Te Pūkenga recently released an ITP Competition Report under an official information act (OIA) request. The report contains a trove of information and data about Tertiary Education Organisations (TEOs) operating in each of New Zealand’s regions. I was surprised at the sheer number of TEOs in regions that have relatively small populations, which led me to wonder whether there would be benefits to having fewer TEOs.

To make a useful comparison of the extent of TEO saturation across regions I have calculated the regional population per TEO (chart 1). Admittedly, it is a crude measure. It doesn’t consider the size of the TEOs in terms of learner numbers. Benchmarking against the whole population is also a little crude when TEOs tend to serve some population groups more than others. All that said, Chart 1 does serve to raise the question of whether some regions have too many TEOs.

One of the key takeaways from Chart 1 is the variation across regions. Auckland has 132 TEOs serving a population of 1,739,300, which equates to just over 13,000 people per TEO. Canterbury is next at just over half that. At the other end of the scale is West Coast Region. Here, there are 27 different TEOs serving a population of just 32,900. That equates to just over 1,200 people per TEO.

It's also clear from Chart 1 that regions with larger populations have a higher population per TEO, which means they have proportionately fewer TEOs. For example, Nelson, Tairawhiti, Marlborough, and West Coast all have populations of under 100,000 people and populations per TEO of less than 1,500. In contrast, Canterbury, Waikato, Wellington, and Bay of Plenty have populations of between 300,000 and 700,000 and populations per TEO of between 4,800 and 7,900. Canterbury has 85 TEOs. If it had the same population per TEO as West Coast, it would have 547 TEOs.

There probably isn’t an ideal number of TEOs for a given population because the size of the TEOs has a strong bearing on the result. But the variation across regions even on this crude measure, and the fact that smaller regions tend to have proportionately more TEOs, suggests a lack of standardisation in how tertiary education is delivered regionally.

Taking the West Coast Region as an example. Tai Poutini Polytechnic had a net deficit of $5m in the 2024 budget year and has been in deficit every year back to at least 2017 (I don’t have access to pre-2017 financial data). Tai Poutini isn’t even the biggest provider on the West Coast. It has a 20% market share compared with 21% for West Port Deep Sea Fishing Ltd.

Several workplace-based training providers operate on the West Coast such as BCITO, Careerforce and Competenz. You could argue that these providers are not in direct competition with Tai Poutini because the latter provides classroom-based education. But Open Polytechnic, Southern Institute of Technology (SIT), Otago Polytechnic, Ara Institute, Wintec, and Nelson Marlborough Institute of Technology all have learners in the region which together account for a 31% share of the learner market. In addition to three West Coast campuses, Tai Poutini also has an Auckland campus, a Christchurch campus (which it shares with Ara Institute and SIT) and a Wanaka campus (which it shares with Otago Polytechnic).

Before making any firm conclusions, it would be important to understand the history of why so many providers operate on the West Coast. They all must be meeting learner needs to some extent. But wouldn’t Tai Poutini have a better chance of turning a profit if it were able to increase the scale of its operations by taking on the learners currently serviced by the other ITPs operating on the West Coast?

The Government’s consultation on its vocational education and training reforms is largely silent on when it thinks competition is good for the sector and when it isn’t. The consultation document refers to cutting programmes or pivoting to blended or online delivery for ITPs facing serious financial issues where programmes have been running with low student numbers. It says nothing about potentially addressing financial issues by having, say, one ITP per region.

This raises the broader question of when competition is good for tertiary education and when it isn’t. Generally speaking, competition can lower prices and drive innovation. This can work well in other sectors such as manufacturing or retail. There is room for innovation in tertiary education, but only to a limited extent. And using competition to drive down prices is not a good idea. We don’t want a race to the bottom, particularly since the quality of different courses is hard for learners to discern and price signals are distorted by government subsidies.

In the end, there’s no getting around the fact that, in many regions, TEOs are serving a sparse population base. The Government’s consultation document says it wants students to continue to have access to vocational education in their region. When populations are sparse, providing access is unavoidably expensive. The Government also wants ITPs to be financially sustainable. I don’t think they can have their cake and eat it. Broad access and financial sustainability cannot coexist with competition.