Appropriation (2026/27 Estimates) Bill

Mr Speaker, thank you very much. As the chair of the Education and Workforce Committee, I have the privilege of chairing this Estimates hearing with the Hon Penny Simmonds as the Minister for Tertiary Education. For those that don’t know, Tertiary Education is a separate Vote to Education and has about 2 percent of spending in the Budget 2026—a nice symbol of the importance of tertiary education to the future of our economy and, of course, the report details the amount of funding to which areas within the Budget, which I’m sure we’ll go into.

We talked about the financial sustainability of the sector and funding settings of the Budget as well, but particularly focused on measuring performance of tertiary education, student financial hardship—which is a topic that comes up every year, inevitably—but we focused a lot on those Not in Education, Employment, or Training (NEETs) and the importance of the tertiary education sector in focusing on reducing the number of people not in education or employment or training, and the many different programmes in place to address that. We talked about the better utilisation of the fees-free scheme funding. We talked about work-based learning. As well as that, I think very important to point out that it is the last hearing that would involve Te Pūkenga as an establishment—as it is being disestablished—and talked about the polytechnics and their re-independence and the future of those institutions.

The interesting conversation around the enrolment growth and strong balance sheets of wānanga, and then the industry skills boards that have received additional funding to help make sure that they are providing the appropriate pathway for the workforce; the fact that research funding has been unchanged in Budget 2026. We talked about the importance of international education programmes and, as well as that, an always interesting topic to talk about: the use of artificial intelligence in the tertiary education sector. With that, I think it’s very important to have a fulsome debate on this topic and welcome anyone to read the report.

Thank you, Mr Chair. Just to acknowledge both the Minister this evening and our Education and Workforce Committee Chair, Katie Nimon, for the work that they’ve done in this Estimates process. I do note that funding has decreased between years by $185 million, and on top of that is the $1.1 billion cut to fees free that was allocated and invested in the young people studying in New Zealand. The Minister has been with me across a few debates, now, where we’ve experienced the green debt monster because people are very concerned about the amounts of their loans, that study is becoming more expensive, but I haven’t seen that this Budget really responds to those particular challenges, and so that will frame the first part of my questioning for the Minister tonight.

I’d like to understand: why was the decision made to allow tertiary institutions to increase their fees by yet another 6 percent? The Minister will understand that hits a 19 percent increase in student fees over her time in three years. What is the total amount of the annual maximum fee movement that has increased under her watch? I’ll start there.

Thank you, Mr Chair. As per the previous Estimate debates, I’ll dump my five-minute contribution out of the way so that I don’t have to keep constantly timing myself. Just wanting to acknowledge and thank the Minister for her respectful engagement over the last two years. This is going to be the last Estimates debate we’ll be doing in this Parliament, potentially forever, depending on the outcome of the election for myself.

It was good to see the Minister at the Otago University Students’ Association (OUSA) leaders’ debate. I was a little bit confused to see her because it was called the OUSA leaders’ debate but then I read the day before that there were some leadership ructions within the National Party, but I didn’t realise that it would happen that quickly. Then I saw my colleague Shanan Halbert there as well and then I realised that it was actually broader than just leaders.

My question is around three streams, around the issue of student poverty, around the fees-free scheme, and around the issue of polytechnic support. I’ll start off with a really crucial issue which is the issue of student poverty. The Minister might recall that I sent her a letter on 31 March 2026. It was around the recently released report that we released around the issue of student poverty around Aotearoa New Zealand. My question around that is: did the Minister read that report and are there measures in this current Budget or any planned Budgets within the Estimates period that would alleviate some of that student poverty issue? What cost of living measures were specifically considered for students, given that they were excluded from the cost of living fuel crisis support?

I note that during the Vote Tertiary Education hearing the Minister said that she would have a look at the idea of potentially raising the course-related cost, which has not risen since 1992, except for a brief period in 2020 when it was raised to $2,000 around the COVID support. That could be a good way to enable a slight measure of cost of living relief for students without unduly stretching the Treasury.

I’ll turn now to the issue of fees free. The Government has raised the number of youth guaranteed placements from 1,000 to 2,000 as part of their initiative, as part of the proceeds of scrapping the fees free. Is the Minister aware that in the final year of the first year of the fees-free scheme that the vast majority of students who received fees free were actually from polytechnics—6,000 out of the 10,000 that received that in 2025. The last year of the first year fees-free scheme were polytech students. Why wasn’t consideration given to potentially boosting polytech support or potentially even making polytechs free for students, as happened in some great institutions like the Southern Institute of Technology?

