Education and Training (Vocational Education and Training System) Amendment Bill

2.1. Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill?

NO

The reforms were initiated under a priority action to disestablish Te Pūkenga, as set out in the Government’s 100-day plan in late 2023.

2.2. Does this Bill seek to give effect to New Zealand action in relation to an international treaty?

NO

2.3. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?

YES

Three Regulatory Impact Statements have been completed in accordance with Cabinet requirements. An interim Regulatory Impact Statement covered the overall VET reform proposals to support a Cabinet decision to consult. The second analysis covered the key policy decisions involved, and a third an updated approach to work-based learning:

1.     Regulatory Impact Statement: Vocational education and training redesign – key policy decisions, Ministry of Education, considered by Cabinet on 1 July 2024

2.     Regulatory Impact Statement: Vocational education and training redesign – key policy decisions, Ministry of Education, considered by SOU with power to act on 18 December 2024

3.     Regulatory Impact Statement: Vocational education and training redesign - Work-based learning policy decisions, Ministry of Education, considered by Cabinet on 14 April 2025.

These are available on the Ministry’s website at www.education.govt.nz/our-work/information-releases/issue-specific-information-releases/vocational-education-and-training-vet-redesign#cabinet-papers-1.

2.3.1. If so, did the RIA Team in the Treasury provide an independent opinion on the quality of any of these regulatory impact statements?

NO

The RIA Team at the Ministry for Regulation determined that these statements should be quality assured by the Ministry of Education's Quality Assurance Panel and recommended that the Ministry also include a panel member from an outside agency.

The panel considered that, because of constraints imposed on consultation and evidence, the Impact Statements partially meet Cabinet’s quality assurance criteria. Despite this, the statements clearly outline complexities, risks and limitations of policy proposals, and foreshadowed the decisions and analysis subsequently required.

2.3.2. Are there aspects of the policy to be given effect by this Bill that were not addressed by, or that now vary materially from, the policy options analysed in these regulatory impact statements?

NO

2.4. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?

NO

2.5. For the policy to be given effect by this Bill, is there analysis available on:

(a)   the size of the potential costs and benefits?

YES

(b)   the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?

YES

(a)   Costs are considered in the Options analysis section of the RIS as well as the Assessment of Overall Impacts section. In particular see Regulatory Impact Statement: Vocational education and training redesign – key policy decisions, Ministry of Education, finalised on 18 December 2024, pages 18-19, 24-25 and 30-31. www.education.govt.nz/our-work/information-releases/issue-specific-information-releases/vocational-education-and-training-vet-redesign.

Due to time constraints however, a full cost benefit analysis of the projected costs and intended benefits over time of the redesigned system has not been undertaken.

(b)   There is potential for some current Te Pūkenga employees to suffer loss of income if their positions are not included in transition plans to transfer to any of the new entities. If they are not offered continuing employment in the new entities, they will be eligible for redundancy. If they are offered continuing employment (on no less favourable terms) and they decline the offer, they will not be entitled to redundancy.

Due to time constraints, no analysis has been undertaken of the potential number of employees whose income may be impacted.

(c)   In June 2024 Te Pūkenga engaged external specialist advisors to undertake work to support the improvement of the financial performance of its ITP business divisions. This included analysis of the current state and long-term sustainability of each ITP, and their potential pathway to financial viability in advance of the legislative changes. This work is ongoing and there are indications that not all polytechnics will be sustainable in the long-term. The provisions in the Bill will provide options for paths forward once the viability of the independent entities is determined by Cabinet.

2.6. For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by:

(a)   the level of effective compliance or non-compliance with applicable obligations or standards?

YES

(b)   the nature and level of regulator effort put into encouraging or securing compliance?

YES

(a)   The bodies established by secondary legislation empowered by the provisions in the Bill are expected to deliver the re-design of the system by meeting the obligations and functions given to them by the legislation.

(b)  The TEC monitors both the education delivery of proposed polytechnics and their financial position, and NZQA and TEC monitor the Industry Skills Boards. In this way the Crown ensures both types of organisations perform well in terms of their functions and obligations.

