Firstly, there are the obvious issues raised by Peter Fenwick: that there is a serious time lag involved:
If he gives an immediate instruction, with appropriate funding, it will take probably two years for institutions to plan and acquire staff and other resources for the increased intake, a further four years until they graduate and then a year or two until they acquire the practical work-place experience. Add another year if they do an industrially desirable conjoint or advanced degree. Thus it will be at least six years before we see any increased supply, certainly not next year.
Unstated: by the end of those six years, employers may have decided they want something else (or "persuaded" Joyce to grant special visa privileges to some favoured group of staff trained overseas, flooding the market and dropping wages through the floor). So there's significant uncertainty faced by students looking at studying such specialised degrees.
But more fundamentally, Joyce seems to think that getting enough engineers is simply a matter of funding university places. While its part of the solution (in that it obviously sets a cap), it assumes that the employment market is between universities (who churn out graduates) and employers (who hire them). This is a fundamental mistake. Universities are simply intermediaries; the real participants in the market are the students. And they are not simply substitutable raw lumps of intellectual labour who can be specialised into whatever the Minister believes the market desires by manipulating course numbers. Quite apart from having their own opinion on what they want to do with their lives, they also have different talents. And they are not all suited to engineering and IT.
Bluntly, the reason so few people do these courses is that they are hard. Engineering is at the crunchy end of science, requiring serious mathematical ability. IT, whether programming or plumbing, requires a confidence with technology and the ability to wrap your brain around stuff that causes SAN-loss in most people. If you are an 18-year-old with middling grades at maths who views computers primarily as an appliance for using Facebook, then these courses are not the way to get good grades and therefore (so the logic goes) a good job. Oh, you might be able to learn, but its a risk, and at the end of it who wants to hire the B student? Better to do that BA or BCom instead.
Which takes us back to Fenwick: if the government seriously wants to increase the number of engineering and IT graduates, it needs to start in schools, and get people interested and confident with maths and science. And that's a much more complicated and longer-term project than Steven Joyce simply dictating graduate numbers as if its some sort of computer game.