Te Pūkenga ring-fenced $80m from seven polytechnics, promising to use that funding in their regions. File photo. Photo: wintec.ac.nz
There are question marks over what the disestablishment of Te Pūkenga will mean for the millions of dollars of loans between different parts of the mega-institute.
Some industry training organisations put their funds into trusts or other organisations before joining Te Pūkenga, but the polytechnics did not.
The institute ring-fenced about $80m from seven polytechnics, with a commitment to use that funding only in their local regions.
But it also adopted a system of lending money between entities to reduce interest charges and it was not clear if that money would or could be repaid if those entities were re-established.
"In September 2020, the New Zealand Institute of Skills and Technology Council approved an Intergroup Funding Strategy. The strategy allowed for intergroup funding which enabled the repayment of all external debt held by subsidiaries of Te Pūkenga network without the need to draw on our external bank borrowing facility," it said.
"Present day business divisions of Te Pūkenga which were - prior to full amalgamation - classed as subsidiaries of the network; formally opted into the strategy by the agreement of their respective Boards. If a subsidiary was to be a borrowing entity, a specific borrowing limit was agreed by the Boards."
Te Pūkenga said by the end of 2022 that borrowing totalled $72.9m.
But after that date, the subsidiaries were disestablished and became a single entity.
"These formal arrangements ended in December 2022 as Te Pūkenga subsidiaries were disestablished and all previous organisations became one entity on 1 January, 2023. As one legal entity, we utilise internal treasury mechanisms to optimise the cash position across our network," it said.
"Because we currently operate as one financial entity, a breakdown is not available for loans transferred between previous individual subsidiary entities."
But the institute continued a system of loans between its divisions, even after it became a single legal and financial entity.
"The parent body coordinates the use of treasury mechanisms to optimise the cash position to provide a financially secure base from which to deliver vocational training across Aotearoa.
"As at 31 December 2023, business divisions held internal loans of $167 million."
The institute said it could not comment on future financial arrangements until the government had decided on a new model for the sector.
Tertiary Education Minister Penny Simmonds did not provide a direct response to RNZ questions about how Te Pūkenga's debts and assets would be apportioned and whether she expected polytechnics would be re-established with the financial assets they held at the time of amalgamation.
"Unpacking the complicated financial situation of Te Pūkenga is a major piece of work in the disestablishment phase," she said in a statement.
Simmonds said some polytechnics went into amalgamation with reserves while others had "significant net debt".
She said those with a lot of debt included Whitireia, WelTec, Wintec, Western Institute of Technology at Taranaki (WITT), Unitec Institute of Technology, Universal College of Learning (UCOL), Tai Poutini Polytechnic, Otago Polytechnic and NorthTec.
Those with financial reserves included Ara Institute of Canterbury, Nelson Marlborough Institute of Technology (NMIT), Southern Institute of Technology (SIT) and the Open Polytechnic, she said.
"Unfortunately, Te Pūkenga failed to establish a pathway to financial sustainability for the sector. There will be considerable work needing to be undertaken to achieve that across almost all polytechnics. More recently, Te Pūkenga have been prioritising this work."
