A Treasury document from early 2018 shows the Government was warned the biggest risk to its fees-free policy was an enrolment spike - the opposite of what's happened.
The Government was advised on its one-year fees-free policy: "The main risk is that there is an increase in enrolments beyond that anticipated in the policy costings."
But Finance Minister Grant Robertson announced this week that the policy - which came into force in January last year - had not met the Government's expectations.
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He said $197 million in funding would be redirected towards vocational education due to the fees-free programme's enrolments "not meeting initial forecasts".
Robertson said when the programme was established, an "assumption of about a 15 percent increase in enrolments" was made.
"That was always a generous assumption and when you've got a period of time when you have unemployment being very, very low, that traditionally coincides with lower enrolments in particularly polytechs."
For that reason, he said it made sense to reallocate the unused fees-free funds towards vocational education - another industry that's faced low enrolment.
"We still believe in the importance of that programme, we still believe that it's giving people opportunities post-secondary school."
Robertson said the reallocation of funds was "simply recognition that not all of the money that was allocated for it is being used".
The policy was rolled out along with a $50 per week increase to student allowances.
The Government was warned it "may incentivise some people currently receiving benefits to enter study primarily for the purpose of receiving this additional support".
The operating impact of the fees-free policy and increase to the student allowance was projected to be $2.57 billion over five years - $342 million in 2017/18, rising to $628 million in 2021/22.
In the lead-up to the 2017 election, Robertson said the large funding commitment was possible because Labour decided against offering tax cuts like the National Party.
Will fees-free still be extended?
Extending fees-free to two years by 2021 and three free years by 2024 still stands as one of Labour's flagship policies.
"One year free will start in 2018, and this will be extended to two years' free in 2021, and three years' free in 2024 or more rapidly if conditions permit."
The Treasury document noted how the Government "will be receiving advice on options for implementing this policy in subsequent years".
It was promised by Prime Minister Jacinda Ardern in the lead up to the 2017 election. She said the policy would be extended to two free years of post-school study in 2021, and three free years in 2024.
But the Finance Minister couldn't confirm if extending the policy was still on the cards. While he said it "remains our policy", he added: "We're not looking at that [extending the policy] at the moment."
"The scheme as it stands now is for one-year free. Those second decisions are beyond this term of government and we will make those decisions nearer to the time.
"I think it's important to have the policy for the long-term. This is a policy that's open for workplace training as well in terms of people who have never studied before."
When asked if the unused fees-free funds could be reallocated towards teachers who rejected the Government's latest offer, Robertson said the offer to teachers was sufficient.
"We believe that what we've got on the table for teachers is a good offer at just over $1 billion it's a significant offer and this funding is important.
"It was part of tertiary education funding and we wanted to make sure it was used in that space."
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