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MPs have been told staff at national skills institute, Te Pūkenga, are "pissed off" by constant change and some polytechnics are unlikely to be financially viable.
Parliament's Education and Workforce Select Committee conducted its annual review of the institute on Wednesday.
They were told the organisation, which brought together polytechnics and industry training organisations in a single entity at the start of 2023, was financially viable and expected to make a deficit of about $16 million this year, following last year's $38m loss.
The government is disestablishing the institute and consulting on options for re-establishing polytechnics.
Te Pūkenga chief executive Gus Gilmore said near constant change in recent years was tiring for the organisation's staff and attrition rates were unusually high.
"This hasn't been going for six months, this has been going for five years so our people are a bit change-fatigued and a bit, frankly, pissed off," he said.
Gilmore said supporting staff was important and through it all they had continued teaching more than 240,000 learners each year and had improved student achievement rates.
Asked if a return to separate, local polytechnics would allow more innovation, Gilmore said he agreed but he had caveats.
"As long as we're not duplicating across the country, as long as we're not competing like crazy with each other across the country. It's just a race to the bottom. And the old world, 10 years ago, was exactly that," he said.
Gilmore said reform of the vocational education sector should include reduced compliance with the Tertiary Education Commission .
"The compliance workload is massive," he said.
"If we can find a way to work with our funder to reduce some of that compliance burden it would be a massive step forward ... you could comfortably strip out a reasonable chunk of it and you wouldn't notice a difference."
Te Pūkenga council member Jeremy Morley said a lot of compliance related to polytechnics' $2 billion asset base and campus directors and managers were not necessarily trained in asset management.
"There needs to be some thought go into that. How do you manage a $2b property base and the onus it puts on people on the ground who are educators," he said.
The institute's interim chief financial officer Phil O'Callaghan said financial modelling showed only two polytechnics would be financially viable as stand-alone organisations once Te Pūkenga was disestablished.
"Open Polytechnic and Ara were basically deemed as financially viable at this point. There were a number of other former polytechnics that are on a path to viability but work is required," he said.
O'Callaghan said work was underway to figure out what changes institutions must make in order to ensure they could operate successfully.
"It's unlikely that every former ITP [institute of technology and polytechnic] can be made viable," he said.
