Annual Report 2016 - Part one

Section 19B reports

The Vote Education Section 19B Report in Relation to Non-Departmental Appropriations for the year ended 30 June 2016 was presented to the House in accordance with section 19B of the Public Finance Act 1989 on 20 October 2016.

Vote Education Section 19B Report [PDF, 329 KB]

Parts 2 and 3 of the Annual Report 2016

Download the full Annual Report 2016 to view:

  • Part 2 — Statements of service Performance
  • Part 3 — Annual financial statements.

Annual Report 2016 [PDF, 1.2 MB]

Amendment to the report

Since being tabled, the Statement of Cash Flows has been amended for a minor editorial error.

New Zealanders have skills and knowledge for work and life

New Zealand needs an education system that provides people with the knowledge and qualifications they need to be successful in life and in an increasingly global economy.

The Tertiary Education Strategy 2014-2019 sets the Government’s priorities to improve the contribution of tertiary education to New Zealand. The Strategy contributes to the Government’s ambitious goals, through the BPS targets and Business Growth Agenda, to improve economic and social outcomes for all New Zealanders. It has six strategic priorities:

    • Delivering skills for industry
    • Getting at-risk young people into a career
    • Boosting achievement of Māori and Pasifika
    • Improving adult literacy and numeracy
    • Strengthening research-based institutions
    • Growing international linkages.

These priorities demonstrate a shift towards a more relevant tertiary education system with strong links to industry, the community and the global economy. During 2015/16, we continued to work with the sector and other agencies to implement the Strategy and deliver more relevant, responsive tertiary education that supports all New Zealanders to succeed.

  • Delivering skills for industry
    • All students need to know the skills and qualifications that are valued by employers, and that will enable them to build a career and achieve their goals. As well as giving students better information, we are using this information in strategic planning and investment decisions.

      Boosting workforce skills

      On average, people with higher levels of qualification are more likely to participate in the labour market, face lower risks of unemployment, have greater access to further training and receive higher earnings.

      The financial returns for completing high-level tertiary qualifications are strong. In 2015, the earnings of New Zealanders with a bachelors degree or higher qualification were 65% higher than for people with no qualification.3 People with a tertiary qualification are also less likely to be unemployed than those with no qualifications.

      As the number of young people achieving NCEA Level 2 increases, we need to focus on progressing young people into NCEA Level 3 and further education at Level 4 or above. The Government has a BPS target to increase the percentage of 25 to 34-year-olds who have a qualification at Level 4 or above. In 2012, a target of 55% for 2017 was set. In 2014, the Government revised the target to 60% as it was expected the 55% target would be met before 2017.

      In the year to June 2016, 56.5% of 25 to 34-year-olds had a qualification at Level 4 or above, up from 53.5% in the year to June 2015.

      We continue to address system issues to ensure schools and tertiary providers have progression pathways linked to industry needs, and approaches to support all young people in their transition into study at Level 4 or above, and into careers.

      Indicator 4 Increase the proportion of 25 to 34-year-olds with advanced trade qualifications, diplomas and degrees (at Level 4 or above)

      Better Public Services: Boosting Skills and Employment, Result 6

      Graph showing Indicator 4: Increasing the proportion of 25 to 34-year-olds with advanced trade qualifications, diplomas and degrees (at Level 4 or above) from 51.9% in 2010 to 56.5% in 2016, with a revised target of 60% in 2018.

      (All numbers %)June 2015June 2016Change (% points)Revised target 2018
      25 to 34-year-olds 53.5 56.5 ↑ 3.0 60.0

      Sharing and using information more effectively

      Most students expect their tertiary study will get them a job and improve their career prospects. However, these expectations are often based on unreliable data and anecdotes. From 2017, provider-level employment outcomes information on things such as employment rates and earnings for graduates will be published to help prospective students make good decisions about what and where to study. During 2015/16, all universities, institutes of technology and polytechnics, wānanga and a large number of private training establishments consented to the release of their data. We also worked with the Industry Training Federation to determine the most appropriate data to extract to measure outcomes for industry training organisations.

      The Student Loan Scheme valuation is an annual process to ensure we have strong, reliable information about the costs and performance of the scheme. This information helps us focus on improving affordability and outcomes for students and government.

      During 2015/16, following monitoring of student loan borrowing limit policies, we introduced changes to increase the support available to graduate-entry students studying long professional undergraduate programmes. Graduate-entry students in
      medicine, dentistry, optometry and veterinary science can now access government assistance to pay their tuition fees for 1–2 years longer than previously.

