By now it must feel like we are starting to beat a dead horse covering the shortcomings of the government’s tertiary education policies. However, every month new data continues to be released which strengthens our position even more. The current system appears to be slowly failing, and fees-free has done next to nothing to save it (at least in the short term). If we want to improve tertiary education outcomes in New Zealand, the sector requires adjustments to the system beyond lowering the costs for students.

Figures from the Tertiary Education Commission have been released providing a snapshot of student numbers in April 2018 compared to April 2017. The data does not paint a pretty picture about the effectiveness of the government’s fees-free policy. Overall, the number of equivalent full-time students (EFTS) in April 2018 was down 0.2% from the same time a year ago.

The largest decreases in student numbers were for Institutes of Technology or Polytechnic’s, and Wānanga, which fell by 2.6% and 1.2% respectively. These education providers are the second and third largest subgroups of the industry and account for 28% of all students in the sector.

However, the remaining two groups of providers didsee increases. Numbers at private training establishments (PTE) and universities, up 3.5% and 0.3% respectively. Universities account for 63% of students, but a mere312 more students is negligible when compared to the 165,014 in the sector.  Additionally, while the 3.5% rise of student numbers at PTEs may seem significant, it is important to note that the number of students at these establishments accounts for a small 8.4% of the total.

Data shows international students numbers in 2017 down by 5% (6,217) from 2016. This fall is only likely to be exacerbated by further government migration policy changes clamping down on international student visas.

The drop in foreign student numbers was strongest amongst PTEs, which fell a massive 22% from the previous year. The main driver of this fall is the reduction in students from India, with 7,778 less students, down 28% from a year ago, which was partly mitigated by increases in student numbers from China.

With falling international demand, and the fees-free policy failing to achieve results, the future of some parts of the tertiary education sector is beginning to look dire. The sector needs a new system that can effectively target the necessary skills to contribute to a skilled labour force able to meet market demands.

So how does the sector need to change to adapt and thrive in the future? This week, Infometrics has published a report on exactly that, From Education to Employment: Megatrends affecting NZ’s working environment.

In summary, there are three main action points. Firstly, the government needs to provide strategic oversight of skills and training via a national skills strategy. This idea of a skills strategy is something about which we have previously gone into further detail. A national skills strategy would help bridge the gap between the skills the labour force currently has and the skills that are needed going forward.

Next, larger qualifications should be broken down into smaller skills-based courses. Given the rapidly evolving workplace, smaller skills-based courses are required to help workers stay up-to-date. Micro-credentialisation allows further upskilling to boost worker relevance in a world facing increasing automation.

And with that comes the final point, increased specialisation and focus on core areas. Additionally, increased collaboration should come hand in hand with specialisation. If each institute focuses on its core area of expertise while leaning on other institutes to cover their shortfalls, higher-quality outcomes are likely. Rather than competing for students across a wide range of courses, specialisation and collaboration will allow education providers to concentrate their effort where it counts, the quality of education.

Failure to respond to these changes and challenges will have far reaching consequence across the economy. In his latest release, Education Minister Chris Hipkins stated, “The decline has challenged providers’ ability to maintain the quality of what they deliver to students”. However, simply throwing more money at the sector through increased subsidies is unlikely to fix the underlying issues in the sector.

Without addressing the current and underlying issues in the tertiary education sector, we will likely see further mismatches in the labour force. As consequence, lower future productivity potential could be realised, resulting in lower living standards in New Zealand.