Anne Tolley

By Chris Ormond of NZPA

Wellington, July 21 NZPA - The Government has begun identifying new schools which could be built and maintained under proposed public-private partnerships (PPPs).

It announced late last year it was investigating such arrangements, and Infrastructure Minister Bill English and Education Minister Anne Tolley announced today it was taking that to the next stage, which involved getting a detailed business case done and making decisions on individual schools.

The initiative would involve private sector operators financing, building and maintaining schools for a set term, with the Government retaining ownership of the land and schools, and boards of trustees being left to concentrate on their day-to-day running.

The ministers said such initiatives in Australia and Britain had been beneficial and there was potential for savings to be made here.

PPPs here would only apply to new schools due to be built, of which there are about five to seven each year, and initial savings to the Government would be "modest". But the partnerships could be tempting to potential private partners, some of whom hav already been in touch with Mrs Tolley.

"The attraction is doing business with the Crown," Mr English said. "The Crown always pays its bills, and in the property development area that is a bit unusual these days."

Mr English said the profit margins would be in more efficient construction with a view to easier maintenance over the life of the asset.

"The PPPs are forcing us to take what's called a whole of life view of the asset, so the person who faces the financial risk of managing that asset over 30 years will make better decisions about how you invest at the start...We get the benefit of competitive thinking -- competitive bids about the best way to get 30 years of value".

Governments were typically not highly skilled at making efficient construction decisions, he said.

Such partnerships would also lessen the impact for governments in scenarios such as the leaky building problem, which is estimated to have caused hundreds of millions of dollars of damage to schools.

The ministers said detail such as the potential for private companies to collapse during their management terms would need to be ironed out in contracts.

Tender processes could start early next year if Cabinet was to approve the business case.

(Seeking comment from education unions)