departments could be based in Invercargill, some in Wellington and some in Christchurch and so on.
He thinks because SIT is successful under the current model it will contribute more under his model and so, in the end, it will all work out the same.
That reasoning is flawed. There are factors that Mr Hipkins hasn’t considered that will lead ultimately to SIT being a sad outlet of a centralised government department.
One thing that Invercargill people won’t easily admit is that not everybody wants to live here. As Invercargill residents we know it’s a great place. The housing is very affordable, the parks are lovely and it’s easy to get around. But it’s a tough sell for most people because it’s far away and you basically give up a fair amount of big-city status by moving to Invercargill.
That is relevant is because the sort of people that can run large government departments are a fairly small pool. High-level bureaucrats are highly skilled and capable people despite popular beliefs. The number of people in Invercargill with the skills and experience to fill high level management positions is small. So it makes sense to put management roles in larger population bases.
The other problem with Invercargill is that it’s at one end of the country and the flights to and from here are long and expensive. The larger population bases are in the north. Meetings are easier to get to in Wellington. That’s why we made it the capital in the first place.
Inevitably there will be costs pressures on the super-polytechnic. It may not be straight away, but sometime in near future, it will go through a rationalisation period. Under the new structure the opportunities for cost-cutting will be clear. Increasingly resources will be rationalised or consolidated.
The longer it goes on, the closer the super-polytechnic will be to being in one shiny glass building. And those ever-shrinking number of buildings will not be in Invercargill. The sort of bureaucrats that run such offices want to continue to have their house in Kelburn and send their kids to Scott’s college. Likewise, it makes sense to have the offices in a place where it’s easier to get to. It’s cheaper and more convenient. Teams need to be together to work properly and those teams will be based in Wellington.
So it will take time, but the demise of SIT as we know it will be a death by a thousand cuts. The naive idealism of Mr Hipkins will give way to hard-headed realism and SIT will be finished and probably with it Invercargill’s economic recovery.
And what about the $32 million in reserves and $100 million in property? Since funding will be based on need from now under Mr Hipkins’ vision the $32 million will gradually be eroded. Why would SIT need money if it sitting on $32 million dollars? And as far as the property goes, it will become increasingly difficult to justify holding onto underused buildings. Their sale will barely be noticed.
Mr Hipkins gave me the impression that the new super-polytechnic is a done deal. He said several times over the course of the course of the town-hall style meeting that the reforms were only at the proposal stage, but that was clearly a weak attempt to avoid the hard questions. The die has been cast on the proposal and its bad news for SIT and bad news for Southland.
Scott Donaldson.
Scott is a local lawyer who is retained by SIT on some legal matters but the opinions expressed in the article are his own.