3.1. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with New Zealand’s international obligations?

The Ministry of Education considered New Zealand’s obligations under the International Covenant on Economic, Social and Cultural Rights regarding equal access to higher education. The changes to the VET system set out in the Bill have the potential to lead to a loss of access to in-person study options in regions where there is no provider to take on certain programmes (which will disproportionately impact under-served leaners). The proposed reforms may result in a greater proportion of provider-based delivery shifting to online or blended delivery (i.e. predominantly online with some campus-based elements), or some programmes becoming unavailable in some regions.

The Ministry of Education also considered New Zealand’s obligations under the Global Convention on Higher Education, including the obligations to promote a culture of quality assurance in higher-education institutions and systems and to promote inclusive and equitable access to quality higher education. The reforms set out in the Bill will restore local decision-making in the vocational education and training system and may enhance regional and industry input into the quality of, and access to, vocational education in New Zealand.

The Ministry of Business, Innovation and Employment (MBIE) provided advice on the compliance of the proposed reforms with International Labour Organisation (ILO) obligations. The transfer of Te Pūkenga and workforce development council employees to new polytechnics and Industry Skills Boards on terms “no less favourable” (as set out in the employment transfer provisions in the Bill) may engage New Zealand’s obligations under the ILO’s Right to Organise and Collective Bargaining Convention, 1949 (No. 98). It is contrary to the principles of free collective bargaining to unilaterally modify provisions of concluded collective agreements. To the extent that it is arguable that transferring employees will lose previously negotiated rights due to the transfer, this gives rise to risk of non-compliance with this convention.

Only those terms in collective agreements however, that are unfeasible for new polytechnics and Industry Skills Boards to offer will not be included in new arrangements. Efforts to preserve the effect of these clauses through the “no less favourable” mechanism should, to a certain extent, mitigate the risk of a complaint being made to the ILO. MBIE have advised the risk of an adverse finding by the ILO would be significantly mitigated by genuine and timely consultation with representatives of the workers affected and emphasising that workers will still be able to collectively bargain with their new employer.

3.2. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with the principles of the Treaty of Waitangi?

The Ministry of Education’s regulatory impact analysis of the policy proposals underlying this Bill included assessment of compliance with the articles of the Treaty of Waitangi / Te Tiriti o Waitangi. The analysis found that time and process constraints limited officials’ ability to engage meaningfully with Māori on the redesign process, and consequently there has not been sufficient analysis or engagement to state confidently that Māori interests will be met across the redesigned VET system.

3.3. Has advice been provided to the Attorney-General on whether any provisions of this Bill appear to limit any of the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990?

YES

The Ministry of Justice has assessed the Bill for consistency with the New Zealand Bill of Rights Act 1990 and provided advice to the Attorney-General prior to introduction.  

3.4. Does this Bill create, amend, or remove:

(a)   offences or penalties (including infringement offences or penalties and civil pecuniary penalty regimes)?

NO

(b)   the jurisdiction of a court or tribunal (including rights to judicial review or rights of appeal)?

NO

3.5. Does this Bill create, amend or remove any provisions relating to the collection, storage, access to, correction of, use or disclosure of personal information?

YES

The Bill authorises the transfer of student and employee information from the old to the new entities and states that the transfer will not constitute a breach of privacy.

The entities will need to consider how information will be securely transferred and to plan accordingly. Transfer of information could be addressed through the Bill’s requirement for transition plans, for which TEC will have oversight responsibility. TEC will expect all organisations being disestablished and established to have a privacy policy in place and adhere to its requirements and expectations.

In terms of national student numbers, tertiary education organisations must adhere to any requirements or restrictions in schedule 24 of the Education and Training Act 2020.

3.5.1. Was the Privacy Commissioner consulted about these provisions?

YES

The Ministry engaged with the Office of the Privacy Commissioner (OPC) during agency consultation, and they identified the same potential issues regarding personal information as set out above at 3.5. After discussion with the Ministry’s internal Privacy team, the OPC are happy that measures are in place to address them.

