In today's headlines with Wilhelmina Shrimpton, former Green MP Darleen Tana heads to court, concerns over Health NZ job cuts and Paralympics under way in Paris.
Te Pūkenga executives have rejected Government claims their entity is drowning in more than $250 million of debt, saying the real figure is one-fifth of that amount.
Labour’s Deborah Russell has accused the Tertiary Education & Skills Minister who made the comment, Penny Simmonds, of being “misleading,” saying Simmonds was making decisions that could not be justified by the entity’s financial position.
But Simmonds has backed her statements and says major changes are needed to improve financial stability.
So what’s going on?
The parties are at odds over whether “inter-company” borrowings are debt.
But Te Pūkenga chief executive Gus Gilmore says the organisation is viable and the vast bulk of the “debt” figure Simmonds references is money lent between Te Pūkenga’s own business divisions and not debt that needs to be repaid.
During a Parliamentary select committee hearing on Wednesday, Te Pūkenga executives said the entity’s debt for 2023 was $48.7m – not $250m.
Te Pūkenga chief executive Gus Gilmore. Photo / Supplied
Simmonds said her reference to “drowning in debt of over $250 million” included $207.3m of “inter-company debt”, $8.4m of commercial debt and $35.4m debt to the Crown.
These inter-company loans needed to be accounted for as part of the disestablishment, she said.
“For some former ITP (institutes of technology and polytechnics) business divisions, they have been allowed to build up significant debt due to ongoing poor performance.
“This is a key reason why Te Pūkenga needs to be disestablished, and major changes implemented to improve financial sustainability.”
During Question Time at Parliament on Thursday, Simmonds said Te Pūkenga had taken reserves from some entities to cover the debt of others.
Tertiary Education & Skills Minister Penny Simmonds. Photo / Mark Mitchell
“As Te Pūkenga is disestablished, that debt will have to lie where it was generated, and the reserves will have to go where they are generated.
“Those individual business units have indeed been decimated by the actions of the previous Government.”
Te Pūkenga said these inter-division loans were not debt and organisations often moved money around to support different divisions and projects.
“Our inter-divisional loan structure tracking is an internal construct and part of our overall treasury function.”
Deborah Russell, Labour’s associate education (tertiary) spokesperson, is on the Education and Workforce Select Committee that conducted the annual review of Te Pūkenga on Wednesday.
She asked Te Pūkenga council member Jeremy Morley if the entity was in $250m of debt, to which he said: “As a consolidated group, as a family group, the answer is no.”
Russell later told the Herald Simmonds’ characterisation of the inter-division loans as debt owed by Te Pūkenga was “misleading at best”.
“The Minister is making decisions that simply can’t be justified on the basis of Te Pūkenga’s finances.”
Simmonds said the debt was “real” and would need to be repaid to the lending polytechnics.
“This Government does not have the same cavalier attitude to using other people’s money that the previous Labour Government did, and we understand that debts have to be repaid.”
Gilmore, Te Pūkenga’s chief executive, also told the committee staff were “pissed off” and morale was low after years of change and uncertainty at the entity.
“This hasn’t been going on for six months, this has been going on for five years, so our people are feeling a bit of change fatigue and are quite frankly pissed off. So, our focus has been on supporting them as best we can.
“We talked earlier about $50m in cost-savings last year. Most of those came from leadership and non-student-facing roles.
“I’m not sugar-coating this. My colleagues have been through a lot and morale is low and change fatigue is substantial.”
Interim chief financial officer Phil O’Callaghan told the panel the entity was forecasting a $16m loss this year following a loss of $38m last year.
“Within that, the ITP losses are decreasing, so we are doing the work, but it will take some time though to generate those benefits.”
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.
