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Budget 2021

Vote Tertiary Education

Budget 2021 allocates new operating funding of $470.3 million and $13.9 million of capital funding for Vote Tertiary Education over the next four financial years in education, which includes:

$466.1 million of operating funding for tertiary education and tertiary ākonga. This include:
- $279.5 million over the next four years to invest in the future transformation of the vocational education and training system, including funding to build towards a more unified funding system.
- $110.7 million over four years for an across-the-board 1.2% increase in tertiary education tuition and training subsidies. This investment recognises the support providers need to maintain quality and ensure their delivery remains relevant and responsive to ākonga, community and employer needs.
- $33.4 million of operating funding and $13.9 million of capital funding to support the transition and integration phase of the Reform of Vocational Education, this includes $27.4 million of operating funding from Vote Tertiary Education and $6.0 million of operating funding from Vote Education.
- $32.3 million to address immediate cost pressures facing wānanga.
- $10.4 million relating to reinstating the Training Incentive Allowance for learners studying at levels 4 to 7 on the New Zealand Qualifications Framework.
- $10.0 million to extend the temporary hardship fund for learners in tertiary education for the 2021 calendar year, this includes $5.8 million of new operating funding from Budget 2021 and $4.2 million of reprioritised funding from Vote Tertiary Education.
The Government has also announced $25 increases to maximum weekly student loan payments for living costs and student allowance payments. More information can be found at the Ministry of Social Development's website.

Vote Tertiary Education Summary of Initiatives 2021

VOTE TERTIARY EDUCATION INITIATIVES	DESCRIPTION
Continued Support to the Wānanga Sector Operating Funding $increase/($decrease) » 2020/21 - » 2021/22 4.000 million » 2022/23 7.250 million » 2023/24 10.500 million » 2024/25* 10.500 million Five-year operating total 32.250 million	This initiative will continue support for wānanga to undertake research and educational delivery that protects and advances mātauranga Māori.
Cost Adjustment to Tertiary Tuition and Training Subsidy Operating Funding $increase/($decrease) » 2020/21 - » 2021/22 16.345 million » 2022/23 31.892 million » 2023/24 31.254 million » 2024/25* 31.256 million Five-year operating total 110.747 million	This initiative provides funding for a 1.2% increase in tertiary education tuition and training subsidies to support providers to maintain quality and ensure their delivery remains relevant and responsive to students’ and employers’ needs. The increase strikes a balance between helping providers manage increases in delivery costs with an expectation that providers make effective and efficient investments to maintain quality and sustainability.
Ensuring the Viability of Vocational Education and Training Operating Funding $increase/($decrease) » 2020/21 - » 2021/22 18.420 million » 2022/23 67.022 million » 2023/24 97.321 million » 2024/25* 96.745 million Five-year operating total 279.508 million	This initiative provides a 13.4% increase in Vocational Education and Training (VET) funding by 2024. This funding will also support the implementation of the new unified funding system for vocational education from 1 January 2023, a key part of the Reform of Vocational Education. The new system will better support high quality work-integrated provision, better support learner needs and help sustain a network of VET provision in our regions.
Extending the Temporary Hardship Fund for Learners in Tertiary Education Operating Funding $increase/($decrease) » 2020/21 - » 2021/22 5.803 million » 2022/23 - » 2023/24 - » 2024/25 - Five-year operating total 5.803 million	This initiative will provide funding for a temporary extension of the COVID-19 Hardship Fund for Learners in tertiary education in the 2021 calendar year. Some learners will have lower incomes, reduced financial support from their families and may face additional costs this year due to the ongoing impacts of COVID-19 that go beyond the current levels of support, or may not be supported by student loans and allowances. This initiative will help students in hardship remain connected to their education provider and engaged in their learning.
Reform of Vocational Education - Transition and Integration Phase Operating Funding $increase/($decrease) » 2020/21 - » 2021/22 12.932 million » 2022/23 9.668 million » 2023/24 2.400 million » 2024/25* 2.400 million Capital Funding $increase/($decrease) » 2020/21 - » 2021/22 7.300 million » 2022/23 4.550 million » 2023/24 2.000 million Five-year operating total 27.400 million Five-year capital total 13.850 million	This initiative provides funding to retain capability, and to build a data interface, to support the transition and integration phase of the Government’s Reform of Vocational Education (RoVE). This will enable the Tertiary Education Commission, New Zealand Qualifications Authority and Ministry of Education to implement changes necessary to deliver the skills and opportunities that learners, employers, industries, and regions need to prosper. This is the Vote Tertiary Education component of a cross-vote initiative. See also Reform of Vocational Education – Transition and Integration Phase in Vote Education.
*Includes outyears funding

Q&As

What does this funding provide to the sector?

