Michael Cullen: Speech to Unitec On The Govt's Tertiary Reforms
5 April 2004 Speech Notes Address to UNITEC Professorial DinnerOakridge House, Carrington Road, Auckland
As you are no doubt aware, I am speaking to you at a time when there is some friction between parts of the tertiary
education sector and the government over aspects of the tertiary education reforms. One would have hoped there would be
some forum other than the High Court for ironing out differences on the question of benchmarking the research outputs of
New Zealand institutions, but sadly that is where things are at the moment.
The action taken by Auckland and Victoria Universities is symptomatic of an age-old tension around how one should define
a tertiary education system and evaluate what it produces. On the one hand, there is some natural suspicion of any whiff
of utilitarianism, the belief that higher education - or at least, any part of it that attracts public funding - should
be linked to demonstrable economic and social benefits.
This is regarded in some quarters as antithetical to free and unfettered intellectual endeavour, which is seen as a good
in itself, requiring no further justification. How can an intellectual community undertake basic research or function as
the critic and conscience of society, some would ask, if it has to justify its contribution to gross national product?
I have some sympathy with these concerns, given my own background as an academic working in the humanities. The value to
a society of tertiary education cannot readily be translated into the language of costs and benefits. For a start, it
contributes to capacities that underpin our economy and society, such as:
v the capacity for abstract and critical thinking,
v the capacity for a critical understanding of our own culture and society, and
v the capacity of individuals to acquire and manipulate new bodies of knowledge.
In this sense, the value created by tertiary education is diffuse and often hard to detect, even though it is critical
to the success of individual endeavour and the functioning of businesses and communities.
Secondly, tertiary education delivers most of its benefits over a long time frame. Education is something that occurs
relatively quickly, but generates returns that continue and often increase over the course of a lifetime. Hence the
problem with applying orthodox accounting principles to education. Future benefits tend to be discounted, while
immediate costs take centre stage.
Finally, there is an exploratory and speculative element in original research which means that we need to risk failures
in order to achieve successes. Indeed from the point of view of scientific method, our failures may be as valuable as
successes. Disproving a hypothesis is as much an advance in knowledge as proving it. An overly utilitarian approach
would find it hard to appreciate this fact, and would tend to restrict the spirit of exploration that is the central
motivation of many academics.
So I accept that tertiary education has some legitimate claims to uniqueness when it comes to running a ruler over its
activities. However, I have to part company with any view that turns institutions of research and higher learning into
national treasures, and argues that their accountability should extend only to their probity in managing public funds
and not what outcomes are created for society.
The reality is that the acceptance of government funding implies some degree of responsiveness to national priorities
and economic, social, and cultural goals. The question is: how much responsiveness? And my answer is, a great deal, so
long as we define those goals broadly and interpret them liberally.
We are a small country with limited resources. We will never be able to afford the breadth and depth of educational
provision that other countries enjoy. We have to be selective, and that selection must be on the basis of relevance to
the skills and knowledge our communities and businesses most need in order to thrive. No tertiary education system can
afford to be disengaged from those needs and priorities, despite the difficulties in defining the terms and measuring
the results.
A key priority for New Zealand is how to overcome our productivity gap. In the last decade we have seen relatively low
productivity and labour productivity growth. While our performance has been trending upwards since the mid-1990s, at 1.5
percent on average per year over the last 4 years, we continue to lag behind other OECD countries with 2-3 percent
productivity growth.
The problem can be attributed partly to underinvestment in infrastructure during the 1990s; but it is in large part a
workforce productivity problem. In short, New Zealanders on average are less skilled than Australians, Canadians,
Britons, Japanese, Germans and so on.
Skilled individuals are like gold to a modern economy. They are masters of technology rather than servants of it. They
tend to increase the productivity of those around them, and they are better able to absorb ideas from other sources and
introduce these into their own work. Indeed, some economists argue that it is concentrations of people with skills that
attract investment in technology and infrastructure, rather than the other way round.
In addition, education is positively associated with a range of other individual and societal goods - for instance,
healthier life-styles, lower propensity to commit crime, higher levels of trust, richer social networks, and greater
participation in volunteering and in democratic institutions. Moreover, higher levels of education in one generation of
families and communities are strongly associated with higher levels in the next.
There are two ways of increasing the skill of our workforce: immigration (which, for many practical reasons, will always
be a limited source) and education, broadly defined. And there is a clear association between a nation's investment in
education and the productivity of its workforce.
Economists have not reached consensus as to how much this association represents causal effects, and whether some
"reverse causality" is involved: that is, whether countries which grow faster or have higher output per capita tend to
spend more on education as a kind of international status symbol. However, labour economists tend to accept that the
association between education and earnings represents real productivity effects, with true annual returns to an extra
year of education being in the order of 5-15 percent.
They are also agreed that there are diminishing returns on the increasing amounts of education one person receives. This
would lead us to conclude that it is more important to ensure a higher prevailing level of skills throughout the
workforce rather than to concentrate upon creating an elite of highly skilled workers. Many have argued that raising
skill levels in the bottom of the distribution (as opposed to elsewhere) will have more of an impact on individual well
being and on the smooth functioning of society. Germany, Japan and Taiwan are all examples of societies which have
produced few superstars, but have made enormous strides forward through a skills policy aimed at raising the abilities
of the average worker.
