Operating Environment

To progress the Tertiary Education Strategy (2010–15) and obtain value from its investment, the Government’s initiatives in 2013 were aimed at strengthening educational and financial performance and focused on:

The following pages summarise the TEC’s activities and initiatives that focus on those outcomes and strengthening sector capability.

Targeting priority groups

Māori performance initiatives

Progress was made for Māori learners from 2012 to 2013, including increased enrolments at Bachelor and postgraduate levels, however, the TEC remains focused on boosting Māori participation and achievement.

One of the TEC’s levers links investment to TEOs’ stretch performance commitments to improve participation and achievement for Māori learners, particularly at NZQF Levels 4 or above and in fields that show strong outcomes for Māori. The TEC will continue to expect TEOs to show how they intend to support Māori learner success through their Investment Plans.

In 2013 the TEC continued to develop a whole-of-system approach to implementing the Māori Education Strategy, Ka Hikitia Accelerating Success 2013 – 2017; the Māori Language in Education Strategy, Tau Mai Te Reo; and He Kai Kei Aku Ringa: The Crown-Māori Economic Growth Strategy to ensure a comprehensive approach to enabling Māori learner success. The TEC will continue to work closely with other education and economic development agencies on how its information, influence and investment drivers can boost Māori learner participation and achievement.

Building on the success of the Māori and Pasifika Trades Training initiatives piloted in 2012, the TEC continued to work with other government agencies in 2013 to enable more Māori aged 18-34 years to obtain meaningful trades apprenticeships and qualifications.

In 2013 the TEC published a literature review on success indicators for Māori learners, Doing Better for Māori in Tertiary Settings. The TEC will explore the research gaps identified in the report and further update its evidence base with research on how to make the tertiary system more effective for Māori learners.

Pasifika performance initiatives

In 2013 the TEC continued to concentrate on improving the quality of education provision for Pasifika learners and began to embed its action points in the cross-sector Implementation Plan accompanying the Pasifika Education Plan 2013–2017.

To better understand Pasifika in tertiary settings, the TEC commissioned a literature review to develop a strengths-based approach to guide TEOs to support better outcomes for Pasifika learners. Throughout 2013 the TEC engaged proactively with TEOs to emphasise its expectation of parity of achievement for Pasifika learners at all levels of study or training, and increased participation.

The TEC also worked with the Ministry of Education and other government agencies to:

Literacy, language and numeracy

The TEC’s Adult Literacy and Numeracy Implementation Strategy published in 2012 outlined major areas of future work, including further development of the Assessment Tool and addressing Māori and Pasifika literacy and numeracy needs. The primary focus for 2013 was the Assessment Tool workstream.

The TEC requires all foundation-level provision to have embedded literacy and numeracy. The Assessment Tool is a key mechanism of good practice, as it enables tutors to understand their learners’ needs, deliver tailored interventions, and measure progress.

Data for courses funded by SAC and Youth Guarantee shows that 46 percent of all foundation-level learners took their initial numeracy assessment, while 25 percent took their required progress numeracy assessment. Tool use was higher for evaluating literacy, with 56 percent of learners undergoing their required initial assessment and 29 percent undergoing their required progress assessment.

Youth Guarantee-funded courses had higher usage of the Assessment Tool than SAC-funded courses, and Assessment Tool usage was highest in the PTE sector.

The TEC will continue to ensure the sector uses the Assessment Tool according to government requirements for all foundation-level provision. In 2013 the TEC worked to improve how it uses Assessment Tool data through mutual understanding and agreement with tertiary providers on TEC-held data. Work on statistically significant learner gain indicators also started in late 2013 and is due to be completed in 2015.

Improving pathways

Youth Guarantee

2013 continued to be a transitional year for TEOs that provided Youth Training prior to its merger into Youth Guarantee in 2012. Further change in 2013 included the shift to an EFTS-based funding model; delivery of full qualifications for the first time; and the inaugural use of the Single Data Return (SDR) for Youth Guarantee for some TEOs. In mid-2013 further policy changes were announced for the 2014 calendar year, extending the age eligibility of Youth Guarantee students up to 19-year-olds and allocating up to $1.3 million for a secondary-tertiary dual enrolment pilot.