My last question is around the polytech support line in the Budget. You can see in the Vote Estimate line that there’s allocated Budget lines that have been earmarked for polytech support that have had quite significant underspends around it. For example—I’ll just read this here; it’s hard when you have multiple tabs open—of the $25.2 million fund that was allocated, only $6 million of it was spent, so there’s a $19.2 million underspend around that fund. Why has that occurred at the same time when, over that financial year, some polytechs have had to make some really tough decisions to stay financially viable? For example, Taranaki has reportedly had to cut 20 percent of their staff, for example. In my own area—Otago Polytechnic—we know that around 100 roles have been lost and I feel like there could have been potential reallocations of that fund.

Why was there an underspend of that fund and what will happen to the washup of that unallocated funding? We also see that there’s support for a polytech property management line that ended in that period. Are there any considerations for any further supports that will be further given to polytechs? I’ll use my remaining minute to ask any follow-up questions that might arise from the Minister’s answers.

Thank you, Mr Chair, and thank you to the two members. I agree that the Otago University Students’ Association debate was done in very good humour and, while there wasn’t raging support for the right, I can say that it was all done in very good humour, so thank you to those that were there supporting us.

Turning to the questions from Shanan Halbert, Labour’s MP, the Annual Maximum Fee Movement—yes, look, the 6 percent increase, or the ability to increase fees by 6 percent again, ensured that for that period from 2018 to 2026, the fee increases were roughly aligned with what the cumulative inflation was over that period. So it has taken the fees, essentially, in line with what inflation was over that period.

In terms of student poverty—the question from the Green MP—New Zealand student contribution versus the public contribution is about average in the OECD countries. About 74 percent is contributed by the Crown and the remainder by the students. Actually, interestingly, at the OECD debate when that question was asked, it was really obvious that most of the audience had no idea that they were subsidised to that amount. So it’s about average in the OECD countries. Certainly, interest-free loans are the main way in which we support students, and they remain interest-free as long as graduates stay in the country. Hardship grants are available through a number of the institutions. They may be eligible for student hardship assistance. Student allowances, of course, are targeted, and they are inflation adjusted on 1 April each year. This year, they went up by 3.11 percent on 1 April, which impacted about 52,000 students.

In terms of additional assistance—and I think we’ve talked about that in the past, or recently—in terms of the costs associated with the particular cost of living shift with the Middle East conflict, I acknowledge, yes, that it’s costing students more to get to their studies, to their placements and things, but we have remained firmly focused on any assistance during this period being targeted and timely and temporary. We consider that students have access to more assistance, such as the hardship grants and the accommodation support, than perhaps the other areas where we’ve provided assistance.

We’ve looked slightly quizzically at each other—oh, you’ve found something that might be referring to it? Ah, right. You asked about the unspent portion of contingency. That has been transferred through, and it is just a timing issue of when these funds are needed. So thank you for bringing up that point and allowing us to clarify that. In terms of the Western Institute of Technology at Taranaki, they are still within the New Zealand Institute of Skills and Technology (NZIST) at the moment, so those decisions are being made under the umbrella of NZIST.

But can I just tell you one story of today. I did a visit to the Universal College of Learning (UCOL) and was absolutely thrilled to see the progress that UCOL in Palmerston North have made. You might recall that their deficit last year was over $9 million. They are forecasting a surplus of over a million this year. They certainly have rationalised some of their programmes where they had smaller numbers going into programmes, but, essentially, they are going to do over 100 percent of their level 3 and above and level 1 and 2—oh, sorry Mr Chair—

CHAIRPERSON (Greg O'Connor): Oh, yeah, so carry on.

Hon PENNY SIMMONDS: Thank you. I’ll be very quick, I promise you. So level 1 and 2, yes, they are running out of a bit of room there, and we were just talking about the possibility of what additional funding might be available for them. So an absolute success story, and I congratulate the staff and management and governance of UCOL. Thank you.

Excellent. Just to follow up on that with the Minister for Tertiary Education, I guess I just want to understand her rationale for why it was necessary to increase student fees for the third time given that she also cancelled Fees-free, which means a $12,000 loss for particular students. We find ourselves in a cost of living environment where, you know, surveys from Victoria University are telling us that hardship is deeply there, and she’s invested less in the overall budget than she did last year but is charging students more. So what is the rationale there, Minister?

