New Tertiary Education Minister Steven Joyce believes a new funding measure for education institutions is on the right track, but Labour is claiming the planned reforms are taking the wrong approach.

The measure means academic performance of students in Universities and polytechnics is essential if an institution is to maintain Government funding and Mr Joyce believes moving from a system based on enrolments to results will provide extra incentive.

He adds that a number of factors will be taken into consideration like the number of students completing their qualifications and their progression to further study.

Labour disagrees however and Tertiary Education spokeswoman Maryan Street says the move would put pressure on academic staff to give passing grades in cases where they are not warranted. She says it could actually lead to a lowering of academic standards at tertiary institutions.