      Improving employer linkages

      Through initiatives such as ICT Graduate Schools and Trades Academies, the Ministry and our partner agencies have encouraged stronger links between providers and employers. These initiatives include new approaches, such as internships, clusters and employers working directly with tertiary education providers to establish effective pathways and partnerships, to support programme development and course design.

      During 2015/16, we engaged in over 45 secondary-tertiary-industry partnerships to support the development and implementation of sustainable pathways from secondary to tertiary education and employment. We also worked with regional economic development agencies to ensure education plays a central role in economic development.

      A more effective tertiary funding system

      During 2015/16, we worked across the tertiary education sector to improve the effectiveness and efficiency of the funding system so it can better meet demand and promote relevance.

      Following a review of appropriations, the Government has increased the flexibility of funding. This has eliminated the timing issues which previously prevented the TEC from reallocating funding across tertiary education organisations, for example, when there were changes in student demand.

      In 2015/16, we used the New Zealand Benchmarking Tool (NZBT) to establish where there are imbalances between funding and costs. The NZBT provides a consistent approach to allocating income, expenditure and equivalent full-time student data to different areas of institutional activity. This analysis informed our Budget 2016 advice on tuition subsidies. This resulted in targeted tuition funding increases for science at degree-level and above (5%), agriculture and horticulture at degree level and above (16%), veterinary science at degree level and above (9%) and undergraduate medicine (6%) announced at Budget 2016.

      To direct investment away from low value delivery, we provided advice on the use of national-level employment outcomes data. The TEC used this to inform their investment plan negotiations with tertiary education organisations in 2015/16. We also supported the Ministry of Business, Innovation and Employment to develop advice on the use of skills and occupational demand forecasts to identify areas of potential equivalent full-time student growth. This was part of the 2017/18 Investment Plan round.

      During 2015/16, we worked with the Ministry of Social Development’s Youth Service to improve how it operates with education programmes (for example the Youth Guarantee programme) so that services are targeted to those young people who most need them.

      3 Profile & Trends 2015: Tertiary Education Outcomes and Qualification Completions.
  • Getting at-risk young people into a career
    • New Zealand has a significant proportion of young people who are not in education, employment or training. To help them succeed, we are working to increase education retention and reconnect those who have already left the system.

      Indicator 5 Decrease the proportion of the youth population not in employment, education or training

      Graph showing Indicator 5: Decreasing the proportion of the youth population not in employment, education or training with 15 to 19-year-olds decreasing from 10.6% in 2010 to 7.2% in 2016, and 20 to 24-year-olds decreasing from 18.3% in 2010 to 15.0% in 2016.

      (All numbers %)4Year to June 2015Year to June 2016Change (% points)
      15 to 19-year-olds 7.6 7.2 ↓ 0.4
      20 to 24-year-olds 15.1 15.0 ↓ 0.1

      During 2015/16, we developed a cohort-based dataset to look at the education and labour market outcomes for young people as they move from school into tertiary education and/or employment. This will improve our understanding of the risks to participation and achievement. A preliminary report was published in June 2016 and the framework and modelling will be completed by the end of 2016. This work ensures resources are well targeted to support the success of all learners in tertiary education.

      We are also making it easier for sole parents to make the decision to move off benefits and into full-time study. New rates of accommodation support for sole parents were implemented from 1 July 2015, to better align the support available across the student support and benefit systems.

      Leading Youth Guarantee

      Working with the TEC, we continue to lead the Youth Guarantee programme, which is intended to increase the educational achievement of 16 to 19-year-olds by making the education system more responsive to their needs. Youth Guarantee also aims to improve retention and progress young people into further learning, training or work by providing more learning opportunities, making better use of the education network and creating clear pathways from school to work and study. The Youth Guarantee programme includes Vocational Pathways, Youth Guarantee partnerships, secondary-tertiary programmes (such as Trades Academies) and fees-free places.

      We published the Youth Guarantee Monitoring Report for 2013 in August 2015 and developed the 2014 Monitoring Report. They looked at the education and employment outcomes from fees-free places and Trades Academies. They also showed that both programmes were effective at retaining young people in education and increasing the achievement of NCEA Level 2. They were also effective at improving employment outcomes. However, they are not yet effective in enabling more young people to progress to higher-level tertiary education, or in reducing the proportion of young people who are long term not in employment, education or training. The extension of Vocational Pathways to Level 3 and the launch of FindMyPath (both discussed on pages 35 and 36) will assist learners to make informed choices about higher-level tertiary education and employment pathways.