Hon Penny Simmonds: Have another go and I’ll do them together.

SHANAN HALBERT: OK, thank you. So just to follow up there: what is the proportion of the transitional funds that have been allocated, and what additional requests has the Minister received throughout that period which she may not have allocated at this particular point?

Thank you. Why was it necessary to allow increases in fees? Well, again, getting in line with inflation was really addressing the cost pressures that were occurring on the providers because of that inflation. So it was really enabling the providers to be able to address some of the issues that they were dealing with because of inflation.

In terms of the increase that we did give, the 2 percent increase that we have put in place in the Budget, that has been to the foundation level 1 and 2, because those programmes don’t have fees and therefore there was no ability for the providers of those foundation programmes at level 1 and 2 to be able to recoup any of those cost pressures.

In terms of the $157 million in contingency for the disestablishment of Te Pūkenga and the standing up of the polytechnics, that hasn’t all been used, and there are some quite big projects that are still sitting there: the Universal College of Learning’s (UCOL’s) rebuild or refurbishment and NorthTec. Both of those are substantial: the NorthTec one is $34 million; the UCOL one I think is just under $30 million. Again, the poster child for the disestablishment of Te Pūkenga, UCOL, now that it is being governed locally by people from the community, they are digging deeper into the need to actually demolish the building that’s there and rebuild new, and they’re getting a more detailed seismic assessment which is showing all the signs of being able to refurbish and strengthen rather than create a hole in the middle of Palmerston North, which the mayor was very agitated about, quite rightly. So having brought community people in to look at what the reality of that build was will actually probably result in a better outcome for that community, at, potentially, a lesser amount than the full amount that was allocated to them for that capital work. I can’t give you the exact detail, but if you want to pop that through to me in writing, we’ll try and give you—but it’s a bit of a rolling thing—

Shanan Halbert: I’ve asked.

Hon PENNY SIMMONDS: —because, obviously, things are being—you’ve asked, in a written—OK, so we’ll get what we can, but it is moving almost on a weekly basis. But we’re not going to run out of money, if you were worried about that.

Thank you, Mr Chair. If there’s money left in the fund, could Otago Polytech have some more, please? Maybe a couple of million? My second question is around the issue of—and I see that the Minister for Tertiary Education referred to universities and polytechs having hardship funds. Part of the funding for those hardship funds comes from, of course, the student services levy, which allows welfare services like that to be funded. You might’ve seen proposals floating around to abolish or restrict the student services levy. Is that something you’ve sought advice on this term, and is that something that you would look to do in the future, potentially?

Thank you, Mr Chair. No, because that is not Government policy. That’s a particular party that is campaigning on that policy, so no, I haven’t sought any advice on that. And yes, you’re quite right, the hardship assistance does come from within the universities. If I could just assure you, though, that the university sector is looking in very good heart. Last year, they had an unaudited surplus of $186 million cumulatively. That was $190 million better than they had budgeted, and $28 million better than the sector’s audited results in 2024.

The university sector is in good heart and able to provide some of that additional support to students in this time of hardship. They have had good domestic growth this year of about 3.4 percent, and also good international growth. None of the universities recorded a deficit last year, so they’re in a strong position, and the three wānanga, similarly, are in a really strong position, and the polytechnics are strengthening as we speak.

I rest my case there, Minister of Tertiary Education, because you’re saying that polytechs, wānanga, and universities are all in good hearts and they’re financially doing well, and yet here you are increasing fees for students by 6 percent once again, and of 19 percent overall in your watch. I just don’t comprehend that during a cost of living environment where students are telling us that they are in the most need that they have ever been in. I digress.

My next question is around the industry skills boards (ISBs), and it’s good to see that there is progress there. It’s not very clear about what progress is coming through. Where are we at with that and the allocation of funds to those ISBs, what are the set dates that you expect the ISBs to be up and running, and what milestones are you working to in that period?

Thank you. All the ISBs were up and running from 1 January this year, and yes, they got their annual allocation in the Budget of $30 million, but we also reprioritised an additional $3 million because I really want them to take a look at some strategic planning around the retention and recruitment of apprentices. They got a little bit of extra funding to do that, you’ll be pleased to hear, Mr Halbert.

