Background

Section 329 of the Education and Training Act 2020 (“Act”) requires the Secretary for Education to determine and publish in the New Zealand Gazette criteria for assessing risk to Te Pūkenga – New Zealand Institute of Skills and Technology (“Te Pūkenga”) and any related entity of Te Pūkenga, or the education and training performance of students enrolled at Te Pūkenga and any related entity of Te Pūkenga.

This notice sets out the criteria for risk assessment, following consultation with the Council of Te Pūkenga (“Council”) under section 329(1) of the Act. These criteria must be reviewed at least once every two years under section 329(3).

The risk assessment criteria set out in this notice will be considered by the Chief Executive of the Tertiary Education Commission (TEC) and the Minister of Education (“Minister”) in determining whether an intervention under Part 4 of the Act is necessary.

The Council may also request an intervention in accordance with Part 4 of the Act (under section 338).

The Council has full accountability for ensuring that it monitors, manages and mitigates risks to Te Pūkenga and its related entities.

Different levels of intervention under Part 4 of the Act correspond to three risk thresholds: “may be at risk”, “at risk”, or “at serious risk”.

• Where Te Pūkenga or a related entity of Te Pūkenga may be at risk or the education and training performance of the students enrolled at Te Pūkenga or a related entity of Te Pūkenga may be at risk, sections 330 (provision of information), 331 (Crown observer), 332 (specialist help), 333 (performance improvement plan) may be used;
• Where there is a risk to the operation or long-term viability of Te Pūkenga or a related entity of Te Pūkenga, or the education and training performance of the students enrolled at Te Pūkenga or a related entity of Te Pūkenga is at risk, section 334 (Crown Manager) may be used; and
• Where there is a serious risk to the operation or long-term viability of Te Pūkenga and other methods of reducing the risk have failed or appear likely to fail, section 337 (Commissioner) may be used.

The “may be at risk” interventions are intended to address possible and emerging risks before they crystallise, and may be used routinely to avoid the need for the other interventions. Therefore, a risk need not have developed to the point where any of risk assessment criteria are met for the Chief Executive of TEC or the Minister to reasonably consider that Te Pūkenga or a related entity, or the education and training performance of the students enrolled at Te Pūkenga or a related entity, may be at risk. For example, Te Pūkenga may not have failed to meet a material obligation of its Charter, but the Minister or the Chief Executive of TEC could still decide to intervene where monitoring or other information provides reasonable grounds to consider the Council may be at risk of failing to meet an obligation of its Charter.

The “at risk” and “at serious risk” interventions are for use by the Minister, and are intended to be used where risks have crystallised and significant intervention is warranted. Where these interventions are used, Te Pūkenga or a related entity will have met one or more of the risk assessment criteria.

A number of Institutes of Technology and Polytechnics have faced a range of viability issues over recent years. Te Pūkenga was established with a number of subsidiaries already at risk in a number of areas. Many of these risks have increased given the effects of COVID-19 and the considerable global uncertainty that exists regarding the future. Whether the Chief Executive of the TEC or the Minister decides to intervene will depend on their assessment of the situation, including the nature of the risk and the thresholds for the various types of intervention set out in the Act. Other relevant considerations will also be taken into account. The Chief Executive of the TEC or the Minister will assess the Council’s approach or plan to mitigate the risk, including the appropriateness of any steps already taken by the Council before deciding whether or how to intervene, and the Minister may have made, or may intend to make, changes to Council appointments including the appointed chairperson and deputy chairperson.

The risk assessment criteria for Te Pūkenga and related entities apply to three areas. These are:

• Operational;
• Financial; and
• Educational.

Nothing in this notice limits or affects the duties of the Council under section 281 of the Act, the functions of Te Pūkenga under section 315 of the Act, or the duty of Te Pūkenga to give effect to its Charter under section 316 of the Act, or any other duties or obligations of the Council under any other enactment.

Words and phrases used in this notice bear the same meaning as under the Act.

Risk Assessment Criteria

Organisational

1. The Council of Te Pūkenga has not fulfilled, and continues not to fulfil, its statutory functions and duties under the Education and Training Act 2020, including, but not limited to section 281(1)(e) of the Act which requires the Council to ensure that the institution operates in a financially responsible manner that ensures the efficient use of resources and maintains the institution’s long-term viability.

2. The Council of Te Pūkenga has failed, and continues to fail, to meet a material obligation of the Charter of Te Pūkenga.

3. The Council or the board of a related entity of Te Pūkenga has failed, and continues to fail, to ensure Te Pūkenga or a related entity of Te Pūkenga maintains adequate systems and processes for:

1. effective planning;
2. effective management of financial and educational performance;
3. effective management of infrastructure; and
4. effective capital-investment management.

4. The Council or the board of a related entity of Te Pūkenga has failed, and continues to fail, to meet a material obligation under the Education and Training Act 2020, Companies Act 1993, Crown Entities Act 2004, Public Finance Act 1989, or any other aspect of the legislative and regulatory framework.

Financial

5. Te Pūkenga or a related entity of Te Pūkenga is, or is at risk of being, unable to pay its debts as they become due in the normal course of business.

6. Te Pūkenga or a related entity of Te Pūkenga has breached any of the conditions set by the Secretary for Education in a borrowing consent under section 282(7) of the Education and Training Act 2020, and the breach has not been remedied.

7. Te Pūkenga or a related entity of Te Pūkenga is in default under any loan or other facility agreement with a bank or other commercial lender, or the Crown, and the default has not been remedied.

Educational

8. Te Pūkenga or a related entity of Te Pūkenga has failed to meet the educational performance commitments in the investment plan agreed by the TEC.

9. NZQA has identified areas of concern about the educational performance of Te Pūkenga or one or more Te Pūkenga subsidiaries as a result of a formal NZQA quality assurance process.

10. Te Pūkenga or a related entity of Te Pūkenga has failed, and continues to fail, to work collaboratively with Workforce Development Councils, Regional Skills Leadership Groups, schools, wānanga and other tertiary sector organisations, to identify and meet the needs of stakeholders for the provision of education, training and skills needed in a region

Dated at Wellington this 8th day of October 2020.

IONA HOLSTED, Secretary for Education