This paper offers insights into the policy environment within which work-based learning takes place. Since 1999, work-based learning in New Zealand has been reframed by a series of ‘third way’ policies implemented by the Labour-led coalition government. These initiatives incorporate an interesting mix of borrowed ideas, principally from the United Kingdom, and domestic imperatives. The purpose of this paper is to outline, examine, and evaluate New Zealand’s ‘third way’ approach to education and training and its present and future implications for work-based learning. The direction of Labour’s policies was signaled in its 1999 election manifesto document, Skills for 21st Century. Buoyed by the support for and success of its initial policies, the government has continued to borrow and adapt overseas initiatives. This paper builds on previous comparative research (Piercy, 2003; Murray and Piercy, 2003). It traces the implementation of key policy reforms that relate to the broad area of work-based learning. It describes, briefly, the evolution of the current Tertiary Education Strategy (TES) and the contribution made by the ‘third way’ Tertiary Education Advisory Committee (TEAC). The TES is a five to seven year plan that intends to give focus and certainty to the entire post-compulsory education and training sector (PCET); this effectively includes all work-based learning. The paper also examines the three Statements of Educational Priorities (STEP) that have been released to date (the latest in April 2005). The STEPs constitute an action plan for each phase of the TES. The paper concludes that the adoption of a ‘third way’ approach since 1999 has not only altered significantly the role now played by employers, unions, and industry training organizations (ITOs) but also provided opportunities to transform important aspects of work-based learning.