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Government to meet cost of schools' collapse

15 April 2004 Media Statement

Government to meet cost of schools' collapse

The government will meet the costs of reimbursing international students for financial losses following the collapse in 2003 of two large private training establishments (PTEs), Education Minister Trevor Mallard announced today.

"The government has agreed to pay for the financial assistance that was given to the international students who were financially affected by the collapse of Carich and Modern Age. We are also taking steps to ensure these situations are covered in the future, so our international students are not disadvantaged if a private training establishment fails," Trevor Mallard said.

"Previously we had proposed, through a bill now before Parliament, that the costs that taxpayers incurred in reimbursing students' would be recovered through an increase in the export education levy on private training establishments from 0.45 per cent of fee income to 0.7 per cent.

"I will now ask the Education and Science Select Committee to remove Clause 5 of the Education (Export Education Levy) Amendment Bill, which specified this increased rate.

"We're taking on board the concerns of the sector, after listening carefully to feedback. Sector representatives had wanted more time to adjust to any possible increase in the levy to ensure their viability during a time of market downturn. They also expressed concern about being accountable for the business decisions of particular providers."

Trevor Mallard said all other clauses in the bill would remain unchanged pending select committee deliberations. These include the proposed clause that will enable levy funds to be used to reimburse international students who face financial losses following any future failure of a private training establishment.

" We must do this to protect what is now a $2 billion dollar industry. This means the cost of any future failures will need to be borne by the sector and not by taxpayers," Trevor Mallard said.

The export education levy supports a range of industry-wide development and risk management activities including professional development, research, quality assurance and promotional activities. The current flat fee for all providers will remain at $185 (ex GST) and the percentage component of the levy will remain at 0.45 percent of tuition fees in 2004.

More information about international education is available on the international education section of the Ministry of Education's website www.minedu.govt.nz


ENDS

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