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Tertiary Ed. Partnership Investment Framework

17 July 2002

Tertiary Education Partnership Investment Framework Detailed

Details of the decision-making framework for joint public-private sector investments at our tertiary institutions were outlined today by Associate Education (Tertiary Education) Minister Steve Maharey and Education and Associate Finance Minister Trevor Mallard.

A substantial amount of money has been set aside to support the new Partnerships for Excellence framework. Under the framework the government can provide capital injections of $5 million or more, provided that this is matched or bettered by funding from non-government sources, chiefly the private sector. Public Tertiary Education Institutions can apply each year for this funding via the governments annual budget round, through a robust application process. Cabinet will make final decisions on applications.

Speaking at Business New Zealand’s Election 2002 - Growth, Politics and Business conference Steve Maharey said the framework aims to increase private sector investment in public tertiary education and foster positive links between business and the tertiary education sector, while upholding the values of academic freedom, scientific rigour and critical inquiry.

“The Partnerships for Excellence framework is another example of the government’s commitment to fostering partnerships and pooling resources to achieve greater innovation and economic transformation.

“The government looks forward to exciting opportunities arising from the new framework to work with tertiary institutions and the private sector.

“Proposals will need to meet criteria such as adding value to New Zealand’s tertiary capability at world-class level, supporting national economic and social goals, increasing New Zealand’s global connectedness and enhancing innovation,” said Steve Maharey.

Trevor Mallard said the framework will increase private investment in the tertiary education sector by enabling institutions to leverage off new Crown capital.

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“Development of the framework was prompted by a proposal put to the government for a separate capital contribution of up to $25 million towards the development of a new business school at the University of Auckland. We have accepted this proposal in principle provided matching contributions from private donors are secured and a business case, consistent with the new framework, is approved by the government.

“In developing the framework the government sought input from the transition Tertiary Education Commission to ensure that it supports our overall strategy for the tertiary education sector. Proposals will need to be clearly aligned with the government’s Tertiary Education Strategy and Statement of Tertiary Education Priorities,” Trevor Mallard said.

Questions and answers on the Partnerships for Excellence framework are attached.

Partnerships for Excellence: questions and answers

What is the Partnerships for Excellence Framework?

It is a framework to guide government decision-making and support for large-scale partnership proposals between the public tertiary education sector and the private sector. It involves the government providing capital contributions of $5 million or more to a public tertiary education institute (TEI), as long as this funding is matched by funding from non-government sources and meets a set of rigorous criteria.

What are its aims?

- To increase private investment in the public tertiary education sector by enabling TEIs to leverage off new Crown capital.

- To foster better linkages between TEIs, industry and business, and to maximise positive results from those linkages.

- To ensure that the public tertiary education sector develops in partnership with the private sector and industry.

How will it be funded?

The Crown’s contribution will be in the form of capital, either via a capital injection or a suspensory loan, which may be converted to a capital injection providing the agreed outputs are achieved. It will be part of the government’s tertiary education funding package and appropriated annually from Vote Education.

Any Crown contribution will be contingent upon at least a matching (dollar for dollar) private sector investment and usually significant resourcing from the recipient institution(s) as well. A condition of the Crown contribution will be that the capital continues to be recognised as Crown equity, even after a suspensory loan has been converted to a capital injection.

The Crown funds may be allocated to capital projects or other investments that generate operating income, such as an endowment fund. The matching private sector contribution need not be capital; it could be operating funds or a combination of operating and capital funds.

How does it relate to the Tertiary Education Strategy and Statement of Tertiary Education Priorities?

Proposals will need to be clearly aligned with the government’s Tertiary Education Strategy and Statement of Tertiary Education Priorities (STEP). As the funding will be from Vote Education, proposals should be clearly aligned with the Tertiary Education Strategy and STEP. If a proposal does not relate to at least one priority identified in STEP, but is nonetheless consistent with the objectives of the Tertiary Education Strategy and meets the strategic priorities of another vote, then funding from that Vote may be more appropriate.

Who will be eligible?

All public Tertiary Education Institutes will be eligible to apply: Universities, Polytechnics, Wananga and Colleges of Education. Private tertiary education providers will not be eligible to apply.

Eligibility will be based on the significance of the proposal and the impracticability of the institution providing the required capital itself. Institutions making proposals must show that there is a need for a change in service delivery that cannot be met just by making gradual improvements, and that this change requires major investment. The project must be consistent with the institution’s charter and profile, its long-term strategy, its statutory powers, and be approved by the institution’s Council.

How will the Partnerships for Excellence initiative work?

A call for applications from public TEIs will be made each year to coincide with the government’s annual budget process. Funding decisions will therefore be made as part of the annual budget process.

All successful proposals will require Cabinet approval. A thorough business case supporting the proposal will be essential. Proposals will be assessed against the following criteria (which may be amended from time to time following evaluation of the success of the Partnerships for Excellence Fund).

1. Proposals should contribute to all of the following goals in line with the objectives and principles of the Innovative New Zealand Framework, as these are developed and operationalised:

- To add value to New Zealand’s tertiary capability at world-class level and increase New Zealand’s global connectedness

- To enhance innovation

- To support national economic and social goals, including regional development

2. Proposals should also contribute to at least one the following goals:

- Developing skills and talents

- Improve information and communication technology provision

- Promote effectiveness and efficiency across the education and employment sectors

3. Successful proposals might also:

- focus on areas that have the most impact - including biotechnology, ICT, and creative industries;

- provide opportunities to generate income from third parties - nationally and internationally;

- in the case of physical assets, provide scope for alternative or additional uses of the assets; and

- provide potential to utilise surplus assets.

Proposals must also include a realistic plan for implementation, including an ongoing project review process.

Each proposal will be assessed against a wide range of factors including financial viability, relevance to and alignment with national goals and the Tertiary Education Strategy, expected private sector/business contributions, contribution sought from government, identification and management of risks and qualitative benefits to the respective partners.

Process for assessment

The Tertiary Education Commission will lead the evaluation of proposals. Proposals will be assessed by a review panel, which will usually comprise 4-5 people, and be chaired by the Chairperson or other member of the Tertiary Education Commission. On occasions where the Commission itself has been closely involved in the development of a proposal, the Secretary for Education will chair the panel. In all cases, the panel will have at least one member who is an acknowledged expert in the industry or social service areas being targeted and who is not associated with the development of the proposal. Conflicts of interest will be managed in accordance with the legislation governing the operation of the Tertiary Education Commission. The board of the Commission will make recommendations on successful proposals to the Minister of Education.

Formal Cabinet approval will also be required.

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