The Government is to fund tertiary institutions based on their academic success, not how many students they have enrolled.
Tertiary Education Minister Steven Joyce says the change will start in two years and that initially between 5% and 10% of institutes' funding will be based on their performance.
"The performance-linked funding model will provide financial incentives for institutions to continually work to improve the educational performance of their students," he said. "The performance we'll be measuring will use indicators like successful course completion, qualification completion and student progression."
Mr Joyce has told universities, polytechnics and other tertiary institutions they cannot expect any extra money from the Government.
Number of qualifications to be cut
The Government is also to review the 6000 qualifications available to students, which Mr Joyce signalled would be cut by 25% by the middle of the year.
Mr Joyce says Finland, which has a slightly larger population than New Zealand, has just 500 qualifications, making 6000 seems a bit high.
"We need to cut out duplication, up the quality and reduce the number of new qualifications being added to the system unnecessarily," he says.
Standards will drop - Labour
Labour's tertiary education spokesperson, Maryann Street, says the changes could have the perverse effect of lowering academic standards because institutions could be encouraged to promote less challenging courses in order to ensure high pass rates so they retain the same level of funding.
"The pressure that will go on staff to get people up over the line, get them over a pass mark, and in the process risk dumbing down a course is very high, and I think that's damaging to our international reputation and damaging to the achievement level that we really need to promote in this country."
Discrimination likely - vice-chancellors
The Vice-Chancellor's Committee says the funding change could lead some institutions to discriminate against some students.
Derek McCormack, who is the vice-chancellor of Auckland University of Technology and chairman of the vice-chancellor's committee, says the new approach runs the risk that institutions will lower standards to increase their pass rates.
"There's also an incentive to avoid risky students, students from low-decile schools wanting to come to university say, Pacifica students who might be a little more risky in getting through to that successful completion."
Pacific Islander views
A private training institute for Pacific Islanders who failed at mainstream schools is backing government plans to link part of tertiary funding to student performance.
But another Pacific educator says Mr Joyce needs to consult with the sector before cutting a quarter of the 6000 available courses.
Puloto Selio Solomon from the Martin Hautus Pacific People's Institute says private trainers are used to the proposed model and it's time universities and polytechnics were made more accountable.
However, the head of Pacific studies at Auckland University of Technology fears some courses will be dropped because Mr Joyce and his advisers want courses that deliver jobs.
Tagaloatele Peggy Fairbairn-Dunlop says Mr Joyce may put educational development at risk if he goes ahead without consultation first.
