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This report reviews the industry training funding system in New Zealand, provides background information to the development of the system, and outlines how the system has evolved since 1989. The report is based on official papers as well as interviews with government ministers, and those involved with the creation of Industry Training Organisations (ITOs), which were introduced in 1992 with the formation of the Industry Training Act. The report is structured around the four phases of development of the funding system: (1) establishment and development, 1991-1995; (2) consolidation - with a view to government exit? 1995-1999; (3) liberalisation and performance measurement, 1999-2000; and (4) new directions and strategic focus, 2000 onwards.