Support for increasing subsidies for in-demand skills

The Productivity Commission believes the tertiary sector needs to be more flexible and embrace innovation. Photo: Lynn Grieveson

New Zealand could be better off directing tertiary education funding towards in-demand skills, rather than popular subjects, a select committee has heard.

The Productivity Commission appeared before the Education & Science Select Committee on Wednesday morning to answer questions about their report into new models of tertiary education.

Released in March, the report determined tertiary institutions were sluggish to innovate and recommended a raft of recommendations including the reintroduction of interest on student loans and focusing more on teaching quality rather than research.

You can read Newsroom's analysis of the report here.

The final report also abandoned a recommendation from the earlier draft that suggested shifting funding from institutions to students, giving each person $45,000 to spend on education.

Dr Graham Scott from the commission told the committee the aim had been to try and improve access to tertiary education for those that did not follow a traditional path.

"We abandoned the idea of a voucher we floated in our draft report, it didn't really find much enthusiasm for various reasons and would have taken a lot of work to detail it out to how it would actually work but the spirit that was behind it was trying to find a way to improve the access for people who don't want a traditional university education straight out of school to get better access to the tertiary system."

The viability of tailoring funding to disciplines that were in demand was a hot topic at the committee hearing after being raised by National MP Maurice Williamson.

He noted that tertiary education was heavily funded by the taxpayer and asked about a model adopted in several countries, including Finland, that involved tiered funding depending on what was best for the country.

"Let's say we need 300 law graduates a year so fund those 300 places really well, probably 90 percent even if you want to, then...anyone else that wants to do it can, just like anyone who wants to do art history - I think there's 10,000 art history enrolments at Auckland University, I think it's fine they're doing it, it's a great discipline, but I don't think it's right the taxpayer funds 10,000 places.

"Maybe we want 500 art historian graduates we fund well, the next cohort moderately maybe, then the last cohort is anyone who wants to can but they pay for it all themselves."

In trying to make his point, Williamson used incorrect figures. At Auckland University there were 145 full-time students enrolled in Art History, while there have only been 1200 students graduate with the subject as a major since 2001.

That aside, Williamson suggested a system where the top bracket of students, those on scholarships or bursaries for example, were funded highly, with the middle bracket funded to current levels and then anyone else paying more of the cost themselves.

Labour's Chris Hipkins retorted that even if people were studying a particular degree, it did not mean that they were not going on to get good jobs in other areas despite not working in their chosen field of study.

But Scott said the commission supported the idea of viable price purchasing rather than controlling volume, saying the measure could be introduced over time.

It was important not to contain choice, but there was no reason why the government could not signal what areas it wanted people to study in to seek value for money for the country, he said.

Earlier, when discussing innovation in the industry, Scott said many providers felt constrained by regulations that made it impossible for them to innovate and try new things.

"One polytechnic...said to us, for example, 'the system treats us as if we're always trying to cheat'."

Hipkins responded that regulations had been tightened for good reason, giving the example of CPIT's Cool IT project, which had been given huge amounts of money for a course where students did little more than post out a CV.

He asked how you could design a system without the risk that could happen again.

Scott said there would always be cheaters, but a tiered approach where more respected organisations were given more freedom to innovate was worth considering.

"You've still got to manage the risk but you don't want a system that starts off that everyone's going to try to do that, so you need to discriminate between the established players you think are not going to misbehave like that and give them more rope."

** This story has been changed to include the number of students studying Art History at Auckland University, which were provided by the institution after publication.*