3.6. Has there been any external consultation on the policy to be given effect by this Bill, or on a draft of this Bill?

YES

Public consultation on the proposed changes to vocational education and training (VET) was undertaken from 1 August to 12 September 2024 and involved publication of consultation documents and supporting information, followed by regional public meetings, and then a request for submissions.

The consultation covered three key areas for proposed reform:

• A redesigned polytechnic network that retains access to provision in regions, through a combination of stand-alone and a federation of polytechnics.
• Options for an industry-led system for standards-setting and industry training.
• Changes to vocational education funding from 2026 to support the reformed system.

Submissions

The Ministry received 1048 unique submissions on the proposals. Of the submissions received, 510 were received from individuals; 538 were received from organisations or groups. The majority of submissions were received from staff (300), employers (201), industry organisations (167), and those with another relationship to the VET sector (177). 

Key findings

Slightly more submitters supported the creation of a federation model for polytechnics than opposed it. 

Submitters’ preferred industry training system was Option B: replacing Workforce Development Councils (WDCs) with industry-specific standard setting bodies. 

Slightly more submitters were in favour of the proposed funding shifts for 2026 than were opposed (among those submitters that expressed a view). 

Common themes that arose across submitters’ responses to the three proposals included: 

• balancing local autonomy and regional responsiveness with cohesion and consistency 

• sustainability of funding for VET (provider-based and work-based) and ITPs 

• the importance of equity of access and outcomes for priority learners 

• a VET system that serves industries of all sizes and meets the training needs of niche industries. 

Further targeted consultation

Following the 2024 consultation, the Government identified two possible models for work-based learning. As only one of the potential models was consulted on in 2024, Cabinet agreed further targeted consultation was required, focussed on understanding industries’ preferences between the two possible models.

Engagement took the form of formal online meetings with the Minister and grouped industry representatives, and less formal online meetings with officials. In total, 204 submissions were received from a range of invited and non-invited stakeholders.  171 submissions favoured the Independent model, 16 favoured the Collaborative model and 17 gave no clear preference.

3.7. Have the policy details to be given effect by this Bill been otherwise tested or assessed in any way to ensure the Bill’s provisions are workable and complete?

YES

The Ministry has worked closely with the TEC on the development of the policy and the drafting of the Bill to ensure that the provisions of the Bill are workable and will enable and facilitate the implementation. The sequencing of the establishment and disestablishment of the various entities as set out in the Bill, and the transfer of programmes to successor organisations, has been planned for by the TEC with the support of the Ministry. The TEC will manage the transition plan approval process and continue to monitor the transfer of programmes and staff from Te Pūkenga divisions into the successor organisations.

4.1. Does this Bill contain any provisions that could result in the compulsory acquisition of private property?

NO

4.2. Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?

YES

The Bill provides for the following powers to charge a fee or impose a levy:

1.    Federation Committee may charge a fee to a federation polytechnic for the cost incurred by the Committee for procuring shared services or commissioning the design, development or delivery of education programmes from an anchor polytechnic. Fees may only be charged for the recovery of actual and reasonable costs. The power to charge a fee is necessary for the Committee to perform its functions and activities in a ‘cost-neutral’ way and to avoid the need for separate funding or borrowing.

2.    An Industry Skills Board may charge a fee to tertiary education providers for the performance of functions related to developing, setting and maintaining capstone assessments, education programme endorsements and moderation activities in relation to a provider. Fees may only be charged for the recovery of actual and reasonable costs of the Board in performing these functions. The power to impose a fee is necessary to enable Industry Skills Boards to supplement public funding in order to function effectively and to transfer the cost of performing its functions to providers who benefit primarily from the performance of those functions.

3.    An Industry Skills Board may, by notice, fix fees payable by trainees for training activities provided by the industry skills board during the transition period. This power is necessary to ensure ISBs can provide training activities relating to work-based training during the transition period, pending the transfer of those activities to a tertiary education provider. The fees set must be limited to recovering the actual and reasonable costs incurred by an ISB in providing the training activities.