Between 2012 and 2013 the number of learners accessing Youth Guarantee-funded programmes increased markedly (from 8,901 to 9,953). Māori and Pasifika participation levels remained high in 2013 at 46 percent and 18 percent of all enrolments respectively. Data shows that many TEOs performed well, despite the transitional challenges, with aggregate course completion rates of 72 percent at wānanga, 70 percent at ITPs and 57 percent at PTEs, and qualification completion rates of 62 percent at wānanga, 60 percent at ITPs and 49 percent at PTEs. Owing to the transitional changes, 2013 results are not comparable with previous years’ delivery.

Secondary-tertiary programmes

Established in 2011 Secondary-Tertiary Programmes (STP) are a thriving component of the secondary-tertiary interface within the Youth Guarantee initiative.

Delivered primarily through trades academies (TAs), STPs provide opportunities for senior secondary school students to achieve credits simultaneously towards NCEA Level 2 and one or more tertiary qualifications. Most TA programmes are two years but individual models range from one year full-time to part-time programmes of one or more days per week, to block programmes delivered during school holidays.

In 2013 the TEC continued to administer funding for 10 TEO-based TAs, as well as Manukau Institute of Technology’s School of Secondary-Tertiary Studies. The TEC funded 2,287 places in 2013, up from 1,806 the previous year.

Trade Academies’ performance highlights the success of this initiative. Of all the students who completed their TA programme in 2013:

Changes to foundation learning

Budget 2012 established a separate funding pool for foundation-level tertiary education to be competitively funded (Levels 1–2 on the NZQF). As a result of the 2012 competitive process for this provision, the TEC funded 25 TEOs (18 PTEs, six ITPs and one wānanga) to deliver programmes for 5,401 EFTS totalling $37 million per year for 2013 and 2014.

The allocation process enabled more places for learners to be made available (1,700 additional EFTS), with the competitive aspect driving both quality and greater value for money. Overall, 5,391 of the 5,401 EFTS allocated for 2013 were delivered (99.8%). Performance information for 2013 indicates that students at TEOs funded through the competitive process achieved overall better results than similar provision funded through the normal Investment Plan process: 80 percent course completion rates through competitive funding, compared to 77 percent course completion rates in non-competitive funding.

The Government announced a further competitive allocation round to be run in 2014, with up to $70 million available to fund foundation-level delivery in each year for 2015 and 2016. In anticipation, the TEC consulted with TEOs during 2013 to assess the 2012 competitive process and to apply lessons learned in planning the 2014 round. More information on the competitive process and the TEC’s lessons learnt document can be found on the TEC website.

Improving system performanceTop

Performance-linked funding

Performance-linked funding is one of the TEC’s approaches intended to improve both educational outcomes for students and employers and value for taxpayers. Effective from 2012, a maximum of five percent of a TEO’s total SAC funding is at risk of being recovered, based on its educational performance in the previous year. The TEC’s performance-linked funding calculator enables TEOs to model the impact of performance-linked funding. In light of the significant changes taking place in the ITO sector, the introduction of performance-linked funding has been delayed for ITOs until 2014.

In 2013, $2.79 million in performance-linked funding adjustments were made to the December 2013 payments of 73 TEOs. This was a decrease on the $2.96 million adjustment applied in 2012.

Capital Asset Management

The aim of Capital Asset Management (CAM) is to deliver services in the most cost-effective manner through the management of assets for present and future customers.

Cabinet Office Circular: Capital Asset Management in Departments and Crown Entities: Expectations CO (10)2 sets out the Government’s expectations for asset management in departments and Crown agencies, including TEIs.

