Tertiary Education Minister Penny Simmonds wants to break up mega-polytechnic Te Pukenga and move towards a new model where the financially strongest polytechnics can eventually stand on their own and the rest become part of a federation model overseen by the Open Polytechnic.
She told the ODT new institutions could not be set up if they were insolvent, and would need sufficient cash to meet their operating commitments.
But she also said an entity that continued to report losses might be able to be set up, subject to it having sufficient cash to cover those losses and "a clear pathway to financial sustainability in the future".
"The current criteria includes that I must be satisfied that the establishment of the institution is in the interests of the tertiary education system and the nation as a whole, and take into account the characteristics of that type of institution.
"I anticipate that some [polytechnics] will be able to meet the criteria through the support a federation can provide, and others will be able to meet them without federation support."
Consultation on the proposed reform is ongoing, but Tertiary Education Union national secretary Daniel Benson-Guiu said there was so much information that was missing in the consultation documents.
"It’s important that staff in the sector are able to know which polytechnics are likely to be standalone prior to submissions.
"Their submissions are likely to change if it becomes clear that they belong to one of the polytechnics that will become part of the federation.
"The problem is that the only polytechnic that’s keen on the federation model is the Open Polytechnic. Every individual polytechnic wants to stand alone."
Information provided to the ODT showed the Otago Polytechnic division ran an unaudited deficit of $8.3 million last year, and its net cash position was likely to be about -$23m.
Southern Institute of Technology ran a deficit of $9.9m and had a positive net cash position of $30m.
Asked whether the polytechnic’s net cash position could affect the chances of becoming standalone, Ms Simmonds said work was under way "to estimate the level of funding required to support the establishment of new entities and the federation".
"Cabinet will make final decisions about the proposed reforms, including who will be responsible for decisions on whether polytechnics are stand-alone or part of the federation, if the proposed federation model is confirmed."
Mr Benson-Guiu said none of the polytechnics were in surplus under the present settings.
"In some ways, this consultation process is a sham.
"Financial viability relates to how much funding comes into the sector. For a long time, the funding has been constrained by various governments.
"What’s actually needed is improving the financial model."
Green MP Francisco Hernandez said Ms Simmonds’ comments confirmed her reforms would "further introduce stress and uncertainty to a sector that’s been crushed by half a decade of uncertainty and likely lead to the diminishment of local voice".
"Dunedin deserves a world-class polytechnic sector and whether it’s part of a collective or not, the minister should guarantee that students in Otago can access a strong polytech that provides skills training for a 21st century economy."
Consultation closes on September 12.