4.    The existing power to impose a training levy (updated to be called an Industry Skills Board levy) by Order in Council is amended to remove the pre-requisite for a ballot of at least 60% of employers in a specified industry that shows at least 60% of those employers are in favour of imposing a levy.  Under the amended provisions, an Industry Skills Board levy may instead be imposed by Order in Council if the feedback from consultation supports the view that imposing the levy is in the interests of all members of the levy group. The levy must be for a purpose related to the performance of the Board’s functions (such as the Board’s standards-setting functions). The levy is necessary or appropriate where employers in the specified industries support the need for additional funding for an Industry Skills Board to widen the range or extent of its activities in the performance of its functions.

5.    NZQA may charge an annual fee for prescribing quality assurance requirements for Industry Skills Boards and monitoring their compliance. This power is carried over from the existing provisions in the Act in relation to NZQA’s power to charge an annual fee to a Workforce Development Council. 

4.3. Does this Bill affect rights, freedoms, or impose obligations, retrospectively?

NO

4.4. Does this Bill:

(a)   create or amend a strict or absolute liability offence?

NO

(b)   reverse or modify the usual burden of proof for an offence or a civil pecuniary penalty proceeding?

NO

4.5. Does this Bill create or amend a civil or criminal immunity for any person?

NO

4.6. Does this Bill create or amend a decision-making power to make a determination about a person’s rights, obligations, or interests protected or recognised by law, and that could have a significant impact on those rights, obligations, or interests?

NO

4.7. Does this Bill create or amend a power to make delegated legislation that could amend an Act, define the meaning of a term in an Act, or grant an exemption from an Act or delegated legislation?

NO

4.8. Does this Bill create or amend any other powers to make delegated legislation?

YES

1.    A power to establish polytechnics by Order in Council, including specifying the region or regions to be served by the polytechnic, and whether the polytechnic is an anchor polytechnic. This power is necessary to set up the redesigned system, to move the polytechnic divisions out of Te Pūkenga before it is disestablished, and to ensure continuity of provision. Safeguards that apply to this power include that before making a recommendation to the Governor General, the Minister must seek advice from NZQA regarding quality assurance, take into account the characteristics of a polytechnic and be satisfied that the establishment is in the interests of the tertiary education system and the nation as a whole.

2.    The power of the Minister to designate federation polytechnics by written notice. This power is necessary to set up the redesigned system which includes a federation to support the sustainability of the polytechnics. Safeguards include that before designating a polytechnic as a federation polytechnic, the Minister must consider advice from the TEC and NZQA on viability and quality assurance matters and must be satisfied the designation is in the interests of the education and training system as a whole and is necessary or expedient for the polytechnic to deliver its functions.

3.    A power to establish Industry Skills Boards by Order in Council on the recommendation of the Minister. This power is necessary to set up the redesigned system including the Industry Skills Boards and ensure continuity of standards setting. Before making a recommendation, the Minister must consult the representatives of the 1 or more specified industries to be covered by the Industry Skills Board.

4.    A power to disestablish Industry Skills Boards by Order in Council. This power is necessary to support the ongoing integrity and functionality of the system. This can only occur if a request from the Industry Skills Board to be disestablished has been received by the Minister, and the Minister is satisfied on reasonable grounds that there are good reasons to do so; OR the Minister is satisfied the Industry Skills Board has engaged in unlawful activity, persistently failed to perform its functions or duties, or serious or persistent complaints have been received regarding the Industry Skills Board’s performance.

5.    The power of Industry Skills Boards to prescribe, by notice, fees payable by providers for quality assurance activities. This power is necessary to ensure quality assurance services can be provided and to support the ongoing financial viability of the Industry Skills Boards. An Industry Skills Board may not issue a fees notice unless the chief executive of NZQA is satisfied that the proposed fee is reasonable, having regard to: the costs incurred by the Industry Skills Board in performing the activities; and the fees (if any) fixed by other Industry Skills Boards in respect of the same activities.

