Education Minister Chris Hipkins recently appeared before the Education and Workforce select committee to face a barrage of schooling related questions, but with little focus on tertiary education. However, just before his appearance, tertiary education data for 2018 and updated tertiary education forecasts were released, casting some light on the tertiary sector.
In this article, we delve into some of the data that was released and look at what’s in store for the tertiary sector. We also consider what these new insights mean for the soon to be announced findings from the review of vocational education (RoVE).
No cyclical movement in 2018, just a downward trend
Over the past 20 years the tertiary education sector has followed a cyclical trend, where learner numbers boomed during the weakest part of the economic cycle, and then took a dive when the economy improved. Industry training saw the opposite effect. However, between 2017 and 2018 this trend did not hold.
Focusing on 2017-18, a period where the labour market was strong, the number of learners fell at both tertiary education providers and in industry training (see Graph 1). There were around 442,000 learners in tertiary education over the year to December 2018, around 8,000 fewer than a year earlier. The industry training sector had the largest decline in learners (down 3,700 or 2.8%pa), followed by wānanga (down 1,900 or 6.8%pa) and then private training establishments (down 1,700 or 4.6%). There was minimal movement in learner numbers in the university sector, which was only down around 150 learners.
There are several factors that influence the downturn in learner numbers that come to light when looking at the data in detail. Two major factors are:
- Fees-free. The decline in learners at tertiary education providers could have been much larger if wasn’t for fees-free. Of the 47,000 learners that took advantage of fees-free in its first year, 75% were studying at universities, institutes of polytechnics or technology (ITPs) or wānanga. Private training establishments (PTEs) attracted 15% of all fees-free learners, with the industry training sector attracted the remaining 10% of fees-free learners. Unfortunately, we’re still awaiting detailed data to do some analysis on the impact of the fees-free policy on first-time learners. That said, we get the sense that the university sector, as the ‘destination of choice’ for many young people, would have had a much lower drop in student numbers had it not been for fees-free.
- Industry training. The high-level drop in industry training numbers is surprising given the strength in the economy. Two ITOs had much lower learner numbers due to lower allocations from TEC as a result of investigations in 2017. Countering this somewhat, the Building and Construction ITO and The Skills Organisation (which has coverage for, among other things, the roofing and electrical industries), saw strong increases and were both up over 1,000 learners.
What does the future hold?
Also released recently were the latest tertiary education demand forecasts for the 2019-2023 calendar period. The forecasts are largely mechanical in nature and rely on predictor variables such as youth unemployment, the youth population and the potential for economic shocks.
Forecasts of equivalent full-time students (EFTS) at tertiary education providers are not too different to the 2018 forecasts. Overall level 3+ EFTS are forecast to be marginally higher over the next five years but remain within the forecast’s margin of error (see Graph 2).
Demand for standard training measures (STMs)  in the industry training sector from the 2019 forecasts follow a similar trend to the 2018 forecasts but are expected to start from a much lower starting point after the decline in 2018.
By being largely mechanical in nature, the Ministry of Education’s tertiary education demand forecasts do not account for any potential policy or structural changes in the tertiary education sector.
What does this mean in terms of actual learners?
EFTS and STMs are things that TEC, the government, and tertiary education organisations (because they are funded on them) care about. But a much more insightful way of looking at forecasts is by qualification level and number of learners. After all, it is actual people that we care about.
Unfortunately, although the Ministry break some of their tertiary education forecasts down by qualification level, they don’t break things down by number of learners. To come up with broad estimates of learners in tertiary education by broad qualification level we’ve made the following estimates and assumptions:
- We estimate the number of learners by converted EFTS and STMs to learner estimates by drawing on the 2018 relationship between EFTS and STMs vs actual learner numbers, using data on Education Counts.
- As the Ministry doesn’t break down STM forecasts by qualification level, we have assumed that the future qualification breakdown of STMs in industry training would be the same as it was in 2018.
- We have also combined industry training forecasts and tertiary provider forecasts. Although we know that there are learners engaged in the both industry training and provider-based education, resulting in double counting, for simplicity we have assumed that this duplication is negligible.
The result is that we expect that there will be an average of around 480,000 learners engaged in level 3+ tertiary education each year over the coming five years (see Graph 4). That’s around 12% of people 15 years and over in New Zealand currently.
Level 3-4 qualifications are expected to have the largest quantities of learners over the forecast period, with around 200,000 learners per annum. Bachelors’ degrees are expected to remain an attractive option, with an average of 155,000 learners per annum.
RoVE – the big unknown
As previously mentioned, the Ministry of Education’s forecasts are largely mechanical in nature and don’t consider structural changes that could occur in the tertiary education sector, such as the proposed changes outlined in the RoVE. The forecasts also don’t consider any extensions to the government’s fees-free tertiary education policy (although the Minister has gone quiet on this matter).
The drop in industry training numbers in 2018, although not affected by the RoVE (which was announced in February 2019) is of concern. The potential decline in future signups generated by the RoVE has been discussed by many stakeholders in their submissions to the government and is an obvious concern for the Minister and officials. Last week the TEC sent communications to all ITOs outlining that current and new training agreements would be honoured for their duration.
However, what the Ministry’s forecasts do tell us is that the vocational education and training sector is a large component of the tertiary education sector. This area comprises around half of all tertiary education learners at level 3+, who are expected to be working towards sub-degree qualifications over the coming years.
Given the size of the vocational education sector, any change needs to be carefully thought through to ensure that learners are keep engaged in vocational education, and that learner demand does not drop away. This balance will be difficult, especially given the talk around town that the impact of changes to the vocational education and training sector will mean fewer signups over the next 2-3 years.
Although this article has looked at recent changes in the number of learners in tertiary education, and the potential short-term outlook, a longer-term view of the wider education sector is also needed. My colleague Brad Olsen laid out his thoughts about what the tertiary education should look like in 2040 in this opinion piece a few weeks back.
 A STM is a unit or a quantity of training. One standard training measure is the nominal amount of training that is required for a learner to achieve 120 credits (or its equivalent) in an approved and structured training programme.
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