Request for Information on Private Equity Contributions in Educational Projects and Value for Money Considerations
Adam Irish made this Official Information request to Erica Stanford
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From: Adam Irish
Dear Erica Stanford,
Under the Official Information Act, I request information on the repayment expectations for private equity contributions in educational projects.
Specifically, I'm interested in understanding how this approach is considered value for money. The Crown can typically borrow at the government bond rate, offering a lower risk return rate of 4.64% for 10-year bonds. In contrast, private equity investment usually requires a return exceeding 8%. This suggests that if the taxpayer funds a return higher than the government borrowing rate, and if the budget isn't balanced, we're essentially borrowing more at 4.64% to pay for the higher returns on the equity investment. Moreover, even if the taxpayer directly funds it, the interest cost for the project would be significantly less than the required return of the private equity investment if just at the government bond rate.
School infrastructure is typically not a user-pays system, and thus, taxpayers fund this directly in one way or another. It seems counterintuitive to promote private investment into schools when the government could initially fund these projects through debt at a cheaper rate, and fully own the asset at the end of the period. The cost of maintaining a fully owned asset is typically much lower than the lease costs that private investors require to generate a return on their capital. Moreover, by leasing, the Crown forfeits any potential capital appreciation, which is then incorporated into the market return that the private equity holder requires. Additionally, as a result, buying them out at a later date would cost significantly more. How does this approach align with the pursuit of value for money?
Could you please provide any briefings and analyses from the Ministry of Education and/or Treasury on this matter?
Kind regards
Adam
From: Erica Stanford (MIN)
Erica Stanford
Thank you for contacting the Office of Hon Erica Stanford, Minister of
Education, Minister of Immigration, Lead Coordination Minister for the
Government's Response to the Royal Commission's Report into Historical
Abuse in State Care and in the Care of Faith-based Institutions, and
Member of Parliament for East Coast Bays.
While the Minister considers all correspondence to be important and all
messages are carefully read and considered, it is not always possible to
provide a personal response to every email received.
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personal view, or if you have copied your email to another Minister
and/or Member of Parliament with more appropriate portfolio
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you need to seek this from the Associate Minister of Immigration, Hon
Chris Penk. His email is [email address]. Minister Stanford
is unable to comment on individual cases.
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this may be transferred to the Ministry of Education, they can be
contacted at [email address]. Minister Stanford
is unable to comment on individual cases.
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who can be contacted at [email address].
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Act 1982, which may include transfer to a more relevant Minister or
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with the Electorate Office. If you wish to keep up to date on
Electorate News please follow: [1]Erica Stanford (national.org.nz)
* To find out more about Minister Stanford read her [2]biography or
recent [3]statements.
Office of Hon Erica Stanford
Reception +64 4 817 6805 | Ministerial Email
[4][Erica Stanford request email] | Web [5]beehive.govt.nz |
Postal Freepost Parliament, Private Bag 18 041, Parliament Buildings,
Wellington 6160, New Zealand
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4. mailto:[Erica Stanford request email]
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From: Erica Stanford (MIN)
Erica Stanford
OIA ACKNOWLEDGEMENT
Dear Adam,
Thank you for your Official Information Act 1982 (the Act) request, received on 11 March 2025, in which you requested the following information:
* Could you please provide any briefings and analyses from the Ministry of Education and/or Treasury on this matter?
Your request will be answered within the provisions of the Official Information Act.
Kind regards,
Office of Hon Erica Stanford
Office of Hon Erica Stanford
MP for East Coast Bays
Minister of Education
Minister of Immigration
Lead Coordination Minister for the Government's Response to the Royal Commission's Report into Historical Abuse in State Care and in the Care of Faith-based Institutions
Website: www.Beehive,govt.nz
Private Bag 18041, Parliament Buildings, Wellington 6160, New Zealand
Disclaimer: The information in this email (including attachments) is confidential and may be legally privileged. If an addressing or transmission error has misdirected this email, please notify the author by replying to this email and destroy the message. If you are not the intended recipient, any use, disclosure, copying or distribution is prohibited and may be unlawful.
show quoted sections
From: Erica Stanford (MIN)
Erica Stanford
Dear Adam,
On behalf of Hon Erica Stanford, Minister of Education, thank you for your email of 11 March 2025 in which you requested the following information:
- Could you please provide any briefings and analyses from the Ministry of Education and/or Treasury on this matter?
Your request has been considered under the Official Information Act 1982 (the Act).
The information you request is more closely connected with the functions of the Ministry of Education and Treasury. As such your request has been transferred to the Ministry under section 14(b)(ii) of the Official information Act 1982. You can expect a response directly from the Ministry and Treasury in due course.
Thank you again for your email.
