Annual Report 2017 — Part one

Section 19B reports

The Vote Education and Vote Tertiary Education Section 19B Reports in Relation to Non-Departmental Appropriations for the year ended 30 June 2017 were presented to the House in accordance with section 19B of the Public Finance Act 1989.

Vote Education Section 19B Report 2016-2017 [PDF, 417 KB]

Vote Tertiary Education Section 19B Report 2016-2017 [PDF, 520 KB]

Parts 2 and 3 of the Annual Report 2017

Download the full Annual Report 2017 to view:

  • Part 2 — Our performance information
  • Part 3 — Annual financial statements.

Annual Report 2017 [PDF, 1.3 MB]

New Zealanders have skills and knowledge for work and life

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

The priorities to improve the contribution of tertiary education to New Zealand are set out in the Tertiary Education Strategy 2014-2019 (TES). We are focusing on building a more relevant tertiary education system that is outward-facing, with strong links to industry, community and the global economy.

The direction set out in the Government’s July 2017 response to the Productivity Commission inquiry into New Models of Tertiary Education signals some immediate and long term changes to improve the responsiveness, innovation and effectiveness of the tertiary education system. More information on the key areas of change can be found on pages 11 and 12.

  • Socially and culturally confident and competent people
    • Our objective is for the education system to support all children and young people to develop social, emotional and cultural skills that will help them succeed in work and life. These basic skills should be developed through early childhood learning and the schooling system and enhanced through tertiary education.

      Improving adult literacy and numeracy

      There are still many young people leaving school without sufficient literacy and numeracy skills to enable access to training and employment opportunities, financial capability and social inclusion.

      Fees-free foundation education was implemented to enable second-chance students to gain the basic skills they need to progress to higher study or gain employment. Over the last year, we worked with the Tertiary Education Commission (TEC) to finalise funding rates and other policy settings so that NCEA Level 1 and 2 foundation education can now be delivered fee-free to students of all ages.

  • Ensuring skills match labour market needs
    • People who gain higher level qualifications, especially at degree level and above, are more likely to be employed, have higher earnings, and less likely to be receiving a benefit. The education system needs to support the skills development and gaining of qualifications necessary to thrive in a globally competitive labour market.

      Boosting workforce skills

      With the number of young people achieving NCEA Level 2 increasing, we are focusing on progressing young people into NCEA Level 3 and to further education at Level 4 or above. The Government has a Better Public Services (BPS) target to increase the percentage of 25 to 34 year olds with qualifications who have qualifications at Level 4 or above. In 2012, a target of 55% for 2017 was set. Better than expected results in 2014 led to an increase in the target to 60% by 2018.

      As part of the 2017 refresh of the BPS Results, the title for BPS Result 6 was changed to better reflect the desired outcome: ‘Upskill the New Zealand workforce’.

      In the year to June 2017, 57.6% of 25 to 34 year olds had a qualification at Level 4 or above, up from 56.5% in June 2016.

      Graph showing 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) from 51.9% in 2010 to 57.6% in 2016, with a revised target of 60% in 2018.

      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
       June 2016June 2017Change (% points)2018 target
      25 to 34 year olds 56.5% 57.6% Up 1.1 60.0%

      Providing pathways across the system

      The education system needs to provide pathways across the system to allow young people to move from each stage of learning to the next, and from learning to sustainable employment.

      Vocational Pathways

      The Vocational Pathways framework helps young people align their learning with skills needed by industry. The Vocational Pathways also enable employers to assess whether potential employees’ skills align with their industry requirements more easily. In each of the six Vocational Pathways, a range of assessment standards provide a curriculum foundation for students at NCEA Levels 1 to 3 to develop skills valued by industry. In addition, qualifications from Level 2 to Level 7 have been mapped to the six Vocational Pathways, to help students navigate learning options related to industry needs.

      The proportion of school leavers leaving school with at least NCEA Level 2 with  a Vocational Pathway Award, indicating alignment of credits achieved in NCEA Level 2 to an industry pathway, is up from 27.2% in 2015 to 32.9% in 2016.

      Youth Guarantee

      Youth Guarantee continues worked with over 250 secondary schools and 110 Youth Guarantee Fees-Free providers to improve the transition of students aged 16 to 19 from school to further study, work or training. Through Youth Guarantee, we are providing a wider range of learning opportunities, making better use of the education network and clarifying pathways from school. Youth Guarantee Fees-Free supported 13,579 young people in 2016. Other Youth Guarantee initiatives, such as Trades Academies, supported 6,900 young people in 2016, working towards attainment of NCEA Level 2 or equivalent qualifications while still at school.


