Budget 2014: Time for greater PPP investment in education sector

With the successful opening of the first schools built under a public private partnership model (PPP), Hobsonville primary (2013) and secondary (2014) schools, the Government should take heed of this success when considering this year’s Budget.

While the Ministry of Education will shortly be seeking Expressions of Interest from the market for the design, construction, financing, and maintenance of Aranui Community School and Rolleston Secondary School in greater Christchurch, Wakatipu Secondary School’s new site in Queenstown and a new school in Auckland to be confirmed at a later date, there is still scope for the Government to be much more active on this front.

New Zealand faces an educational challenge with our present system coming up short for one out of five school-aged children.

From the world of IT we know that good hardware supports the effective operating of good software. So if the software in education is its leadership and quality of the teaching and the hardware is its physical infrastructure, then what type of hardware would best support the software?

Recently announced initiatives have focused on the software, i.e. leadership and the quality of teaching – to address the identified learning gaps.

What could further support this would be to have the issues associated with property ownership managed by the private sector under PPP models. Why should our best leaders and teachers have to deal with property issues?

In a PPP arrangement, a private partner is responsible for designing, building, financing and maintaining the school property for the term of the contract (usually 25 years from the opening of the school). The private partner works with the Ministry and the Establishment Board of Trustees to ensure the education vision for the school is captured in the design of the building.

The Ministry of Education pays the private partner quarterly and this payment is reduced if the school facilities do not meet the standards specified in the contract. This effectively provides a 25-year guarantee on the buildings, unlike schools procured under traditional procurement models. The Government then retains ownership of the land and buildings throughout the life of the contract.

Labour maintains that PPPs will end up costing taxpayers more. National, in response, will say the idea behind PPPs is to bring innovation and this is likely to reduce the total cost of ownership.

The Minister of Education, Hekia Parata, has advised that the use of PPPs for the recently announced four schools could deliver savings of between 2% and 8% over traditional procurement by the Ministry. She has also said that the use of PPPs for new school projects is a key part of the Government’s plan to achieve high-quality infrastructure to get the best learning outcomes.

These trials are welcome arrangements. However, the Government must ensure, through measures taken in the upcoming Budget, that they are equipped to manage these arrangements and to ensure that the promised savings are realised. There also needs to be sufficient transparency regarding the results.

The initial stages of the two Hobsonville schools were delivered on time and a high quality modern learning environment was created. Let’s feed on this initial success and let results rather than politics dictate the approach to acquiring educational hardware.

Further enquiries, please contact:

Alastair Boult
Grant Thornton New Zealand National Director, Government Advisory
T: +64 (0)4 495 1724
E: Alastair.Boult@nz.gt.com

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