Tertiary education system set up to preserve status quo: Productivity Commission

New Zealand's tertiary education system is set up in ways that preserve the status quo, discourage innovation, encourage high-cost models and reward the largest providers for gaming the system to be able to 'cry poor', the Productivity Commission's interim report on the sector concludes.

While the focus of most reporting on the report, published this morning, has been on rejection by all major political parties of its suggestion that student loans should be interest-bearing, the commission's most radical suggestions relate to the creation of a voucher-style funding model that would see funding directly allocated to students rather than to tertiary institutions who then use that funding to attract enrolments.

The commission suggests that universities, in particular, seek prestige by owning "very old or else very modern buildings" and constitute a powerful self-perpetuating lobby group.

Universities "have managed to secure significant advantages and some of these have been enshrined in legislation," the 402-page report says. "TEIs (tertiary education institutions), especially the universities and their academics, have status in society and can be powerful voices in public debates.

"The majority of politicians and public servants are tertiary educated and many have ties back to the intuitions they attended. While this has many positive consequences, this power could be misused should TEIs apply it to creating and entrenching privileges for their institutions to the detriment of students, employers and the economy, or wider New Zealand society."

As currently configured, the tertiary education system is slow to innovate, does so most commonly as a result of top-down changes to government policy, and in ways that seek to preserve the status quo rather than improve educational outcomes, the Productivity Commission says in the report, for which it is seeking submissions by November 21, for a final report early in election year, by February 28.

The government seeks to control the "high political and financial risks" of the system by increasing top-down control "with more prescription, less trust, and less autonomy", which in turn leads to "less diversity, flexibility and innovation".

The result is "considerable inertia" in the New Zealand tertiary education system, which the commission says is "an emergent property of the system rather than a characteristic of providers".

The system also tends to provide students with the same set of learning choices across different institutions, requires all students to learn at the same pace, and exacerbates existing inequalities, especially as funding methods tend to ensure that the most well-endowed institutions are best-placed to attract further funding. At the same time, a 'Gordian knot' of regulation has grown up over time that makes tertiary institutions less likely to try new approaches.

It also criticises the way funding incentivises research activity without corresponding incentives to invest in teaching.

"To really promote new models, it is necessary to cut through the Gordian knot," the report says. "The commission is considering a proposal that shifts education funding, in the first instance, from providers to students" and seeks feedback on a 'Student Education Account' model.

It is in this model that interest would be charged on resulting student loans, which would arise once a student had exhausted the balance of SEA.

"Providers would have freedom to set prices according to student demand. Students would pay fees out of their entitlement to any provider licenced by the New Zealand Qualifications Authority.

"The major advantage of the SEA model is that it firmly establishes the student at the centre of the system and allows tertiary providers to offer a much wider range of education models to meet students' diverse needs and aspirations."

Universities New Zealand, a peak body, reacted to the report cautiously.

Executive director Chris Whelan said it had "picked up some of the sector's concerns and makes some sensible suggestions for enhancement."

"At the same time, we also have some concerns about the lack of in-depth analysis and evidence provided in the report to support many of the conclusions and recommendations. We are also concerned that the commission has failed to fully consider some of the evidence provided.

"Our key concern is that this draft report does not yet provide a vision for a coherent and connected tertiary education system," Mr Whelan said.


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