6.    The power of the Minister to issue an apprenticeship training code. This power is necessary to protect relevant parties and to set out the responsibilities of apprentices, their employers, and persons carrying out apprenticeship training activities. Before issuing an apprenticeship training code, the Minister must consult the relevant Industry Skills Boards that cover the one or more specified industries to which the code relates.

7.    A power to impose an Industry Skills Board levy by Order in Council. This power is necessary to update the current training levy provisions in the Act. The provision requires the Minister to be satisfied that the feedback from consultation with qualifying members of a levy group supports the view that imposing the levy is in the interests of all members of the specified industry. This aligns with the policy objective of ensuring that a levy proposal remains primarily a choice for the specified industry concerned.

8.    Schedule 1 – new Part 7 inserted in Schedule 1 – new clause whereby the Minister may by written notice issue directions to NZIST on matters related to the allocation and transfer of programmes and activities to a successor organisation. This provision is necessary to facilitate the transition of NZIST programmes and activities to the new organisations prior to disestablishment. A direction expires on either the expiry date specified in the direction or the end of the transition period relating to NZIST.

9.    Schedule 1 – new Part 7 inserted in Schedule 1 – new clause providing a power to disestablish [Te Pūkenga] NZIST by Order in Council. This power is necessary to give effect to the intent of the redesigned system.

10.  Schedule 1 – new Part 7 inserted in Schedule 1 – new clause providing the power of an Industry Skills Board to prescribe, by notice, fees payable by trainees for training activities provided by the industry skills board during the transition period. This power is necessary to ensure ISBs can provide training activities relating to work-based training during the transition period, pending the transfer of those activities to a tertiary education provider. The fees set must be limited to recovering the actual and reasonable costs incurred by an ISB in providing the training activities.

11.  Schedule 1 – new Part 7 inserted in Schedule 1 – new clause whereby the Minister may by written notice issue directions to a WDC to ensure the council can deal effectively with matters relating to the transfer of functions to an ISB. This power is necessary to support the transfer of functions. The Minister must consult TEC, NZQA and the WDC prior to giving a direction. A direction expires on either the expiry date specified in the direction or the end of the transition period relating to the WDC.

12.  Schedule 1 – new Part 7 inserted in Schedule 1 – new clause providing a power to disestablish Workforce Development Council and provide for the distribution of residual assets and liabilities, by Order in Council. This power is necessary to give effect to the intent of the redesigned system.

4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment?

YES

Provided in Appendix One

4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment?

YES

1.    The Bill provides for the transfer of education and training programmes and associated assets, liabilities and employees from Te Pūkenga NZIST to a new polytechnic or other public tertiary education institution (TEI) such as a wānanga or university, or to a registered private training establishment (PTE). The policy objective of the transitional provisions in the Bill is to ensure, as far as reasonably practicable, that the core vocational education and training provision is continued at a new polytechnic or another TEI. The option to transfer programmes that fall outside the core provision of a polytechnic (or other TEI) to a PTE is to enable continuity of such programmes, which may otherwise be closed down. The transfer of public education programmes to a private provider is not unprecedented but is unusual at a system level of reform.

2.    The Bill provides for the establishment and operation of a federation of polytechnics. The federation model is new in the New Zealand tertiary education system, although there are some overseas examples of a federation for public tertiary education providers. The purpose of the federation is to enable the federation polytechnics to procure the design, development and delivery of education and training programmes and to have access to shared services at cost through an anchor polytechnic, while maintaining their institutional autonomy and academic freedom to determine their core provision in the regions served by those polytechnics. The federation structure is necessary to help support the federation polytechnics remain viable and can continue to deliver the range of programmes and training activities required by the industries and communities in the regions served by the polytechnics.

3.    The Bill provides the Minister with a temporary power during the transition period to give directions to NZIST or a WDC that the Minister thinks reasonably necessary to ensure that NZIST or WDC can deal effectively with matters relating to the transfer of programmes, micro-credentials, training activities, or functions. This direction power is necessary to safeguard continuity of learning for students and trainees, but is limited to the transition period and can only be exercised after consultation with TEC, NZQA, and NZIST or the WDC (as the case may be).