      Boosting Trades Academies

      Trades Academies deliver trades and technology programmes to secondary students through partnerships between schools, tertiary institutions, industry training organisations and employers. They provide students with a greater number of study options, give them clear post-school pathways by providing a head start in training for vocational qualifications, and improve the responsiveness of schools to business and economic needs.

      To help improve employment outcomes, an additional 940 Trades Academy places have been funded per year from 2016, increasing the total places available to 6,190. This means there is now one Trades Academy place per 26 students (compared to one place per 31 students in 2015). The additional Trades Academy places will support achievement of the BPS Result 5 target and equity targets.

      In 2015/16, the Southern Institute of Technology was recognised as a Trades Academy lead provider, with a new Trades Academy to open in Southland in 2016. This means locally-based Trades Academies are now in every region of New Zealand.

      Trades Academies places since 2011.

      Long description for Trades Academy statistics

      Our work with the TEC on Trades Academies won an IPANZ Award for Excellence in Achieving Collective Impact in July 2016. This recognises the impact Trades Academies have in motivating students to get real, hands- on experience, an NCEA Level 2 qualification and a head start in their future career.

      Secondary-tertiary programmes (STPs) are a partnership between schools, tertiary providers, local communities and employers to provide young people with better education and employment opportunities.

      There is a growing demand for more skilled workers from New Zealand industries. Using Vocational Pathways, young people can gain the necessary foundation-level education and skills training that employers want. STPs provide more relevant learning options for them to remain in education and acquire the knowledge and skills that local communities need.

      Of all the students who exited the STPs (including Trades Academies) in 2015, 77.2% (or 3,154 students) had achieved NCEA Level 2 or equivalent by the end of the calendar year. This is consistent with the 2014 result, also 77.2%, showing how STPs are able to support more at-risk students to achieve.

      Extending Vocational Pathways

      During 2015/6, we refined the Vocational Pathways to ensure coherent, consistent and balanced assessment opportunities are available for learners across all six Vocational Pathways. The Vocational Pathways provide new ways to achieve NCEA Levels 1, 2 and 3 and develop pathways that progress to further study, training and employment. They align learning to the skills needed for industry, providing a framework for students to see how their learning and achievement is valued in the workplace.

      Infographic showing the six vocational pathways through NCEA Level 1 to 3 – Construction and Infrastructure, Creative Industries, Primary Industries, Service Industries, Social and Community Services, and Manufacturing and Technology.

      The recently introduced Vocational Pathway Awards also show more students are undertaking a course of study at school that can lead to continued study, training and employment. Of the 2015 school leavers with NCEA Level 2, 29.4% had a Vocational Pathway Award. 2016 is a transition year, during which students are able to gain Vocational Pathways Awards from both the existing and refined pathways.

      To improve access to tertiary education, we also extended Vocational Pathways to NCEA Level 3 in 2015/16. Level 3 is a critical bridge between school and tertiary study or training. Extending Vocational Pathways to Level 3 means students can make informed choices about study options. School-based education at Level 3 is linked with more specific vocational qualifications (at Level 3 and above) and students at NCEA Level 2 who do not intend to return to school and students at NCEA Level 3 who do not intend to go to university are supported to make decisions on their next steps.

      We launched the FindMyPath mapping tool from Levels 3 to 7 in June 2016. The tool provides greater understanding of the education system and supports continued learning through Vocational Pathways. FindMyPath shows that there isn’t just one pathway to a career and allows students to decide which path suits them. It supports them to think about their tertiary education and future employment earlier to ensure their study options match their aspirations.

      Image long descriptions

      Long description for Trade Academies statistics
      • Graph showing an increase in Trades Academy places from 620 in 2011 to 6,190 in 2016.
      • Infographic showing 1 Trades Academy place for every 26 students in 2016
      • Graph showing that participants in Trades Academies are more likely than a comparison group to achieve NCEA Level 2 by age 18 (85% for Trades Academy participants, 77% in the comparison group)
      • Graphs showing characteristics of 18-year-olds who had participated in Trades Academies
        • 68% male, 32% female
        • 32% had experienced disengagement from school
        • 32% Māori, 11% Pasifika, 57% other
        • 47% from low decile schools, 35% from medium decile, 16% from high decile and 2% from other (mainly Te Kura Correspondence School).
      4 Source: Revised Statistics New Zealand data following the 2013 Census.
  • Boosting achievement of Māori and Pasifika
    • The Māori education strategy Ka Hikitia – Accelerating Success 2013-2017 and the Pasifika Education Plan 2013-2017 provide the context for the Government’s Tertiary Education Strategy 2014-2019, in particular the priority to boost achievement of Māori and Pasifika. We are working to ensure the tertiary education system improves the participation and achievement of Māori and Pasifika learners through all six of the Tertiary Education Strategy 2014-2019 priorities.

