The Productivity Commission's Report on Tertiary Education was not productive – it needed to be

According to the Productivity Commission the current tertiary education system is blocking innovation. But in its recent report that promised to put forward New Models of Tertiary Education it delivered none. Its failure should not end the debate. There is an urgent need to bring about change

For more than a year the Productivity Commission has been working on its report, New Models of Tertiary Education (released last week), with the aim of showing us how we can have a more innovative tertiary sector. The report will not make the best seller list – but it is worth a read. All 500-plus pages of it.

Worth a read but do not expect to find any new models of tertiary education because, oddly enough, the Commission does not offer any. Nor will the reader find a coherent analysis of where tertiary education might head in response to major drivers in its environment because what made the first draft hang together has been taken out.

In the first draft, the Commission favoured a more market approach and offered Student Education Accounts (vouchers) as central to the way forward. Accounts do not appear in the final version leaving readers to browse through a lot of interesting information about the sector while sifting through a kit bag of ideas – some useful, some not so much.

The Tertiary Education Commission (TEAC)

The Commision's report is the work of some clever people who obviously read widely and talked to a lot of people. Yet, astonishingly, the Commission appears to not have read any of the reports produced by the Tertiary Education Advisory Committee (TEAC) in the early 2000s. These reports underpinned the reforms put in place from 2002 onwards. I hasten to add that the system we see today is not quite what the TEAC or the government of the time wanted. Leaving that matter aside, it would have been worth the effort to read the reports because not only are they shorter and more focused but they also had the backing of the sector.

While much has changed over the past fifteen years, the Commission might have been wise to use the reforms as a point of departure as they sought to offer new ideas in the context of changing environment.

When the TEAC did its work, it was reacting to a more market approach that had led to higher participation rates while appearing to ignore such important matters as quality, relevance, access and connectedness. There was also a sense that not enough was being done to move New Zealand towrds being a knowledge economy and society.

Full aware that any new policy framework would need to carefully balance government and sector priorites, the TEAC proposed a new tertiary system that included "light-handed" guidance through a Tertiary Education Commission, strategic goals and priorities, an assessment of institutional relevance, charters and profiles (now investment plans), a new funding model, support for building institutional capacity and accountability arrangements.

Almost all of the suggestions made by the TEAC were implemented with the aim of building an integrated system that would:

* meet the needs of students;

* help achieve Government"s strategic goals;

* deliver excellence in teaching and research; and,

* demonstrate open and dynamic connectedness amongst providers and between providers and business.

I should again note that what we see today has only a passing resemblance to the spirit of the TEAC inspired reforms. If the original intention was to create an environment within which the sector could respond to the demands of the 21st century, the current regime is more about reducing financial risk for the Government.

The reader of the Productivity Commission's report will notice that their aspirations and those of the TEAC are not that different. Another good reason to build on the earlier work.


I emphasise "build on" because in the years since the TEAC report, the world of tertiary education has become open to disruption in ways that were then not so obvious.

Among the main sources of disruption are:

* the costs of education to students and Government;

* the perceived value of education to students;

* cultural shifts that mean people want to learn in different ways;

* the call for geater differentiation between institutions;

* unbundling of services and qualifications;

*  new technology;

* the need to access to lifelong learning;

* the importance of vocational learning;

* the ability access to best teachers and best courses on-line;

* new approaches to pedagogy;

* the diversity of students;

* credit inflation undermining the value of qualifications;

* the drive to create new knowledge;

* pressure to commercialise IP; and,

* internationalisation.

There are changes here that are desirable, changes that are inevitable and changes that are neither. But, in one way or another, they will have to be addressed.

The Productivity Commission was aware of these changes but, unfortunately, did what happens so often when difficult policy issues arise – they reached for the market. Letting eveything rip always seems easier than coming up with workable answers.

But no government is going to live with market solutions because they know tertiary education is vital to national success and that they will pay if an institution gets into financial trouble.

Equally, if institutions are to respond to this disruptive environment, they will require appropriate support. This is the biggest concern of the Productivity Commission. They conclude that the current system is blocking innovation and in this they are right.

Since the reforms of the early 2000s, the financial risk the tertiary education sector represents to Government has become the the driving force of policy. As one wag said to the Commission, "fees are regulated, student numbers are regulated, funding is regulated - everything else is up to you!"

Even more frustrating, institutions are asked to do things for which they have no funding and that current regulations prevent them doing. Take, for example, the criticism universities face for not doing enough for business. Critics overlook the fact that there is no funding to support working with business because current policy focuses almost exclusively on school leavers studying full-time until they complete a qualification. This makes it very difficult to tailor credit-earning education for a specific group already in the workforce. Predictably, given the focus on school-leavers, there has been a significant decline in the numnber of mature students at universities at a time when lifting their capability is critical to national success.

The Productivity Commission is, then, right to pinpoint the system as the problem. This does not let individual institutions off the hook, but it is no use attacking them for failing to innovate when they cannot.

Where to from here?

Where do we go from here? I suspect the Commission's report will see little of the light of day. The National-led Government has dismissed or ignored it. The Labour/Green alternative has so far shown more interest in lowering costs for school leavers than improving things for the system itself.

This is a tragic situation. The ability of our tertiary sector (and the wider education sector) to innovate in the face of a changing environment is what will drive individual and national success. Let us make no mistake, New Zealand has to change if it is to succed in the 21st century. If we fail to equip ourselves to meet the new times we live in, we are not going to thrive.

In my view, the original TEAC inspired reforms provides us with a starting point for what is needed. But we need to look again, in a new context, at the way we can best balance the priorities of government and the sector as we try to create the right envionment for innovation.

To finish – a few words of caution. Do not expect the education system to change quickly. There is a reason it is slow to change. By its very nature education is slow to reveal its value. Indeed it could take a lifetime. Change needs to be carefully considered to avoid doing things that may prove to be counter-productive.

In addtion, disruption on a large scale is unlikely to come from existing institutions simply because they are locked into what they are doing day to day. This mean disruption is more likely to come from outside the system, by institutions starting new organisations where they can innovate or by new entrants to the sector.

The difficulty of achieving change in the sector makes it all the more urgent to find out what needs to be done.

None of this should be taken to mean we do not have a system to be proud of. Our universities in particular are keeping New Zealand on the world educational map. But being good at what we did yesterday is not answering the question about what we should do tomorrow. The question is – how will we make the change?