There is truth in that, as someone who also went to such a school (numbers dropped very noticeably in yr 11, either towards TAFE or simply leaving education as soon as legally possible).

Combining CIT and UC would indeed be a hard task to manage without scaring off those who are sick of schooling as they know it and desire more practical experience. The other end would have its own issues too as prestige does still play into people's university choices and the combined edifice would have to spend efforts on maintaining its reputation for research/academia to not scare off those prospective students.