It has been reported that the Minister is considering public-private partnerships to build schools. In fact, though, all school builds are effectively public-private partnerships. The Ministry always contracts private construction firms to build schools. The real issue is the nature of the contracts.  

The business-as-usual approach is for the Ministry to pay for builds up front. But an alternative, used by the Key government to build eleven schools, gives Government more certainty over the cost of school builds over their lifespan. 

Under those contracts, investors met the up-front costs of building, as well as maintaining the schools for 25-30 years. The Government paid those investors in instalments over an agreed period.  

That approach brings two advantages to the state. First, the risk of builds going over-budget is borne by the contractors, not taxpayers. Second, contractors are liable for building defects through the maintenance agreements. There is an advantage for Principals and Boards too: They don’t have to manage cleaning, gardening or maintenance.

This kind of contract has been criticised on the grounds that the deferred payment arrangements potentially lock the Government into ongoing payments for underused schools. But that criticism doesn’t really make sense.  

If a school’s roll falls so low that it becomes unviable to keep it open, the government is left with a property asset it no longer needs. That is true irrespective of the whether the contract with the developer required upfront payment, or deferred payments over time.  

In either case, the solution is to sell or lease the school. And here, another Government policy might help. Under National’s coalition agreement with ACT, charter schools are making a comeback.  

One of the attractive features of charter schools is that they stand to improve choice in education. In that vein, the charter school approach might especially suit groups wanting to set up special character education. That category includes religious schools, Kura Kaupapa, and schools offering alterative curricula like Montessori, Steiner and Reggio Emilia.  

Finding premises could be a major obstacle for establishing new charter schools, especially for organisations that lack capital. Leasing a surplus Government-owned school from the Ministry, especially one with a maintenance agreement in place, might be a very attractive option.