Reports suggested Northtec had no chance of repaying a $12m debt. Photo: Peter de Graaf
Consultants' reports indicate the government may need about $190 million to restart the 16 polytechnics it is removing from super-entity Te Pūkenga.
The reports also warned at least two institutes - Northtec and Tai Poutini - had no future as standalone organisations and would struggle, even within the government's planned 'federation' for weaker institutes.
The reports were completed last November at the order of the Tertiary Education Commission, and published in August and September by Te Pūkenga.
They showed recapitalising the institutes to ensure they had sufficient cash to cover initial costs and upcoming capital expenses could require about $190m, including write-offs of internal Te Pūkenga loans.
Vocational Education Minister Penny Simmonds told RNZ the reports provided a snapshot in time, based on assumptions made late last year.
"Those figures are being updated, as the financial improvement plans are implemented, and Te Pūkenga and the Tertiary Education Commission (TEC) are continuing to monitor progress closely," she said. "The position is therefore evolving and not finalised.
"A $157 million contingency was put in place in Budget 2024 to support the transition, if needed. We expect to use some or all of the contingency, depending on the level of debt and transition costs involved in re-establishing the polytechnics."
Simmonds said some polytechnics had significant reserves, before they became part of Te Pūkenga, while others had significant debt.
"We can't responsibly re-establish institutions that are not solvent. For now, the focus is on improving the financial positions of individual business units and using Te Pūkenga reserves first.
"We'll have a clearer picture by October or November 2025."
Simmonds said the government had set up a $20m strategically important provision fund to protect access to training in small regions and to courses that were nationally important.
Education Ministry figures showed many of the institutes had [ https://www.rnz.co.nz/news/political/572394/new-zealand-polytechnics-had-double-the-students-a-decade-ago
lost a significant number of students over the past 10 years].
What the consultants said
Northtec
The Northland polytechnic had lost a significant share of the tertiary education market in its region and had no prospect of repaying a $12m debt to Te Pukenga.
The institute needed $5m recaptialisation by December 2024, a sum that would be depleted by 2027.
"There is no clear pathway to financial viability for NorthTec as a standalone institution," the report said. "We consider there is a strong case for a merger, particularly as a more established ITP will be able to instil the requirement management discipline and accountability that has been lacking at NorthTec."
Unitec and MIT
The document assumed Unitec and Manukau Institute of Technology (MIT) would formally merge.
Both institutes would be viable by 2026, if they made cuts and increased international enrolments.
If they stood alone, the Auckland polytechnics would each would need to spend about $2.4m more in management costs.
Wintec
The Waikato polytechnic's management was fine, but support costs were poorly linked to programmes.
It could save about $5m from programme and support cost cuts, and be viable as a standalone institute by 1 Jan 2026, but would require $15m for recaptialisation.
Toi Ohomai
The Rotorua and Bay of Plenty institute could be viable as a standalone institute.
The report identified millions in savings, plus about $32m in property sales from 2025-27, but would require $20m recapitalisation.
It said the institute had not realised cost savings that were possible, when the former Bay of Plenty and Rotorua polytechnics merged in 2016.
Witt
The Taranaki polytechnic could return to viability by 2027, as a satellite of a larger organisation.
The report warned that the move to a satellite model would be "a large and complex change".
Witt could pay $3m a year for shared services provided by a "parent" organisation and would require $30.8m recapitalisation.
EIT
The Hawke's Bay and East Coast polytechnic could be viable, if it made cuts and was properly recapitalised.
It required extra funding to re-establish its cyclone-damaged Taradale campus.
Recaptialisation figures for 2025 were redacted, but about $5.5m required for 2026 and 2027.
Ucol
The lower-North Island institute could be viable by 2029, after breaking even in 2028, but needed substantial change.
"The cost of change for UCOL may impact the appetite to provide continued support," the report said.
"Ucol is unable to support any level of debt, however, asset divestment and cash on hand balances support a portion of its change costs."
Recapitalisation estimate were redacted and it had an intercompany loan of $26.4m that would need to be written off.
Whitireia and Weltec
The Wellington region's joint institutes could be viable by 2029.
Restructuring the two institutes would require considerable cost, likely funded by Te Pūkenga or the Crown.
It required $67m net capital for total change costs of $97m, including $30m self-funded, but could not support any level of debt.
The report indicated a $46m intercompany loan would need to be written off.
Open Polytechnic
The distance education organisation required no major course or personnel changes to be viable by 2026 and would sell surplus land.
It should pursue an "automation first" approach to reduce the cost of marking students' work.
NMIT
NMIT could make a small surplus by 2026, if it made course and staff cuts, and grew its international enrolments.
It would have cash reserves of $20m, with no core debt.
Tai Poutini
The West Coast institute was unsustainable as a standalone organisation.
It needed additional funding of $4-6m a year to support it over and above income from enrolments.
Preferred option was deleted, but future options considered were standalone, federate, become a subsidiary of another insitute, merge with another institute or close.
Ara
"When benchmarked against sector averages, Ara is not only well within acceptable ranges, but sets the standard for efficiency within the sector."
The Canterbury institute would need some restructuring.
Otago
It would be viable standalone by 1 Jan 2026, if it followed its recovery plan.
The plan was "primarily based on moderate EFTS growth", coupled with reduced staff cost.
Otago was likely to need $12-27m additional funding to support establishment as standalone - the higher figure being required, if EFTS growth did not eventuate.
It could reduce its land area by 60 percent and built area by about 50 percent.
SIT
The Southland Institute was basing its viability plan on "the most aggressive growth" in student enrolment of any of the polytechnics.
The report warned of significant downside risk, if that growth did not happen.
The report Indicated the institute would need recapitalisation funding of about $6.58m.
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