The Education Ministry recommended a different approach to reforming the polytech system from the minister's chosen model, saying what the minister is doing risks the failure of institutions.
Tertiary Education and Skills Minister Penny Simmonds unveiled plans to group the weakest polytechnics together and let the strongest stand alone on Thursday.
She did not say which polytechnics might be able to stand alone and which might be included in the federation, and standards for industry training would be overseen by eight boards which might also have the power to arrange and offer training.
The Ministry of Education had warned the option carried risks, and recommended forming four regional groups of polytechnics instead.
It said creating the federation would be complex and there was a risk it and the standalone institutions could fail. However, it also said it did not have a strong view on which option was preferable.
Simmonds told Morning Report forming four regional groups of polytechnics would not save costs.
She said smaller regional polytechnics were running courses with too few students and too many staff, and needed support from Open Polytechnic.
"They need that access to online delivery. They can't develop that themselves."
"Some have had a long history of running deficits and they've been bailed out and they just need to get their cost structure under control."
She recommended Open Polytechnic as the anchor institute for the federation as they had around 160 online programmes which could assist polytechnics to be able to pull their costs back and do a blend of on-campus and online learning.
However, the Tertiary Education Union said it would not solve some of the underlying problems within the sector, such as funding and institutions competing for students.
It said staff were also worried about the prospect of further cuts at polytechnics.
Labour leader Chris Hipkins, who as a previous minister announced and oversaw the merger of the polytechs into Te Pūkenga, acknowledged that reform had been strained but argued the government's approach was throwing the baby out with the bathwater.
"Look, I'll admit that Te Pūkenga has had a pretty rocky ride since it was established. The benefits of that reform had not yet been realised. A lot got in the way of that reform process including the pandemic - where the institutions were shut down for a long period of time - and we do need to do more to make sure that vocational education in this country is viable," he said.
"But simply pretending that there were no problems with the previous system is farcical. The previous system was going broke."
He said the approach being taken was a shift away from what most countries had been moving towards.
"Putting work-based learning together with off-the-job learning is actually really important - we're one of the few countries in the world that treats apprenticeships as completely separate and a whole separate system to institution-based training.
"Going back to what we had, when what we had was clearly failing, isn't an answer to the problem."
Back in 2019 then Otago Polytechnic chief executive Phil Ker wrote a paper proposing the federation model for struggling polytechnics.
But he told Nine to Noon what had been proposed was neither a fish nor a fowl.
"It's a sort of a Darwinian solution of the survival of the fittest, go on to be autonomous institutions and the leftovers become some form of federation," he said.
"Whilst I am supportive of the concept of a federation, this falls far short of a well-thought-through and well-designed federation model."
He said we had a sector, but we did not have a system, which is what we were lacking. He said there needed to be some coordination.