The final one-eighth of the money ($5.8 million) will pay for abolishing fees for about 1475 students aged 20-24 who are studying foundation courses at levels 1 and 2 on the qualifications framework.
Along with a separate move to extend the fees-free Youth Guarantee scheme from the current maximum age of 17 up to age 19, this means all school leavers without a level 2 qualification will be able to enrol in free level 1 and 2 courses up to age 25.
Independent Tertiary Education NZ chairwoman Christine Clark, who represents most of the 108 private training institutes that provide FFTO courses, said the changes would be positive for many of the 4963 trainees (53 per cent) who are under age 25. But she is concerned for the 4416 (47 per cent) aged 25 and over.
"The older, most disadvantaged beneficiaries do not appear to be catered for."
She said they were not suitable for one- to three-month straight-to-work courses and needed at least the six-month fulltime courses they could get now under FFTO.
"FFTO are your long-term unemployed.
"They come with a lot of problems. They need to get teeth, they need hearing aids, they need to learn to walk," she said. "They are missing out."
The changes follow a long-term decline in all level 1 and 2 tertiary study from 32,500 fulltime-equivalents in 2005 to 22,300 last year.
The Tertiary Education Commission forecasts a continued fall in mainstream level 1 and 2 training (excluding Youth Guarantee) from 15,451 fulltime-equivalents this year to just over 13,000 in each of the next two years.
The commission's tertiary investment manager, Grant Klinkum, said this reflected tighter rules to stop people "simply repeating foundation learning for little benefit".
There was also an unintended 15 per cent drop in level 1 and 2 ESOL places in the mainstream tertiary system this year after a third of the funding was put out to tender a year ago, including private companies for the first time. Some winning providers chose to use the money for other subjects.
Refugee grandfather struggles with system
Burmese grandfather Lian Pu Taithul walks an hour each way to get to an English class because our student allowance system is not designed for older students - and is about to become even tougher for them.
The 55-year-old refugee who came here in 2011 receives $369.68 a week on a married student allowance including a $40 accommodation benefit. But his rent for a three bedroom house in Ranui is $370.
His wife, Vung Go Niang, 57, is not studying so she has been able to get a higher accommodation supplement and temporary additional support from Work and Income totalling $128.78 a week. But that is only just enough for basic food and utility bills, leaving nothing for bus fares.
"The bus ticket for one trip is $1.90. That's $3.80 up and down. I'm still walking," Mr Taithul said.
He leaves home at 7.30am to get to Unitec's Henderson campus by 8.30am, and walks home by the same route after his class finishes at 2pm.
If his wife went on to a student allowance too, which she would need to do if she is ever to learn enough English to work and participate in Kiwi society, she would lose entitlement to Work and Income supplements and go on to a $40 student accommodation benefit. They could not live on that with their current rent.
Unitec Student Union president Ben Kevey said the student allowance system was designed for young, single university students - not for older married students at polytechnics and training institutes.
Tertiary Education Union president Lesley Francey, an English tutor at Manukau Institute of Technology, said the system would get even harder for older students next year when the student allowance will be stopped after three years for students aged 40 and over. Younger ones are allowed up to five years.
"If we are going to offer refugees settlement in New Zealand, then we have an absolute duty of care to look after them. The basic requirement to exist in a new country is the ability to communicate."
A Ministry of Social Development spokesman said an "administrative error" meant Mrs Niang was receiving $7.77 a week less than her entitlement. The ministry has backdated the correct rate to July, raising the couple's total income to $520.23, or $506.23 a week after deducting a $14 repayment for a previous Work and Income advance.
It also paid Mr Taithul a $1000 student loan last week for course costs such as travel. He plans to use it to pay off bills.
Mrs Niang is on a waiting list for a beginners English class at the Waitakere Workers Educational Association.
Shifting foundations
This year
$46.8m: Foundation-Focused Training Opportunities (FFTO)
53 per cent aged under 25, 47 per cent aged 25+
Next year
$20m: Transfer to welfare reform
$12.3m: Short courses and job subsidies
$5.8m: Abolish level 1-2 fees under age 25
$5.3m: Preserve FFTO ESOL
$3.4m: Preserve FFTO intensive literacy and numeracy
Read the Cabinet Papers here: Cabinet paper one, Cabinet paper two
