The cost efficiency of New Zealand’s polytechnics

Abstract

In New Zealand the most important institutions that are responsible for the delivery of vocational education and training programs are the government owned and operated tertiary education institutions known as polytechnics.1 The New Zealand polytechnics deliver programs at the certificate, diploma and degree level. During the course of the 1990s, expansion of participation in vocational education and training was a major priority on the part of the New Zealand Government (OECD 2002). In order to enable this to occur without placing too great a financial burden on the government and taxpayers, the polytechnics have become more dependent upon non-government sources of income (both student fees and other sources) and have been opened up to increasing levels of competition with the view that this will compel them to operate at higher levels of efficiency. As well, it is thought competition will make the polytechnics more responsive to the demands of students and industry.2 At the same time the polytechnics have been given more autonomy such that they have been able to move into the delivery of programs formerly denied to them.The purpose of this paper is to look at some aspects of the cost efficiency of the operation of polytechnics in New Zealand between the years 1995 and 2002. The efficient operation of the polytechnics in New Zealand is important because they need to operate at high levels of cost efficiency if they are to provide the greatest possible contribution to the development of New Zealand’s skill and knowledge base. In particular one issue to consider was whether the creation of larger polytechnic institutions could achieve lower unit costs and therefore educate a greater number of students without significantly increasing costs. In order to achieve these larger institutions, the various polytechnics have attempted to 1) expand enrolments by diversifying into the delivery of degree programs, 2) attract additional students from overseas and 3) arrange (or been forced by circumstances into) mergers in order to create larger scale institutions. In the next section, a background account of the nature of the vocational education sector and the role of the New Zealand polytechnic is given. Following this, a section containing an analysis of the cost efficiency of New Zealand’s polytechnics is provided, and in the final section some conclusions are given.