Minister’s letter aimed at unseating Te Pūkenga chair Murray Strong, and his rejoinder

Minister for Tertiary Education and Skills Penny Simmonds sent a scorching letter of no confidence to then chair of Te Pūkenga Murray Strong in December. In his resignation letter, Strong fired back. Photo / Phil Smith

Murray Strong, former chairman of Te Pūkenga, resigned last December under the threat of imminent removal by incoming Minister for Tertiary Education and Skills Penny Simmonds, newly released documents show.

Strong’s resignation was tendered on December 8, just three days after he received an excoriating letter from Simmonds, expressing no confidence in him.

Despite the timing, Strong contends that he stood down because the Government’s change of direction put him in an untenable position. His resignation letter to Simmonds contained its own rebuke.

Te Pūkenga (the New Zealand Institute of Skills and Technology) is the partially executed amalgamation of the country’s 16 polytechnics and institutes of technology and nine industry training organisations.

The centralising effort began in 2020 under the Labour-led coalition Government of the time, and Strong was the inaugural chair. The National-led coalition Government plans to disestablish the entity.

”I am writing to you to notify you of my proposal to remove you as a member of the council of Te Pūkenga under section 37 of the Crown Entities Act 2004, which will also have the effect of terminating your role as chairperson of the council,” Simmonds’ letter of December 5 said.

”I do not have confidence in your ability to oversee Te Pūkenga’s overall performance and to guide Te Pūkenga to a financially sustainable position. I do not have confidence in your ability to guide Te Pūkenga through the coming months while the Government is assessing options for Te Pūkenga’s future in line with its 100-day plan.”

The letter cited “a general lack of progress to date” and “specifically in addressing Te Pūkenga’s financial performance”. It cited past and forecast deficits but some financial details were redacted.

The letter advised Strong that he had five working days to “make any submissions” to Simmonds related to her proposal to remove him.

The two-step process fulfilled a requirement for “natural justice” – in particular, the principle that affected parties be given a fair hearing.

Strong’s term as chair was due to expire on March 31, less than four months from the date of Simmonds’ letter. He was replaced by Sue McCormack who remains acting chair; she was previously the deputy chair.

The letter and other TEC documents, were released to the Herald under the provisions of the Official Information Act (OIA).

Separately on December 5, Simmonds also provided Strong, as Te Pūkenga chair, with a “letter of expectations” which formally notified him of the Government’s intention to disestablish the Crown entity, and it asked that he avoid making decisions that would make disestablishment more difficult or costly.

The Government has promised to disestablish Te Pūkenga (New Zealand Institute of Skills and Technology), but, as yet, it has set no timeline to do so. Photo / RNZ

Strong has considerable experience in public sector board roles; he remains chair of the Centre of Digital Excellence in Dunedin, of which Te Pūkenga and the central government are shareholders, and is the former chair of Christchurch City Council-owned Te Kaha Project Delivery Ltd, the council’s vehicle for building a new stadium.

Among the previous Government’s main aims in setting up Te Pūkenga was to provide financial stability for the country’s polytechs and technology institutes, which, as a group, have a history of running deficits.

The new organisation, however, was also plagued by problems, including missed deadlines, deeper deficits than forecast, and a considerable reset of strategy and turnover of senior leadership staff following the departure of chief executive Stephen Town in mid-2021.

Town took council-approved “discretionary leave” for more than five weeks before he formally left the job. During the leave he remained on full pay of $13,250 per week, in addition to which he received a $195,075 lump sum payment upon departure.

Te Pūkenga has also battled a range of financially difficult circumstances beyond its control. These include: a period of high inflation; a decline in domestic student numbers (tied to very low unemployment rates); a very steep decline in full-fee international students resulting from government policies of the Covid-era; and the introduction of the “unified funding system” which reduced government subsidy rates for both campus-based and off-campus teaching and delivery.

Strong’s resignation letter

Strong’s resignation letter focused on his misgivings about Simmonds’ as yet vague plan for the future.

”After our recent discussion in your office I resign as the chairman of the Te Pūkenga Council. It is effective immediately. My role is untenable given your intent to undertake a return to 17 separate entities, even as a transition step to an as yet unknown, future state. In addition, I am not able to operate outside of the limits of my statutory functions or breach my obligation to work towards the financial sustainability of the organisation,” Strong wrote.

Te Pūkenga operates under a legislated charter.

Strong also warned that the organisation’s 10,000 staff would be “deeply impacted” by the Government’s mandated change of direction for the mega-entity.

”The strides made in turning around the enrolment profile are also positive and it would be unfortunate if learners and their families saw recent changes as a reason to withdraw from study and further vocational education,” he warned.

The Herald was supplied with a copy of the letter in confidence.

The Herald requested Strong’s letter from both the TEC and Simmonds’ office, but the request was declined.

Strong breaks his silence

Responding to emailed questions, Strong broke his silence for the first time since his resignation.

He rejected the characterisation that his resignation was prompted by Simmonds’ December proposal to remove him from his post.

He said his resignation letter had been drafted (though unsent) since October, and that, in mid-October, he informally signalled to the TEC his intention to resign. This intent, he said, was also signalled to the Te Pūkenga council and to chief executive Peter Winder (who took redundancy in mid-December).

Strong defended Te Pūkenga’s financial performance, noting that the organisation is cash-positive and also has cash reserves.

He warned against “short-termism” and said the benefits of reform will be apparent soon.

“The 2023 annual report will indicate those advances. Decreasing deficits over coming years were less than 1 per cent of revenue over $1b and in fact modest surpluses may be recorded sooner than anticipated,” he said.

Financial results for 2023 are currently with the auditors, and will be published in the annual report, the release of which is expected at the end of May.

Strong said that savings had been made with the dissolution of the institutes and polytechs and industry training organisations across 2023, and more were forecast for 2024. In addition, he said a “property rationalisation plan” to sell or lease surplus land and buildings would have generated funds for reinvestment.

He also said the TEC had signed off a “financial strategy and financial plan” to return the organisation to surplus in 2025-2026.

This plan has been long anticipated, and its earlier delay was noted as “concerning” by the Auditor-General this time last year.

Minister’s embryonic plan

Te Pūkenga cannot be disestablished without a plan to replace it; this will require new policy, consultation with those affected, and, finally, new law.

In her early days as a minister, Simmonds suggested that Te Pūkenga could be gone within 12 months, replaced with eight to 10 regional institutes.

However, this week she declined to indicate how many institutes might emerge at disestablishment; she also declined to provide a timeline for disestablishment.

Meeting a January 1, 2025 deadline for disestablishment – a date Simmonds previously suggested – seems profoundly unlikely.

Simmonds told the Herald that work is underway to develop the detail of the new model, and that she plans to take “an initial paper to Cabinet in the middle of 2024″. Thereafter, she said consultation about proposed change would begin with regional stakeholders, staff, and industry leaders.

“Given the financial issues, not all 16 former ITPs [institutes of technology and polytechs] will be re-established and there will be some consolidation across the sector. We are working through a process to decide the number and configuration of the new ITP network. We need to see what is going to be financially viable and what will meet the needs of communities,” Simmonds said.

She added that other changes to the vocational education and training sector will be needed: “this includes consideration of the future of work-based learning, standard setting, and the funding system. I am working through the design of the new system with officials.”

Simmonds declined to reveal whether she has sought new funding for either Te Pūkenga or its disaggregated parts, but this month’s Budget is likely to be telling.