For 2022, the industry training fund will increase by $14.8m, which will increase all funding rates by 5%

For 2022, this is alongside an additional $22.0m in equity funding to:

Boost current equity funding rates for VET to match those for higher education;
Extend the eligibility of equity funding to all eligible VET learners (e.g. learners with transitional industry training organisations); and
Extend equity funding to support VET learners under 25 years old without a level 3 or above qualification.

What’s the next step for the reform of the funding system?

From 2023, the additional funding will become part of the unified funding system for vocational education and training, which will unify, simplify, and significant increase existing funding for provider and workplace-based vocational education and training.

Information on UFS funding rates is expected to be available in mid-2022. Ahead of this, we intend to provide clarity on the approach for transitioning into the new system.

The aim of any arrangements to support transitioning to the new system is that providers will be supported to shift to new funding rates in a smooth and managed way, with time to adjust to the UFS, while minimising disruption to the network of provision.

Implementation of the unified funding system will start from 2023 and is a core element of completing the Reform of Vocational Education.

What does this cost adjustment provide to the sector?

$110.7 million over four years will help the sector to maintain the quality and relevant of the learning opportunities they provide by increasing tuition and training subsidies by 1.2 percent.

Tertiary education and training organisations are estimated to receive additional funding of the following amounts over the next 4 years:

Universities: $56.8m
Te Pūkenga - New Zealand Institute of Skills and Technology: $23.4m
Private Training Establishments: $14.8m
Transitional Industry Training Organisations: $7.0m
Wānanga: $7.2m

The cost adjustment also applies to Youth Guarantee, Adult and Community Education (ACE), Literacy and Numeracy programmes, Gateway, English for Speakers of Other Languages (ESOL), Māori and Pasifika Trades Training Top-up and Equity Funding.

Actual amounts will depend on enrolments and investment decisions by the Tertiary Education Commission.

What support does this funding provide to wānanga?

This initiative provides baseline funding to each wānanga of $4 million per annum from 2021/22 to maintain current research capability funding and provide equal access to interim funding for all three wānanga.

This funding supports the unique role of wānanga in protecting and promoting mātauranga Māori while work to co-design a new long-term approach to funding wānanga is progressed.

Ākonga and wānanga will also benefit from the wider funding for the tertiary sector including: 

increased equity funding to better support for learners ākonga at levels 3 to 7. 
the 1.2% increase in overall tertiary education tuition and training subsidies
access to the extended Hardship Fund for Learners.

What does the Temporary Hardship Fund extension mean for the sector?

The Fund has been extended for the 2021 calendar year at a total cost of $10m.

Funding will be paid to providers to allow quick distribution to learners who need extra support.

Learners may receive either cash grants or goods/services purchased on their behalf if this is more suitable in the circumstances.

How does the Fund relate to other support students can access?

The Fund complements existing emergency support available for tertiary learners through StudyLink.

Where does the other $4.2m in the temporary Hardship Fund come from?

The $10m extension to the Temporary Hardship Fund for tertiary learners for 2021 is funded with $5.8m from Budget 2021 and $4.2m of unspent 2020/21 funding within Vote Tertiary Education. This comprised $2.1m for outbound international education scholarships that was unspent due to COVID-19 and $2.1m due to COVID-19 related changes to contracts under the Entrepreneurial Universities programme, which was already being phased out.

What is happening to the Reform of Vocational Education?

The Reform of Vocational Education is the largest and most complex change to New Zealand’s vocational education and training system in a generation.

The new system will have a stronger focus on employers, delivering the skills they need, providing more support for both their employees and employers, and ensuring greater consistency in vocational education across the country.

There is still a large amount of work to be done over the next two years so that RoVE is designed and implemented to deliver a fully integrated system.

This initiative provides funding for the Tertiary Education Commission, New Zealand Qualifications Authority and Ministry of Education to implement changes necessary to deliver the skills and opportunities that learners, employers, industries, and regions need to prosper.

The initiative includes capital funding of $13.850 million for the Tertiary Education Commission to design and deliver a new data system to support the implementation of a unified funding system for vocational education and training from 2023.