Government begins Te Pūkenga disestablishment despite last year's $16.6-million surplus

RNZ News

6 hours ago

Savings came from winding down its Te Pūkenga's head office and regional campuses.
Photo:
supplied
The New Zealand Institute of Skills and Technology, Te Pūkenga, finished last year with a $16.6-million surplus and $382m in the bank.
The super-institute's annual report was tabled in Parliament on Wednesday, showing a profit just as work
accelerates to disestablish the organisation
and return to a
system of stand-alone polytechnics
and work-based learning organisations at the start of next year.
The report showed income increased $68.4m or five percent last year, much of it from growing international student enrolments, but it attributed much of its surplus to cost-cutting rather than increased earnings.
"The financial result, showing a 144 percent improvement on the previous year, is the outcome of focusing on addressing financial performance through an intensive cost savings exercise across all divisions, structural changes, vacancy management, lease reduction, property sales and programme rationalisation," chief executive Gus Gilmore said in the report.
Gilmore told RNZ the surplus was "a fantastic result" for the institute just two years after it was created to take over 16 polytechnics and nine industry training organisations.
He said Te Pūkenga had budgeted and was on target for a break-even result this year.
Vocational Education Minister Penny Simmonds.
Photo:
RNZ / Samuel Rillstone
Last week, Vocational Education Minister Penny Simmonds told the Education and Workforce Select Committee that Te Pūkenga's
result did not prove it was viable
, and was possible because it had wound down spending on a centralised head office.
Gilmore told RNZ some of this year's savings came from winding down its head office, but a lot also came from its regional campuses.
"We had some 200 FTE's two years ago. That number is down to 52 during 2024, which is the period in focus.
"We made a $6.5 million cost saving in the national office and overall we've seen steady reductions across a number of our business divisions as we reviewed the demand for some of the less profitable programmes," he said.
"Yes, there was some cost reduction in the national office but there was also cost reduction within the the 25-odd business division. So we took a holistic approach right across the whole network. It wasn't simply about the national office. The national office isn't the greatest proportion of our cost. The greatest proportion of our cost is the delivery across the country."
Gilmore refused to be drawn on whether the report showed that Te Pūkenga would have been financially viable had it been allowed to continue.
"I don't have obviously those numbers in a hypothetical situation. What I can say is we've been really focused on revenue growth and cost reduction, obviously the two most important ingredients of returning to surplus," he said.
He also would not comment on the scale of cuts recommended by financial advisers and how much remained to be axed.
"In the low hundreds was the number of of redundancies in our 2024 report, we reported 288 redundancy payments, that is $9.5 million, which is similar to the number in 2023," he said.
"There will be more this year, although I can't give you an exact number, but it's going to be in the magnitude of low hundreds."
Asked if Te Pūkenga had sufficient reserves to recapitalise its polytechnics, Gilmore said that was a decision for government and last year's Budget had included a contingency for that purpose.
The report included a $9.6m provision for an "onerous lease" on the Weltec and Whitireia downtown Wellington campus.
It showed "impairment" of the Taradalde campus due to flood damage of $21.3m in 2023, $13.8m in 2024 and elsewhere showed a $15.5m insurance payment for work on Taradale campus.
The report said the institute had ring-fenced cash reserves totalling $63.4m from five former polytechnics and eight former ITOs, as well as $51m in other financial assets from four former polytechnics and two former ITOs.
It said Te Pūkenga's top-tier management of 5.1 FTE were paid $3.99m last year.
However remuneration information elsewhere in the report said one employee was paid in the range of $470-479,999, three in the range of $380-389,999, and one in the range of $370-379,999.
"Cessation payments" were made to 353 staff and totalled $10.77m, an average of $30,497.
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