Hon Anne Tolley

Minister of Education

4 December 2009
Media Statement

PPPs being considered for new school property

The Ministry of Education and Treasury are assessing the suitability of public private partnerships (PPPs) for building and maintaining some new school property, the Minister of Education Anne Tolley has announced.

“We would only accept PPPs for school property if they free up schools to focus more on teaching and learning, and deliver better value for taxpayers,”said Mrs Tolley.

Under a PPP the private sector partner would be responsible only for the school property for the term of their contract. The operation of the school would remain the responsibility of its board of trustees, and the land would still be owned by the government.

“PPPs for new school property would use the skills and abilities of the private sector to finance, build and maintain a new school.

“These partnerships have been successful overseas and the Ministry of Education and Treasury are assessing whether they would work in New Zealand.

“However, if the project is not feasible, it will not go ahead.”

The Ministry of Education will bring in external expertise to assist with the preparation of a stage one business case. If a project goes ahead, teachers, communities and boards of trustees will be involved.

“At all times, but particularly when government spending is under constraint, we need to make the best use of our resources. We need to look at the range of options available to deliver school property.”

Frequently asked Questions:

What is a public private partnership?

For a schooling PPP, the private sector would have responsibilities in relation to school property for the life of the contract but the operation of the school would remain the responsibility of the board of trustees. Benefits of PPP may include:

o whole-of-life cost minimisation (as ongoing maintenance is linked to design and construction)

o Greater cost certainty (due to fixed price nature)

o Financing cost optimisation (private sector bears the financing cost during the construction period)

o Improved maintenance of school facilities and grounds

o Greater community use of facilities

o More time for boards of trustees to focus on students and learning (as private sector is responsible for property)

Is public private partnership now government policy?

No. The Government is considering alternative forms of procurement to ensure value for money when procuring new schools. Private sector involvement will only happen where it makes sense and delivers value for taxpayers.

The Ministry of Education spends approximately $500 million per annum on school property. Should the project proceed to a pilot school or schools being procured under a PPP, this would only represent a portion of the Ministry’s new school programme and an even smaller portion of the Government’s overall spend on school property. Subject to a successful pilot project, the Ministry of Education will review the applicability of PPPs for other new school property projects.

How does the Ministry of Education currently procure school property?

Since 2007, the Ministry of Education has procured new school property through a single-line accountability, guaranteed maximum price model. The Ministry’s approach is to tender for a consortium to undertake the design and construction of new schools under a two-stage contract to design, then build. The consortium is responsible for developing a design able to be built within the maximum price. At the completion of construction, the Government owns the asset and is responsible for its maintenance.

Could a PPP include teaching roles?

No. The Ministry of Education is only considering asset related services (such as design, construction and maintenance).

What does this mean for students and teachers?

The proposed project will have no impact on students and teachers. Should the stage one and two business cases confirm a PPP makes sense and delivers value for taxpayers, further engagement will be undertaken with teachers, the community and board of trustees during the planning, design, procurement and tendering process.

When will construction tenders be let and contracts awarded?

At this point the Ministry of Education is only looking to assess the suitability of a PPP to new school property. Construction contracts are not being procured at this point. Formal expressions of interests or requests for proposals are not expected to be issued until later next year and only subject to Government’s decision to proceed beyond the stage one and two business case.

ENDS

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