      In 2016, the TEC launched a new pilot called DualPathways to support secondary school students to gain NCEA Level 2 and 3, or equivalent, and help them move into work and/or higher level education. The DualPathways pilot builds on feedback from schools and tertiary education providers that further support is needed in providing relevant programmes for students at NCEA Level 3, and to support progression to further study at Level 4 or above, particularly for students not planning on going to university.

      The DualPathways pilot extends the collaboration that is happening between schools, tertiary providers and industry training organisations across the system. Up to 1,200 student places have been available to 18 tertiary education providers through the DualPathways Pilot in 2017.

      Trades Academies

      Trades Academies are another example of the secondary-tertiary programmes we support. They give students a head start in training for vocational qualifications and improve the responsiveness of schools to local business and economic needs. We provided 6,190 places in Trades Academies in 2016/17, up from 5,520 in 2015/16. Research shows that participants in Trades Academies are more likely than a comparison group to achieve NCEA Level 2 by age 18.

      Regional He Poutama Rangatahi/Youth Employment Pathways Strategy

      The Ministry, alongside the TEC, has worked as part of the Ministry of Business, Innovation and Employment-led cross- agency initiative to develop the regional He Poutama Rangatahi/Youth Employment Pathways Strategy. The Strategy focuses on understanding both what support youth need to become work-ready, and what support employers need to invest in employing and retaining young people at risk of long term unemployment. It focuses on four regions with the highest rates of young people not in employment, education or training.

      Māori and Pasifika Trades Training

      Māori and Pasifika Trades Training enables Māori and Pasifika students to obtain practical qualifications that lead to an apprenticeship or employment. Over the last year, the Ministry provided advice on how to expand Māori and Pasifika Trades Training to meet the Government’s target of 5,000 places by 2019, while also strengthening the focus on improving employment outcomes. In 2017, 3,000 places were available, up from around 2,500 in 2016.


      The growth of demand for trades skills provides a key opportunity to give more New Zealanders access to on-job training to prepare them for skilled employment, while delivering the skills industry needs in accordance with the Tertiary Education Strategy. We are working with the TEC on actions to achieve the Government’s target of raising participation in apprenticeships from around 43,000 in 2016 to 50,000 in 2020.

      We also advised the Minister for Tertiary Education, Skills and Employment on providing enough funding to enable the growth of industry training, with $7 million in funding to be transferred over four years from providers to industry training.

  • Getting at risk young people into a career
    • A significant number of young people in New Zealand are Not in Education, Employment or Training (NEET). The needs of these young people are wide-ranging and complex, and require a coordinated cross-agency approach. We are delivering a package of services that address the drivers of NEET rates related to the education system, while focusing support for groups overrepresented in NEET statistics. We are working to increase education retention and reconnect those who have already left the system through providing a wider range of learning opportunities, better use of the education network, and clearer pathways from school to work and further study.

      At the end of June 2017, 9.7% of 15 to 19 year olds and 15.7% of 20 to 24 year olds were not in employment, education or training.

      Graph showing Indicator 5: Decrease the proportion of the youth population not in employment, education or training, with the proportion of 15 to 19 year olds decreasing from 10.6% in 2010 to 9.7% in 2017, and the proportion of 20 to 24 year olds decreasing from 18.3% in 2010 to 15.7% in 2017.

      Indicator 5 Decrease the proportion of the youth population not in employment, education or training
       Year to June 2016Year to June 2017Change (% points)
      15 to 19 year olds 7.2% 9.7% Up 2.5%
      20 to 24 year olds 15.0% 15.7% Up 0.7%

      Statistics New Zealand runs the Household Labour Force survey, which provides us with these figures. The survey questions have been changed to allow more accurate identification of education and caregiving status, and self- employment. This may have changed the number of people classified as NEET since the change took effect in June 2016. It is not clear whether these questionnaire changes increased or decreased the number of people reported as being NEET, so the increases in NEET rates since December 2016 need to be interpreted with caution.

      For 15 to 19 year olds, programmes including Trades Academies, the DualPathways Pilot, Gateway and Youth Guarantee Fees-Free support the sector to identify and re-engage those at risk of disengaging from education. These programmes are designed to reduce the flow of young people becoming NEET.