      While overall rates of participation in tertiary education have been decreasing over the last five years due to factors such as improving labour market conditions and increased net migration5, Māori and Pasifika participation rates remain static. Age standardised rates of participation of Māori (14.5%) and Pasifika (11.4%) show higher participation than the rate of the general population (9.8%) and of students identifying as European (9.7%).

      Percentage of population participating in tertiary education

      Graph showing the percentage of the population participating in education by ethnicity: Māori decreasing from 17.9% participating in 2011 to 17.2% in 2015; Pasifika remaining at 15.1% in 2015 (compared to 15.1% in 2011); European/Pākeha decreasing from 9.7% in 2011 to 8.8% in 2015; The total population decreasing from 11.0% in 2011 to 9.8% in 2015.

      Proportion of all bachelor's and graduate-level equivalent full-time students enrolled in STEM

      Graph showing proportion of all bachelor’s and graduate-level equivalent full-time students enrolled in STEM.

      Long description of Proportion of all bachelor's and graduate-level equivalent full-time students enrolled in STEM

      Māori and Pasifika Trades Training (MPTT) supports Māori and Pasifika to obtain practical qualifications leading to an apprenticeship and employment. It is raising awareness of trades training opportunities among young Māori and Pasifika and boosting the number of these learners achieving at higher levels. Policy changes, based on advice we provided in 2015, have contributed to MPTT growing to over 2,500 places in 2016, an increase of 63% on 2015. The Government intends to further scale up this initiative, which is already half-way to its goal of 5,000 places by 2019. Other changes included implementing a wider age range for eligibility, increased funding and introducing targets for female participation.

      More Māori and Pasifika students are enrolling in science, technology, engineering and mathematics (STEM) based bachelors and postgraduate-level qualifications. The completion rates for Māori and Pasifika students are also improving at a faster rate compared with all students enrolled in these qualifications. In 2015, across New Zealand 6456 full-time Māori students and 4257 Pasifika students were enrolled in a STEM-focused postgraduate qualification.

      Through projects such as Creating Communities of Young Engineers we are working across government to support Māori and Pasifika students to engage and achieve in STEM-related fields and increase their representation in STEM-related careers.

      Image long descriptions

      Long description of Proportion of all bachelor's and graduate-level equivalent full-time students enrolled in STEM

      Graph showing the ethnicity of all bachelor’s and graduate-level equivalent full-time students enrolled in science, technology, engineering and mathematics from 2011 to 2015:

      • European/Pakeha:
        • 2011 – 33.9%
        • 2012 – 34.5%
        • 2013 – 35.4%
        • 2014 – 36.1%
        • 2015 – 36.9%
      • Māori:
        • 2011 – 26.8%
        • 2012 – 27.9%
        • 2013 – 29.3%
        • 2014 – 30.0%
        • 2015 – 31.3%
      • Pasifika:
        • 2011 – 28.7%
        • 2012 – 29.9%
        • 2013 – 30.4%
        • 2014 – 30.5%
        • 2015 – 31.5%
      5 The Profile & Trends, New Zealand’s Annual Tertiary Education Enrolments 2015 report provides more information on the factors driving lower participation. It is available at data/assets/pdf_file/0010/172495/ Profile-and-Trends-2015-NZs-Annual-Tertiary-Education-Enrolments-Part-1-of-6.pdf.
      6 Rounded to the nearest 5.
      7 Rounded to the nearest 5.
  • Improving adult literacy and numeracy
    • Basic literacy and numeracy skills are essential for participating fully in New Zealand society and the economy. Further training, employment opportunities, earning potential, health outcomes, financial capability and social inclusion are all enhanced by gaining sufficient literacy and numeracy skills.

      New Zealand’s ranking in adult literacy has improved to fourth in the Organisation for Economic Cooperation and Development (OECD), up from 12th in 1996. This country is also amongst the world leaders in problem solving using technology, skills that are increasingly called for in today’s working environments.

      Although New Zealand’s ranking in numeracy has not increased, we have a higher proportion of New Zealanders with high numeracy skills than the average across the OECD. However, even though we are on the right track, there is still room for improvement.

      During 2015/16, we completed a policy review of literacy and numeracy funds. Employers and providers are pleased with changes introduced to the Workplace Literacy and Numeracy Fund in 2016. This included enabling employers to form a consortium
      to help workers gain literacy and numeracy support, lowering the minimum size of eligible employees from 50 to 20 and removing the 2-year maximum length of funding.

