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Acting chief executive Sally Pairman made the comments at the launch of a national campaign against a decision by the Government to put $38 million out of $115 million of its level 1 and 2 funding up for tender - resulting in money shifting from polytechnics to the private sector.
As part of the launch, the Tertiary Education Union (TEU) held events at polytechnics around the country.
About 25 people turned up to a meeting at Otago Polytechnic as part of the launch, where a range of speakers brought up their concern about the changes.
Prof Sally Pairman told those attending the Government's decision was not about providing better quality education as it had claimed, and instead about cutting costs and furthering its "privatisation agenda".
Otago Polytechnic was less affected by the cuts than some other institutions, but there was a concern the cuts were just the start of a privatisation push in the foundation studies area.
"If that's the case then that will mean we will be in a situation at Otago Polytechnic where we are going to have to make some hard decisions," she said.
The tendering out of funding would also cause major problems in the regions, in some cases forcing people to move towns to get access to education.
TEU Otago branch chairman Craig West told those attending that yesterday's campaign launch was only the beginning of what would need to be a long fight against the Government's privatisation agenda.
Otago Polytechnic Students' Association president Rebecca Hohaia said the Government's decision would result in many "second-chance learners" missing out.
"I've seen first-hand what a second-chance learner can do, because my dad has come back to study, and how important it was for him," she said.
Tertiary Education Minister Steven Joyce said the decision was "purely"in the interests of raising the quality of education for students. He also disputed the suggestion certain regions would miss out, saying regional concerns were part of the tendering process.