      For 20 to 24 year olds, tertiary education provisions such as fees-free provision at Levels 1 and 2, subsidised higher level study, and Māori and Pasifika Trades Training provide opportunities to engage in education and gain skills to transition into employment.

      These programmes are underpinned by Vocational Pathways, which provide a framework for students to show how their learning and achievement is valued in the workplace by aligning learning to the skills needed for six broad industry areas.

      We monitor performance of Youth Guarantee programmes (Trades Academies and Youth Guarantee Fees-Free) through an annual monitoring report. The programmes are shown to be successful in supporting learners to achieve a Level 2 qualification, and have a temporary effect engaging young people in education, but do not reduce the flow of young people becoming NEET in the long term. We are reviewing current policy settings to identify what has the best long term impact on young people’s education and employment outcomes.

      Building links to employment pathways and access to other social support is a key part of ensuring NEETs successfully transition into sustainable employment.

  • Maintaining internationally credible skills and institutions
    • Human capital is one of New Zealand’s major resources, and education is one of this country’s major exports. Our institutions must maintain their good reputation to support employers and graduates to be competitive in the global labour market, and to attract international students and high quality staff. This helps New Zealand graduates and firms to thrive in domestic and international markets.

      We implemented the Budget 2016 International Connections for New Zealanders package, which supports New Zealand students to gain international experience. This included expanding the Prime Minister’s Scholarships, and increasing access to New Zealand tuition subsidies and student financial support for overseas study, alongside student loan interest exemptions for overseas study.

      Budget 2017 allowed for $372.8 million in the tertiary education and science and innovation systems. This will see a total of $203 million invested over the next four years in science and innovation, $132 million in tertiary education and skills, plus $31 million of regional development initiatives to build a stronger economic future for New Zealand.

      We led, with Education New Zealand, the development of a draft government International Education Strategy for sector consultation between July and September 2017. The draft Strategy sets out the Government’s proposed vision, goals and immediate priorities for the international education sector through to 2025. It was developed with input from the international education sector, including an online survey and a series of workshops in 2016 to identify the future challenges and opportunities of international education in New Zealand. A final International Education Strategy for New Zealand will be launched by the end of 2017.

      During 2016/17, we consulted on proposed changes to the Export Education Levy, which is paid by all education providers who enrol international students in New Zealand. We also consulted on new expenditure proposals, to support international students’ wellbeing and Education New Zealand brand and marketing initiatives.

      The Government ensures quality education is delivered to students and that New Zealand qualifications are robust, credible and internationally recognised. Where providers are not meeting the standards we expect of them, the government takes action to ensure the integrity of New Zealand’s education system. Over the last year, the government has taken a number of steps to assure the quality of education delivered to international students including NZQA’s assessment of compliance through extensive monitoring visits and external moderation of Tertiary Education Organisation (TEO) assessment samples. Where international students have been affected by poor quality provision, the Export Education Levy has been used to cover tuition fees or costs.

  • Providing high quality research and innovation
    • Tertiary education organisations play a vital role in creating the knowledge that drives economic growth and development through research and innovation.

      We provided advice leading to the Budget 2017 Innovative New Zealand package, including a $15 million per annum investment in the Performance-Based Research Fund that complements increasing investment in Vote Science and Innovation.

      We supported the TEC to implement the Budget 2016 Entrepreneurial Universities initiative, which provides funding for universities to attract internationally regarded academics to New Zealand.

      We supported the Research, Science and Innovation Domain Plan, released in 2016/17, which is an extension of the National Statement of Science Investment. The Plan will lead to improvements in the transparency and discoverability of New Zealand research. We are working actively with the Ministry of Business, Innovation and Employment to develop the National Research Information System, an online portal that will provide information and data on research projects done in New Zealand.

      A key action of the Plan is to embed the Open Researcher and Contributor Identifier (ORCID) across the system. ORCID is an international hub that connects to other researcher identification systems, publishers, funders, professional associations and higher education bodies. In 2016/17, we were a foundation signatory to the New Zealand ORCID Joint Statement of Principles which will enable the future direction of ORCID in New Zealand.

      We also supported the TEC’s mid-term review of Centres of Research Excellence (CoREs). CoREs are inter-institutional research networks that support growth in research excellence and contribute to New Zealand’s development of world class researchers.

      As part of the next steps following from the Government’s response to New Models of Tertiary Education, we will be thinking about the appropriate balance of incentives to support teaching and research across the tertiary system.