As at 31 December 2013, TEIs collectively owned or managed assets with a net book value of around $8.3 billion. This made TEIs’ assets, collectively, the fourth-largest social-asset portfolio across Government. The majority of assets were held by universities ($6.25 billion), followed by ITPs ($1.83 billion) and wānanga ($0.27 billion). Land and buildings, the largest asset category, accounted for $6.9 billion of the total net asset base.

The value and importance of these assets to the social, cultural and economic well-being of New Zealand reinforces the need for TEIs to set high standards in managing their assets.

In 2013 the TEC worked closely with tertiary education sector bodies and individual TEIs to further embed the integrated CAM Monitoring Framework. This framework articulates how the TEC will monitor CAM and provide any necessary advice and guidance to TEIs.

Further CAM-related achievements from 2013 included:

Industry training initiatives


The performance of the ITO sector in 2013 showed a significant improvement in educational outcomes for trainees when compared to previous years. ITOs continued to respond to the Government’s priority to simplify and strengthen the sector by seeking further merger and amalgamation opportunities. At the start of 2013 there were 20 recognised ITOs. During 2013 mergers reduced the number to 13. Further details about the mergers are provided in a separate section on ITOs.

New Zealand Apprenticeships

In early 2013 the Government announced from 1 January 2014 New Zealand Apprenticeships (NZ Apprenticeships) would be introduced to combine all apprenticeships into a single nationwide scheme. NZ Apprenticeships allow all apprentices, regardless of age, to receive the same level of Government support. The scheme has a strong theoretical component and provides high-quality vocational pathways, setting up people of all ages for a career in their chosen industry.

The Apprenticeship Reboot

The Apprenticeship Reboot initiative was launched in March 2013 with the aim of raising the profile of apprenticeships and opportunities for careers in trades. This made approximately 12,000 apprenticeship trainees eligible to receive the Government’s payment of $1,000 (or $2,000 for priority trades), with employers eligible to receive the same payment. Owing to the success of the initiative in encouraging apprenticeships, it was extended until 31 December 2014.

The Direct Funding Scheme

Introduced to encourage competition and drive innovation, the Direct Funding Scheme allows employers to be directly funded for training their employees. Following a competitive process in late 2013, a small number of employers and organisations will test implementation in 2014 before the scheme is rolled out more widely. An evaluation of the scheme is running alongside its implementation to inform future funding rounds and any changes to operational policy.

High-quality research that helps drive innovationTop

Performance-Based Research Fund

The Performance-Based Research Fund (PBRF) is a TEC-administered fund designed to encourage and reward excellent research in the tertiary education sector. The PBRF is allocated by assessing the research performance of TEOs and then funding them accordingly. PBRF funding is based on three components: quality evaluation, research degree completions and external research income.

The quality evaluation is a peer-review process that determines the quality of research in TEOs at the level of individual researchers. This measure accounts for 60 percent of the funding pool and provides the basis of funding for six-years, following each quality evaluation. TEOs that do not participate in the quality evaluation cannot access funding through the two other measures.

In 2013 the TEC presented the final report on the 2012 quality evaluation, which again confirmed the concentration of research excellence in universities. The results also demonstrated that the sector’s measured research quality has increased since both the 2003 and 2006 quality evaluations.

The finalised figures showed that between 2003 and 2012 the number of staff whose evidence portfolios (EPs) were assigned a funded quality category grew by 41.5 percent (from 4,458.82 to 6,312.18). Likewise, the number of funded EPs rose by 991.55 between 2003 and 2006 and by a further 861.81 between 2006 and 2012, totalling 1,853.36 additional funded EPs from 2003 to 2012.

In the 2012 quality evaluation, the distribution of funded quality categories assigned to EPs was as follows:

The EPs of 53.3 percent of PBRF-eligible staff were assigned an ‘A’ or a ‘B’ in 2012, up from 48.9 percent in 2006 and 48.1 percent in 2003.

The Ministry of Education conducted a review of the PBRF in 2013, with the findings to be agreed by the Government in 2014. The recommended changes are expected to:

The TEC will work with the sector on implementing the agreed changes. All of the changes will be implemented prior to the next quality evaluation in 2018.