So on the evidence it is a fairly safe bet that high rates of economic growth are likely to require a mix of highly
skilled technical specialists, skilled entrepreneurs and managers capable of seeing and putting in place new
opportunities for productivity gains, and workers with good, medium-level skills to operate new technologies.
While immigration will play a small role in achieving and maintaining this mix of skills in New Zealand, our education
system has to be the major influence. We need to turn the workforce we have now into the workforce we need for the
future.
That is what our tertiary education reforms are about. Looking back, the changes to tertiary education in the early
1990s represented a welcome move away from policies which tended to restrict access to higher learning and make it a
middle class preserve. However, the belief that market forces would create a better quality system proved to be naïve,
as many predicted at the time. Certainly rates of participation were increased; and higher participation amongst Maori
and Pacific peoples was an important part of that. But along with an increase in quantity have come serious issues with
unnecessary duplication and question marks over the outcomes for many students. Quantity did not necessarily bring
quality in its wake.
Recently the Ministry of Education released figures which showed that only 40 percent of domestic students starting a
qualification in 1998 had completed it after five years. Fifty-one percent of those who started a qualification in 1998
had left without completing it five years later, and nine percent were still studying towards it five years later. Even
allowing for part-time study and legitimate reasons for abandoning study - such as gaining employment - this is a
worrying statistic.
Certainly I would not dispute the fact that many young people in particular 'find themselves' in the course of tertiary
study, and this can lead to a change in direction. However, in the recent past our system appears to have lost a
significant number of people, who have drawn down an entitlement to EFTS funding and more than likely put themselves
into debt, and now, it seems, have nothing to show for their efforts, or only ambiguous results.
In a country our size, we can afford to have large numbers of people effectively cooling their heels in the tertiary
education system.
That is why the focus of our tertiary reforms has been the simultaneous promotion of excellence, relevance and access.
These three objectives stand together as pillars of a coordinated system.
Excellence in teaching and research is of utmost importance; but if it is not relevant to our businesses and communities
it can become something of a fetish. And if there are barriers to students entering study and persisting in it to the
point where they have attained meaningful qualifications then the effort that has gone into teaching and course design
is wasted.
The reforms involve a set of integrated measures aimed at strengthening these three pillars; measures such as the
Centre's of Research Excellence, the Performance Based Research Fund, Charters and Profiles and the new funding
framework and student support measures.
I doubt that it is a contentious point here at UNITEC, but it is clear to me that we need to anchor academic programmes
more solidly in the world of business and commerce. Our tertiary institutions are turning out the workforce that New
Zealand businesses need, and we need to ensure that there is the best possible communication on both sides, so we can
achieve the best fit and make the transition from study into the workforce a smooth one.
At one end of the spectrum, the link between education and industry can be quite explicit. My government has placed a
high priority on industry training, and as a result the number of workers participating in industry training jumped by
nearly 20,000 last year to a new record high.
Total numbers in industry training during 2003 reached 126,870 trainees, a 19 per cent increase on the number
participating during 2002, and a 56 percent increase over the number in late 1999. The number of employers involved in
the industry training programme also increased substantially, with 29,206 firms now on board (up from 24,576 in 2002).
These results give confidence that the government's target of getting 150,000 New Zealanders learning on the job by the
end of 2005 will be achieved.
UNITEC, of course, has a major stake in providing programmes that are tailored to the needs of industry and of
individuals seeking professional qualifications.
At a more general level, charters and profiles require that institutions are actively working with their local business
communities seeking ways of collaborating that are mutually beneficial and generate positive spinoffs for students. Most
institutions have been doing this for many years, but the charters and profiles process encourages a more consistent and
disciplined approach to integrating the work of a tertiary institution with the needs and priorities of their
communities. Town and gown have to work together, respecting each other's differences.
Compared with other countries, this is still a very permissive hands-off regime for determining the strategic direction
that tertiary institutions take. There is still considerable latitude for innovation, and the hand of TEC - if it is
felt at all - is to be a light one. TEC's role is to ensure that there is genuine engagement between institutions and
the communities of interest around them, and also to grasp the nettle in areas where there is a very obvious problem
around relevance or a duplication of programmes which weakens rather than enhances the choices presented to students.
It is apparent to me that UNITEC is well positioned to thrive in the new environment created by the reforms. It is an
institution which has always had a dual focus - a higher education portfolio including a broad range of professional
postgraduate programmes extending to doctoral level, alongside a vocational education portfolio which includes the
leading trades programmes in New Zealand.
As a result, UNITEC graduates people whose skills are strongly linked to labour market needs, with a very high
proportion of graduates - 85 percent in 2002 - working in an area related to their UNITEC qualification.
It has also encouraged programme innovation as courses are designed in close collaboration with industry, employers and
students seeking relevant professional qualifications at advanced university levels. This has seen UNITEC provide value
in areas not well served by the more traditional university approach.
I appreciate that at times it has been difficult to be neither fish nor fowl; but what this has meant is that the
institution has kept strong links to the business community and to local governments, as seen in the recent
collaboration between UNITEC and the Waitakere City Council to foster the social, economic, and environmental
development of that city. In hindsight, being neither fish nor fowl has freed the institution to become the hybrid
organisation that many students and businesses need.
Thank you.