WELLINGTON, March 1 - Education Minister Chris Hipkins says it forces tertiary education providers to bid against each other.
"From 2019, the up to $135 million of funding will return to being on the basis of student enrolments," he said on Thursday.
"It removes uncertainty and will enable providers to properly plan and develop programmes, build tutor capacity sand focus on what they do best - improving the quality of outcomes for New Zealand's learners."
The previous government introduced the process.
Mr Hipkins says it was "another failed ideological experiment".
Competitive funding allocations cover some areas of non-degree tertiary education.