In a series of Treasury documents released under the Official Information Act, the department criticises Vocational Education Minister Penny Simmonds’ failure to brief members of Cabinet properly and reflect sufficiently on the risks of her proposals.
The government broke up mega-polytechnic Te Pūkenga earlier this year and devolved it to a series of stand-alone polytechnics and "federation model" merged entities.
Otago Polytechnic became part of one of the latter, lumped in with Open Polytechnic and Universal College of Learning.
The Treasury’s papers suggest officials did not understand the approach.
"We have not seen sufficient analysis on the federation model and how it will function, be funded and implemented, or how it will materially support the viability of institutions," the Treasury advised Ms Simmonds in May.
"As such, it is difficult to have a clear view on its likely success."
Instead, it recommended consolidating polytechnics to create more financially viable entities.
While Ms Simmonds was preparing her Cabinet paper, Treasury advisers also warned her on more than one occasion about the speed of the reform.
One advised that implementing the changes by January 2026 would require an "extraordinary amount of work".
"It will also be important to manage these changes so that learners’ education is disrupted as little as possible ... This will be a difficult job."
Any reform of the vocational education sector should be clear on what model was being proposed, the costings and the critical assumptions that underlaid those costings, the adviser said.
Officials also doubted simply returning to regional polytechnics would be successful.
"We think that the scale of the very substantial cuts required to establish the [polytechnics] as independent entities arguably calls into question how responsive they can be to the needs of learners and employers and whether they can fulfil their broader mission to contribute to human capital and social outcomes."
Instead, the Treasury recommended keeping a central institution similar to Te Pukenga to assist with back-office functions and standardised learning, with an ability for regional polytechnics to be established in time where there was "a clear case".
That would be an effective "lift and shift" to a new Crown company, the advisers said.
The Treasury also felt the minister had not informed Cabinet sufficiently of the financial risks.
"There are significant unspecified and unquantified fiscal impacts related to the proposals in this paper, both transitional and ongoing, and we are concerned that Cabinet and officials have not had sufficient oversight of these."
The success of the polytechnics would require significant financial assistance from the government, the Treasury advised.
"We consider that strategic grants will likely need to be increased under any option."
Green MP Francisco Hernandez said the Treasury correspondence to the minister made for sorry reading.
"At a time when unemployment is at a historic high and our young people need training and education, it’s deeply troubling that the government has presided over the butchering of polytechs and the wider vocational education sector."
The documents showed the Treasury was clear that the government’s reforms would carry significant risk, he said.
"We have seen this borne out in the nearly 1 in 7 jobs lost, courses cut and campuses closed across the motu.
"In Otago, we have seen our Otago Polytech forcibly amalgamated into the federation — against the wishes of the community — long-established programmes being scrapped and about a hundred jobs lost."
Otago Polytechnic executive director Dr Megan Potiki said it had the opportunity to raise its concerns at a meeting with Ms Simmonds.
"We are hopeful these will be the last significant changes for the country’s polytechnics for a while, given the major upheavals across the sector over the past five years.
"This has been disruptive for kaimahi [staff] and ākonga [students], and we are keen to focus our resources on providing the best quality vocational education for our community."
