Draft National Infrastructure Plan

7.6. Education | Te Mātauranga

7.6.1. Institutional structure

Service delivery responsibilities

• The education sector includes primary and secondary education and tertiary education. It also includes early childhood education, which we discuss but do not include in our analysis of investment demands.
• The Ministry of Education (MoE) owns buildings and land for state schools and kura. School Boards are responsible for day-to-day maintenance and management of their property, with support from MoE regional offices.
• State-integrated and private schools own or lease their land and buildings independently. A small number of schools are currently designated as charter schools. These are publicly funded and operated by a sponsoring organisation (rather than a traditional school Board). The Charter School Agency has oversight of these schools. 
• Tertiary education institutions include universities, polytechnics, and wānanga, which are Crown entities, and some private training establishments. These entities own their property and are responsible for meeting their own investment requirements with occasional exceptions.
• Early childhood education services are mainly provided by community-based or commercial entities, with the exception of kindergartens which are run by central government.

Governance and oversight

• MoE oversees primary and secondary school education policy and legislation. Its role in infrastructure provision focuses on operational planning, funding allocation and investment, and major capital works or redevelopment projects. It sets performance frameworks for School Boards, which are responsible for maintaining school property.
• MoE also oversees policy and legislation for tertiary education. The Tertiary Education Commission has an oversight role over tertiary education providers.
• Early learning services must be licensed or certified by MoE.

7.6.2. Paying for investment

• Schools are funded through general taxation with varying degrees of private/household co-funding.
• School Boards prepare a 10-year property plan of priorities, which MoE uses to provide support and funding to ensure buildings and facilities are adequate. MoE supports school Boards to develop their plans.
• School Boards can also seek MoE consent to construct new assets using their own funds. Ongoing responsibilities for operating and maintaining those assets remain with the Board.
• Tertiary institutions are funded through a mix of government funding, student fees and philanthropy. They may sell land with the consent of the Secretary for Education, or through the Crown asset transfer and disposal policy.
• A large share of the cost of early childhood education and care (ECE) is passed through to customers. MoE offers subsidies for ECE which are issued directly to providers, the proceeds of which may be used for infrastructure by the provider.

7.6.3. Historical investment drivers

• Investment in new education infrastructure has historically been driven primarily by population growth and demographic change. Investment demand for primary and secondary schools is highly localised.
• Between the 1950s and 1970s, the number of primary and secondary school students approximately doubled. This led to more than 300 additional schools being built. As student volumes declined in later decades, so did the number of total schools, although not in proportion to the decline in student volumes.
• Significant growth in tertiary student numbers led to significant investment in tertiary education throughout the 1990s and 2000s.
• During periods of slower school rolls growth, investment is more focused on managing maintenance and renewal needs to match demand. Investment has also responded to unplanned renewal needs, such as weathertightness remediation for many school buildings built or modified between 1994 and 2005, and recovery after natural hazard events like the Canterbury earthquakes.

7.6.4. Community perceptions and expectations

• Ageing schools are the third most important infrastructure priority, according to a Te Waihanga survey of over 23,000 New Zealanders.
• Education services in general are very important to New Zealanders, consistently ranking in the top 10 issues.
• Education services are the NZ public’s second highest priority for increased government spending, after healthcare services. However, it’s unclear whether this relates specifically to school infrastructure as opposed to the overall education system.

7.6.5. Current state of network

New Zealand’s difference from comparator country average

• New Zealand’s spending on education infrastructure, as a share of GDP, is slightly higher than the average comparator country. On a per-student basis, we spend approximately the average.
• The average New Zealand primary and secondary school has 358 students, slightly above the OECD average and near the average comparator countries.
• The overall quality of school infrastructure does not appear to be affecting the quality of education in New Zealand relative to other countries. The share of school principals reporting a lack of, or poor
  quality, infrastructure affecting students’ education is low in New Zealand, in line with comparator countries. However, a recent Ministerial Inquiry into School Property found many school buildings
  were undermaintained and there was a lack of transparency around investment decisions and prioritisation.

7.6.6. Forward guidance for capital investment demand

• We expect overall education infrastructure investment to increase in dollar terms, but decline as a share of GDP relative to recent years. The primary reason for this is the ageing of our population, which means less demand for school infrastructure overall.
• Demographic trends will raise challenges for the sector about how to optimise renewals and maintenance to meet needs. Many schools built in the 1970s will require renewal, but some will need to be right-sized to meet demographic trends.
• Future demand for schools will increasingly be driven by localised demographic pressures. Māori school-age populations are expected to grow significantly in most regions, while non-Māori school-age populations are expected to decline in most regions. This may increase the relative demand for schools with Māori immersion settings.

7.6.7. Current investment intentions

• Education infrastructure investment has risen in recent years, but the ongoing outlook is less clear.
• The following chart shows that projected spending to deliver initiatives in planning and delivery in the Pipeline (blue bars) and programme-level intentions in central government’s reporting to the Treasury’s Investment Management System (orange bars) are similar to the Commission’s investment demand outlook (black lines) in the late 2020s but decline after that point.
• Education infrastructure appears to have short-term planning horizons, especially for specific projects. This reflects the fact that projects are often small in scale, requiring shorter lead-times to implement. Over the next decade, specific initiatives in the Pipeline are equal to 9% of the Commission’s forward guidance on future investment demand.

7.6.8. Key issues and opportunities

• Asset management and investment planning: A key challenge for the sector is to manage uneven and changing geographic demand for education infrastructure alongside maintaining and renewing existing assets. Making the most efficient use of existing assets will enable funds to be freed up to address concentrated areas of demand.
• Demographic change: Areas with high Māori populations are likely to see higher demand for new school infrastructure. While the number of non-Māori student-aged children is expected to decline over the next 20 years, numbers of Māori students are expected to grow by almost 40%. This could provide opportunities to ensure future infrastructure investments in schools and kura with Māori immersion programmes are well-aligned to changing demands.