Can SIT prove it is financially sustainable?
“To be a regionally independent polytech, we would have to be able to put a proposition to the Minister and cabinet that says this entity can stand on its own two feet into the future."
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The Southern Institute of Technology has a challenge on its hands to prove it has a “robust pathway to financial sustainability” and re-establish itself as an independent organisation.
The previous Labour-led Government merged New Zealand’s polytechnics creating the centralised Te Pūkenga to oversee them. The new National-led coalition Government has now moved quickly to disestablish Te Pūkenga.
However, that doesn’t mean each polytechnic will simply return to being independent again - including SIT.
Tertiary Education Commission [TEC] representatives were in Invercargill on Tuesday providing an update on the “Redesign of the vocational education and training system”.
Under its proposal polytechnics that can show a robust pathway to financial sustainability will be reestablished as independent regional industry training providers.
However, it is unsure if any will be able to prove that.
During TEC Deputy CEO Gillian Dudgeon’s visit to Invercargill she said no polytechnic was financially sustainable right at the moment.
As part of the proposal those who cannot prove their sustainability will join a new “federation” of training providers.
They will be provided academic and financial support to deliver courses and programmes with the support of others.
Dudgeon was asked at a public meeting at SIT what a “robust pathway to financial sustainability” actually looked like.
“To be a regionally independent polytech, we would have to be able to put a proposition to the Minister and Cabinet that says this entity can stand on its own two feet into the future and continue to deliver what its region needs,” Dudgeon said.
“So financial sustainability is obviously really important, but the breadth of programmes and the way in which they are delivered is also very important.”
Te Pūkenga has money ring-fenced for SIT which was SIT’s cash reserves before the polytechnic merger went ahead.
That money will be returned to SIT providing significant capital that others won’t have.
Dudgeon acknowledged SIT was probably in the strongest position to return to being independent, however, she added it was not a simple case of returning to the past.
“Some things have changed, like the number of learners, the number of international students [SIT] have. All of those things have impacted the financial viability of this particular polytech, and other funding changes, all of those things.
“We can’t go back to exactly what it was, but you would have to say that you guys should have the strongest case of getting from where you are now to being regionally independent.
“I’m just being really honest and saying that it is still going to require some tough decisions,” Dudgeon said.
Former SIT employee Bharat Guha - who is now ILT’s chief financial officer - explained at the meeting how the SIT’s key asset in attracting students had been the Zero Fees scheme.
But that did come with an additional expense for SIT to carry in the initial stage, which may impact the quest to prove its financial sustainability.
In response, Dudgeon said: “It was all going to be about the decisions this [Southland] region wants to make, and I think the free fees is a really good example.
“You could decide that you want to be a slightly smaller polytech with less students and have fees, or if you want more students, because you want them in the community, and have zero fees.
“Those are all decisions that will be your decision to make and then you will be the ones that will live or die by the consequences of those decisions.
“Where at the moment those decisions are being made by Te Pūkenga.”
Another former SIT employee Chami Abeysinghe - who is now Great South’s CEO - said SIT had a strong record of attracting international students and suggested that should be taken into account when assessing if SIT can be independent.
Dudgeon said leadership and management capability, as well as resources, will go into the final decisions.
Although earlier - in relation to international students - Dudgeon said: “You can’t necessarily be independent based on just forecasts into the future of things that you don’t have tangible evidence that are actually going to happen.”
SIT operations lead Daryl Haggerty assured those at the meeting that the management team was seeking autonomy for SIT.
“It’s our focus and it’s been our focus for some time, and we are driving that. Don’t forget that’s our goal and that’s where we want to be.”
SIT’s economic impact on Southland is considerable.
According to a 2022 economic impact assessment SIT contributed a total value add of $508.5 million in GDP to the Southland economy from 2018 to 2022.
Annually SIT’s total spend is $65.4m, and it provides employment of around 581 full-time equivalents (FTEs) in the Southland region.
In addition, SIT’s domestic and international students spend is $91.7 million annually in the Southland region on rent, food, and other goods and services. Combined, SIT and its students spend around $157.1 million a year in the Southland region.