Kind regards,
Office of Hon Erica Stanford
Office of Hon Erica Stanford
MP for East Coast Bays
Minister of Education
Minister of Immigration
Lead Coordination Minister for the Government's Response to the Royal Commission's Report into Historical Abuse in State Care and in the Care of Faith-based Institutions
Website: www.Beehive,govt.nz
Private Bag 18041, Parliament Buildings, Wellington 6160, New Zealand
Disclaimer: The information in this email (including attachments) is confidential and may be legally privileged. If an addressing or transmission error has misdirected this email, please notify the author by replying to this email and destroy the message. If you are not the intended recipient, any use, disclosure, copying or distribution is prohibited and may be unlawful.
show quoted sections
From: Enquiries National
Kia ora Adam
Thank you for the information request below, that was transferred to the
Ministry on 25 March 2025. The Ministry will consider and respond to your
request in accordance with the Official Information Act 1982 the Act).
Under section 15(1) of the Act, we are required to make and inform you of
our decision on your request as soon as reasonably practicable and in any
case not later than 20 working days after the day on which your request is
received. You can therefore expect to receive our decision on your request
on or before 24 April 2025. If more than 20 working days are needed due to
the potential workload and/or consultations involved in answering your
request, we will notify you accordingly.
The Ministry may publicly release on our website the response to your
request five days after you have received it. Any personal information
will be removed.
In the interim, if you have any questions about your request, please email
[1][email address]
Ngā mihi
Enquiries National Team | Te Tāhuhu o te Mātauranga | Ministry of
Education | TW
[2]education.govt.nz
We shape an education system that delivers equitable and excellent
outcomes
He mea tārai e mātou te mātauranga kia rangatira ai, kia mana taurite ai
ōna huanga
[3]Te TD huhu o te MD tauranga
show quoted sections
From: Enquiries National
Tçnâ koe Adam
OIA: 1345173 – Advice to the Minister on Public Private Partnership (PPP)
value for money considerations
I refer to your email of 11 March 2025 to the Minister of Education (the
Minister) requesting the following information:
I request information on the repayment expectations for private equity
contributions in educational projects. Specifically, I'm interested in
understanding how this approach is considered value for money. The Crown
can typically borrow at the government bond rate, offering a lower risk
return rate of 4.64% for 10-year bonds. In contrast, private equity
investment usually requires a return exceeding 8%. This suggests that if
the taxpayer funds a return higher than the government borrowing rate, and
if the budget isn't balanced, we're essentially borrowing more at 4.64% to
pay for the higher returns on the equity investment. Moreover, even if the
taxpayer directly funds it, the interest cost for the project would be
significantly less than the required return of the private equity
investment if just at the government bond rate.
School infrastructure is typically not a user-pays system, and thus,
taxpayers fund this directly in one way or another. It seems
counterintuitive to promote private investment into schools when the
government could initially fund these projects through debt at a cheaper
rate, and fully own the asset at the end of the period. The cost of
maintaining a fully owned asset is typically much lower than the lease
costs that private investors require to generate a return on their
capital. Moreover, by leasing, the Crown forfeits any potential capital
appreciation, which is then incorporated into the market return that the
private equity holder requires. Additionally, as a result, buying them out
at a later date would cost significantly more. How does this approach
align with the pursuit of value for money?
Could you please provide any briefings and analyses from the Ministry of
Education and/or Treasury on this matter?
Your request was partially transferred to the Ministry of Education (the
Ministry) and Treasury on 25 March 2025 and has been considered under the
Official Information Act 1982 (the Act).
We have interpreted your request to be for formal advice and analysis from
the Ministry to the Minister on value for money considerations for the
Ministry’s Public Private Partnership (PPP) programme.
We can confirm that some PPP schools were assessed as part of the
Ministry’s recent review of Ministry-led projects in pre-construction, to
identify opportunities to achieve better value for money. These reviews
were looking at cost efficiencies, need and timing for the delivery of
projects.
However, no substantive Ministry advice or analysis for individual PPP
schools or the wider PPP programme has been provided to the Minister.
Therefore, we are refusing your request under section 18(e) of the Act, as
the information requested does not exist.
Thank you again for your email. You have the right to ask an Ombudsman to
review our decision on your request, in accordance with section 28 of the
Act. You can do this by writing to [1][email address] or to
Office of the Ombudsman, PO Box 10152, Wellington 6143.
Nâku noa, nâ,
Official and Parliamentary Information | Ministry of Education | CM
[2]education.govt.nz
He mea târai e mâtou te mâtauranga kia rangatira ai, kia mana taurite ai
ôna huanga
We shape an education system that delivers equitable and excellent
outcomes
[3]Te Tâhuhu o te Mâtauranga
show quoted sections
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