Regulation of Tertiary Education

Abstract

he provision of tertiary education is regarded by many as being vital to both the achievement of economic success and greater social equity. In recent years the trend in most countries has been to grant government education providers with greater institutional autonomy but at the same time subject them, and private providers, to formal regulation. The impact of this regulation to both government and private providers is little understood by participants and in most countries is still in an evolutionary stage. The collapse in 2003 in New Zealand of two major private tertiary education providers (PTEs) — Modern Age Institute of Learning and Carich Limited — brought into question in that country the manner in which PTEs are regulated. In New Zealand PTEs make up a significant proportion of the tertiary education sector (in July 2003 there were 49,897 students formally enrolled in PTEs or around 15 per cent of formal enrolments; 337,004; Table 1). In New Zealand PTEs are able to offer certificate, diploma and degree level qualifications; both developed by themselves and by the national accreditation authority. In providing these services they must submit themselves to a national regulatory regime that is designed to enforce quality standards; not just of the PTEs but also of a number of government tertiary education providers (GTEs). In New Zealand GTEs include the universities, polytechnics, institutes of technology, colleges of education and wananga. In this paper the term GTE is not applied to the universities but only to the polytechnics, colleges of education and wananga because these institutions fall under the same regulatory regime as the PTEs, which the universities do not. The purpose of this paper is to identify the economic rationale for the regulation of PTEs and discuss whether New Zealand’s regulation of this sector effectively achieves economically rational outcomes. Internationally many countries are opening up their tertiary education sectors to increasing levels of competition; both between government-owned institutions and between private institutions and the government sector. At the same time the creation and operation of formal regulation of the tertiary education sector has become a matter of contention. The regulatory dilemmas facing the New Zealand Government provides a good example of some of the problems faced by governments when they attempt to create a regulatory framework for the tertiary education sector. In the first section the general background to the New Zealand tertiary sector is provided. In the following section a description of the economic rationale for the regulation of the tertiary education sector is given, and in the next section the responsibilities of the New Zealand Qualification Authority (NZQA), which enforces regulation is explained. A discussion of whether NZQA’s regulations Malcolm Abbott is Dean of the School of International Studies at AIS St Helens, a private tertiary education institution in Auckland, New Zealand. T