      We are proposing further changes for 2017 to continue to improve the literacy and numeracy outcomes for learners, particularly those within the workplace. One of these changes is extending the Workplace Literacy and Numeracy Fund to include industry trainees.

      In addition, from 2016, around 600 more places will be available in the Workplace Literacy and Numeracy Fund with up to 900 more available in 2017. The amount of training available to each learner through both the Workplace Literacy and Numeracy Fund and the Intensive Literacy and Numeracy Fund is also increasing. This greater flexibility supports adult learners in lifting their skills, and demonstrates our commitment to improving workplace productivity and supporting personal success.

      In 2015/16, we provided advice on the funding and implementation of the final stage of the Government’s commitment to make foundation education fees-free for under-25s. This enables second-chance learners to gain the basic skills they need to progress to higher study or to gain employment.

      Budget 2016 provided $2.3 million additional funding over 4 years to maintain the Refugee English Fund, which provides fees-free study for refugee background learners in English for Speakers of Other Languages courses at Level 3 and above. Around 700 places are funded per year.

  • Strengthening research-based institutions
    • To better recognise the relevance of research to end users, during 2015/16, we supported the TEC with the implementation of the actions from the Performance-Based Research Fund (PBRF) review and the expansion of the Centres of Research Excellence (CoREs).

      CoREs are inter-institutional research networks, with researchers working together on commonly agreed work programmes. They support growth in research excellence and make a strong contribution to New Zealand’s development of world class researchers.

      The PBRF assesses the research performance of degree-granting tertiary education organisations in New Zealand and allocates funding based on research performance. During 2015/16, the PBRF increased to $300 million per annum. To support growth in research excellence, it has funded four additional CoREs (increasing the total to 10), including one focused solely on Māori research. We also provided ongoing input into science and innovation policy. During 2015/16, we worked alongside the Ministry of Business, Innovation and Employment to help progress the Research, Science and Innovation Statistical Domain Plan and proposals from universities that aim to improve tertiary sector-driven entrepreneurship and innovation.

  • Growing international linkages
    • A global market for skilled workers, strong international competition in tertiary education, and the Government’s ambitious goal to increase the value of international education to $5 billion by 2025, make building the international relevance of New Zealand’s education system a priority.

      The benefits of international education extend beyond the economic contribution. Young New Zealanders are given the opportunity to live and learn alongside people from other countries, increasing their understanding of other cultures and boosting our links with the world.

      All government agencies working in international education need to be well connected to achieve the goals of the Government’s Leadership Statement for International Education. The Ministry and our partner agencies support providers to create enduring relationships with overseas partners and showcase the quality of New Zealand’s tertiary education system. In 2015/16, the Chief Executives Board for International Education was established to drive a work programme, with international student wellbeing one of its first priorities.

      We worked with other agencies to look at the integrity of international education in New Zealand, in response to concerns raised about the safety and wellbeing of some international students. We also worked on projects such as the regulatory levers for quality in international education and the International Student Support Framework.

      The new Education (Pastoral Care for International Students) Code of Practice which came into force on 1 July 2016 makes it clear that all New Zealand tertiary providers are responsible for the activities of their agents. With a sharper focus on outcomes, it requires that international students are provided with accurate, reliable information to make informed choices before they arrive and are fully informed about the advice and services available to them while they are here.

      The new Disputes Resolution Scheme (DRS) for international students also came into force on 1 July 2016. The DRS will resolve contractual and financial disputes between international students and education providers. The existing International Education Appeal Authority and Review Panel will be disestablished but will continue beyond 1 July to complete all existing cases. All complaints reported after 1 July will be addressed under the new Code of Practice and DRS rules.

      New Zealand’s commercial and social linkages around the Pacific Rim mean our people and businesses need to be more culturally aware and capable. We introduced policy initiatives to simplify and clarify eligibility settings for government funding for study overseas to reduce barriers to offshore study. It is expected that changes will be implemented by January 2017. To further equip New Zealanders with the capabilities required for the global economy, we led work to increase support for international cultural and language learning for New Zealand students, particularly with our key trading partners in Asia.

      We represented New Zealand’s education interests in international fora during 2015/16, including chairing the OECD Education Policy Committee meetings, and supporting the Chair of the New Zealand National Commission for the United Nations Educational, Scientific and Cultural Organisation (UNESCO) and our Secretary-General at the 2yearly UNESCO General Conference.