The work-based learning (WBL) units—so let’s take a step back. What was the industry training organisations (ITOs) then became the work-based learning. They are sitting within the ISBs. They have two years to transition out as private training establishments (PTEs), and at this moment, the building construction ITO have transitioned out, the motor industry organisation has transitioned out, the hairdressing has transitioned out, and ServiceIQ has transitioned out into an existing PTE. There’s a couple more that are getting well on the way; the plumbers and gasfitters are well on the way. They’re all working through this process of the ITOs and WBLs that have been sitting in there and working through the process with industry of whether they go out into a new PTE, or into an existing PTE, or whatever configuration they are looking at.

I’m pretty pleased with what’s going on there. I think all but one have got a full complement of their board. I think it’s only one, isn’t it? It’s just got one missing. They are working well in terms of the updating and renewal of qualifications that they need to be focused on, and I believe that they are engaging well with industry. I’m pleased with how they’re getting on, and I think they have ensured that they understand the Budget and that they are working to their budget of $30 million plus the $3 million.

CHAIRPERSON (Greg O'Connor): I must comment, it’s a very acronym-heavy ministry you have, Minister.

Thank you, Mr Chair. When we came into this term, sustainability of the sector is top of mind for anyone who is working in this particular space. In 2022, under the last Government, we launched a review of funding. That’s something that you discontinued when you started as the Minister for Tertiary Education. Where is that at and what work is currently being done in order to understand the forecast for the next few years?

Thank you, Mr Chair. I just want to ask the Minister for Tertiary Education what she has done for NorthTec, please.

Of course, I’ll start with the funding review. Thank you, Mr Chair. Yes, you’re right, the funding review that had been initiated by the previous Government I put on hold and felt there were more critical things that needed to occur and have occurred now. I’m starting to look at the funding review again for higher education, level 7 and above. Very early days; just starting to talk about the scope of that, but very early days, and really wanting to ensure that we are prioritising the areas that we’ve got skill shortages in, making sure that we’re getting good value for money, and that the sector is sustainable in the long run.

It’s worried me for some time that there are areas where we maybe aren’t training enough, and you look at dentists and vets and things like that, and what we might need to do in those areas. Look, yes, funding review, and I’m happy to keep you informed with that as we go along, but it is very early stages.

In terms of Northland, what have we done for Northland? Look, we are working really closely with the community up there. I just think the new—what are we calling them?—establishment advisory group and the initial board up there are working really well. Derek Slatter, the acting chief executive, they are working through a process with their community. We have allocated, I think, $34 million to ensure that they have a knowledge-hub in the centre of town. If it works out to be the right financial thing to do, we can get a business case that stacks up.

I’m really committed to ensuring that Northland has a polytechnic that they are proud of. We know that we’ve got high NEET numbers up there. We know that we’ve got significant needs in the wider health sector that the polytech tends to provide graduates for, and so we’re absolutely committed to ensuring that we stand up NorthTec in a way that it can be successful going forward, that it can be the heart of that Whangārei community, and ensuring that the industries have the graduates that they need up there.

Places like Whangārei, like Nelson, like Invercargill, and New Plymouth, it’s really critical, when you only have one major public tertiary provider, that they are strong, that they can operate sustainably, and that they are fit for purpose and that young people and, well, everyone in that region is proud to be part of. So, very pleased to be doing that for NorthTec.

CHAIRPERSON (Greg O'Connor): We’re down to the last 12 seconds.

Thank you, Mr Chair. One final question is just a follow-up on the Youth Guarantee (YG) numbers. I note that there is an increase in this Budget. How did the Minister for Tertiary Education come to that particular number? Was it purely a Budget decision? When we have almost 100,000 young people not engaged in education, employment, or training, 175, Minister, is simply not enough.

Thank you, Mr Chair. I did have the number here, and it is actually more than that. It’s 5,500 that will be the total number of YG places. Yes, it’s still well short of the 100,000, however, remember that YG is a part of the whole picture, with Ministry of Social Development (MSD), YG, and other supports around that. Again, I’ll refer back, because I visited there today, to University College of Learning who, working closely with MSD, contracted to take two cohorts of MSD clients through revenue from MSD; so polytechs working together and ensuring that we are putting support and pathways in for those young NEETs to find a way to employment. Thank you for that question. Yep, it would be lovely to have more, but we’re gradually working through.

CHAIRPERSON (Greg O'Connor): On that last set of acronyms, the time has come for me to leave the chair. I’ll report progress on this bill presently. The committee is suspended and will resume tomorrow morning at 9 a.m. to consider the Disability Support Services Bill. Have a good night.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Thursday)