Tertiary Education Minister Steven Joyce is calling on universities and polytechnics to respond to demand from the engineering and computing sectors.
Mr Joyce says there are shortages of qualified people in these areas.
He says while New Zealand has under-invested in engineering in recent years, the Government has put more funding in place this year.
He says universities need to use this money to enrol more students to meet the demand.
The Minister says the Tertiary Education Commission will ensure the funding is tagged to actual investment in engineering.
But Tertiary Education Union national president Sandra Grey says Mr Joyce's comments are out-of-step with the Education Act, which states that universities need academic freedom and autonomy.
She says while the Government can give direction about where money is spent, institutions know what to teach and how to meet students' needs.