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Southern Institute of Technology chief executive Penny Simmonds was also surprised by the minister's plans, and said it was ''very difficult'' to see how a national polytechnic helped regional New Zealand.
Education Minister Chris Hipkins, for his part, said Otago and SIT would be role models as New Zealand's 16 polytechnics were potentially brought together as one entity.
Yesterday the Government unveiled proposals to change vocational education - the key feature being all 16 polytechnics and Institutes of Technology merging to become the ''New Zealand Institute of Skills and Technology''.
Mr Hipkins stopped short of closing cash-strapped institutions, and of putting a number on possible job losses.
He did say the Government wanted substantial change, as the status quo was financially unsustainable.
In recent months the Government has provided bail-outs, loans and capital injections exceeding more than $100million to three northern training providers.
By contrast, the two southern institutions - SIT and Otago Polytechnic - have done well. Otago last week announced its 2018 financial surplus was ahead of budget.
''I understand that those who have strong institutions are thinking 'what does this mean for us?''' Mr Hipkins told the Otago Daily Times.
''Actually there are huge opportunities for the regions to play a bigger role nationally . . . I think Otago Polytech is very well positioned to play a pivotal role in the new national network.''
Mr Hipkins also signalled policies which have driven the success of SIT - Zero Fees and accommodation bursaries - would likely survive the revamp, as they were ''unique regional arrangements''.
''Otago and SIT are strong institutions and have characteristics we want to see replicated across the entire system,'' Mr Hipkins said.
''Their strengths are things we want to leverage off for the rest of the country. I have spoken to regional leaders from Dunedin and Invercargill, saying that this isn't about taking stuff away. It is about getting the system operating more effectively as a whole.''
Job losses seem inevitable, with Mr Hipkins proposing all polytechnic staff would be employed by the new, national institution. That would have a ''significant impact'' on staff.
The National Party yesterday said the reforms were much bigger than anticipated and could lead to mass job losses.
''We believe that there is a need to address issues of quality, sustainability and more skilled people in trades, but the idea that all this can be solved in Wellington is naive,'' tertiary education spokesman Shane Reti said.
''Given how much uncertainty there is, there should be a thorough consultation period, but instead, there will be just six weeks for industry to have its say.
''Mr Hipkins wants this in place next year, which means rapid upheaval for the sector.''
Mr Ker said two-thirds of the proposed reforms - revamping relationships with business and a new unified funding system - made sense.
However, anything which led to a loss of the autonomy or identity of Otago Polytechnic would undermine the work done to make it a degree-providing national education provider.
''The model the minister has adopted was roundly rejected in the consultation phase last year by everyone as wrong for New Zealand, and he has by his own admission ignored the advice he got from his officials,'' Mr Ker said.
''What that places significantly at risk is the innovation we are renowned for, and the initiatives we have put in place to service our community.''
Otago Polytechnic would make rigorous submissions during consultation to maintain its status and not be a ''mere branch'' Mr Ker said.
Ms Simmonds agreed there were positive aspects.
''But even with the best intent that he would like the regions to be strengthened, it's very, very difficult to set up the structure of one mega-institute and be certain you are going to be looking after the regions.''
SIT's distance learning programme would end and upward of 30 staff could be affected by the proposals, Ms Simmonds said.
The discussion documents include a proposal that the NZIST could set up centres of vocational excellence (Cove) in areas of study of particular importance to New Zealand.
Mr Hipkins said southern institutions were well placed to be among the first cabs off the rank to host a Cove.
''We don't want everything centralised, but spread throughout the country,'' he said.
''There will definitely be opportunities for those strong regional polytechnics - and Otago and SIT are two great examples - for them to host centres of excellence.''
• All polytechnics and institutes of technology merge and become New Zealand Institute of Skills and Technology.
• NZIST manages all capital and operational budgets, staffing, student and learning management systems.
• NZIST governed by a national council appointed by the Minister of Education. Some national office functions could be delegated to one or more regions.
• Students enrol as normal this year, but with NZIST in 2020. NZIST to set up ‘‘regional leadership groups’’ to provide a link between local government, employers, iwi and communities.
• Consultation closes on March 27.