Friday, March 29, 2024

No rescue for Taratahi

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A rescue package for the Taratahi Agricultural Training Centre was rejected by the Government last year, which left the national training provider no option but to face liquidation.
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The Farmers Weekly has been told the package consisted of cost savings, a restructured business and courses, the planned sale of the 518ha Mangarata farm in the Wairarapa, a $6 million working capital cash injection and moratorium on refunding over payments to the Tertiary Education Commission (TEC).

Last year the Government spent nearly $100m bailing out Unitec, Whitireia and Tai Poutini polytechnics.

Education Minister Chris Hipkins was not available to comment.

The Farmers Weekly has been told the package was prepared by the TEC but Gillian Dudgeon, its deputy chief executive for delivery, said Taratahi approached ministers late last year seeking financial support.

“Taratahi is a private training establishment and the issues that it faces are due to the financial viability of its operating model, reduced student numbers and unsustainable levels of debt.

“There was no clear pathway for Taratahi. Independent financial advice showed that the amount of Crown financial support needed to clear Taratahi’s debt and ensure it remains viable in just the short term could be more than $30 million if no asset sales were made.”

Following the Government’s rejection, a TEC spokeswoman said Taratahi withdrew its 2019 funding application and a week before Christmas called in interim liquidators, Grant Thornton.

Taratahi’s 750 effective full-time students and 250 staff – who had their salaries suspended from Friday – face uncertainty as the liquidator works through realising Taratahi’s $46m of assets to settle more than $23m of debt – $10.5m to the TEC and $13m to Westpac.

The TEC is working with other education providers and institutions to find courses for students planning to study at Taratahi.

If the liquidator does not consider Taratahi viable, the Farmers Weekly has been told it will need to sell all its assets, including the Mangarata breeding and finishing farm bought in 2011, livestock, vehicles, campus land and buildings.

Its Wairarapa dairy farm, which was gifted, cannot be sold without approval from the Minister for Primary Industries and the Telford farm is held in trust.

In 2018 the TEC provided Taratahi with $17m in funding, but it only recruited half the targeted enrolments for which it was funded, requiring the repayment of $6.5m.

In 2014-15 it had to refund $4m for similar under-enrolment.

The TEC said it is seeking to recover $10.5m in overpayments from the liquidators.

Meanwhile, Invercargill-based Southern Institute of Technology (SIT) is once again looking to take over Taratahi’s Telford campus in South Otago, having looked at it in 2017 when divested by Lincoln University.

Telford Farm Board chairman Richard Farquhar said his board is talking to SIT.

“We need to have something in place very quickly as we are likely to see students starting to come in at the end of the month to start their courses.”

His board is concerned the Government has no plans for level three and four primary sector training despite course completion rates in the high 90% and virtually every graduate getting a job.

SIT chief executive Penny Simmonds says she is waiting for direction from the liquidators.

Political, farming and education leaders all say the current sub-degree model is costly and unsustainable.

To secure funding, training providers predict student numbers for the coming year and lodge a funding application with the TEC.

They then try to recruit their targeted student numbers, but if they fail, they must refund the TEC.

Taratahi faces high costs because students are required to live on campus, and it must offer hands-on education, adhere to compliance and provide pastoral care.

A TEC statement said a competitive funding pilot proposal for level three and four primary industry providers run in 2017 and 2018 will not continue this year.

It created different funding rates for different qualifications, but all rates will now be standard, which the TEC said will have meant lower funding for some Taratahi qualifications in the coming year.

“Even if the TEC did fund Taratahi in 2019, without additional government support it was not going to be viable and would not have been able to pay its debts as they became due.”

The TEC said the number of students studying level three and four agricultural, environmental and related studies has fallen sharply. 

“It is partly due to demographic change, with declining numbers of school-leavers in most regions of New Zealand, and also because the labour market is very strong, with low unemployment in most places, making work more attractive than study.”

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