Actions initiated for wananga

Education Minister Trevor Mallard announced today that he had initiated two holding actions following advice that Te Wananga O Aotearoa is on the brink of insolvency, and will be unable to meet its financial commitments over the next fortnight, including wages to staff and payments to creditors.

"Today Cabinet has approved a short term loan of $20 million to meet immediate cash flow requirements this month, including debt repayment and payroll. The loan has been initiated following an investigation by Crown Manager Brian Roche into the financial state of the wananga, which has revealed the situation to be worse than initially thought," Trevor Mallard said.

"I have also written to the council of the wananga indicating that I have begun the statutory process under the Education Act to dissolve the wananga's council and appoint a commissioner. A final decision on whether a commissioner will be appointed will be made by me following two periods of consultation with the wananga.

"I have not taken this step lightly. But advice from the crown manager indicates that the financial situation at the wananga is so precarious that I am obliged to take all action available to me under the Education Act for the sake of the students, staff and creditors. To not do anything would be irresponsible.

"The role of a commissioner would be to deliver the overall governance capability required to assist the crown manager, staff and stakeholders to rebuild the institution. If I decide to proceed with this appointment, I also intend to appoint an advisory group who would work alongside the commissioner.

"The short term loan will run from May 17 until 31July to meet required and vital outgoings and to safeguard students' programmes of study. The crown manager, who was appointed in March, will remain at the institution for at least the term of the loan. A condition of the loan will also be that the wananga improves its management structure."

Questions and answers follow:

Question and Answers – Te Wananga o Aotearoa 9 May update

Why have procedures towards appointing a commissioner been initiated? Evidence provided to government by the crown manager indicates that the wananga is under high financial risk. On this basis the Minister of Education will be consulting with the Council of the wananga on his preliminary view.

The Education Act (under Section 195 ) sets out the procedure for moving to a Crown Commissioner. The appointment is not instantaneous and will include a process for consultation, submissions and confirmation.

When will the government make a decision around the appointment of a commissioner? The Minister must undertake the following statutory steps before a decision is made to appoint a commissioner.

The Minister must first consult with the council of the institution, and any other interested parties, over the possible need to appoint a commissioner. Following that consultation the council must be given written notice of the preliminary decision whether the council should be dissolved or not and a commissioner appointed. The council is then given 21 days in which to respond to the preliminary decision. During that period the council can make any submissions as to why the preliminary decision should not be confirmed.

In this case, the Minister wrote to the council today (May 9) giving five days for the preliminary consultation. The second 21-day consultation period will follow this.

If appointed, what would be the commissioner's role? A commissioner would replace the existing council and provide the governance capability for the amount of time necessary until the wananga regains stability and viability.

In the event a commissioner is appointed, an advisory group would also be appointed to work alongside the commissioner.

Who will pay for a commissioner? The costs of the commissioner will be met by the wananga just as the council costs are currently.

What interventions has government taken to date? The current statutory intervention is that of a crown observer, which recognises significant risk has already been identified at the institution. The Minister of Education appointed Brian Roche as crown observer in February 2005.

Shortly thereafter the council agreed to that appointment being extended to that of crown manager, which took effect in March 2005. This was done to give public confidence in the financial operation of the institution while the Office of the Auditor General report was completed.

Prior to that a crown development advisor was appointed in 2002, in response to concerns about the wananga’s rapid growth.

What is the crown manager's role? The purpose of the appointment is to take control of all financial responsibilities previously held by the Council, to control and stabilise the wananga, and to restore public confidence in the financial management and accountability of the tertiary education institution at senior management and governance levels.

What is the difference between a crown observer, a crown manager and a commissioner? A crown observer is a low level statutory intervention under the Education Act. The crown observer’s role is advisory only. A crown manager is non-statutory and relates to financial management and control. The crown manager was appointed with the agreement of the wananga council in this case. A commissioner is the highest level of statutory intervention - triggered under section 195 of the Education Act - that could be put in place and replaces the Council.

Why hasn’t the wananga’s situation been resolved by the appointment of a crown manager? The investigations of the crown manager have revealed the situation to be worse than initially thought. In light of this, the wananga now meets the criteria under the Education Act for further statutory intervention.

What other activity is happening around the wananga? The Office of the Auditor-General is reviewing management and financial practices of the wananga. The Auditor-General will present his reports on the findings of the inquiry to the House of Representatives in due course and as quickly as possible allowing for integrity of the process and natural justice.

The terms of reference for the enquiry can be found at http://www.oag.govt.nz/

How does this affect the Charter renegotiation process? The Tertiary Education Commission will continue working with the wananga's council on its new charter while the Minister consults with the Council over the appointment of a commissioner. If a commissioner is appointed, the TEC will finish working on the charter in consultation with the commissioner.

The TEC is on track to conclude work on the charter by mid-June. It is important that the TWOA has a robust charter in place by that time to shape development of its profile.

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