23 May 2018: On 20 February 2018, the Auditor-General received a request from Hon Nikki Kaye to investigate the way the
Government is managing its contract negotiations with partnership schools and the possible transition of partnership
schools to other schooling models. This is our response.
Hon Nikki Kaye
MP for Auckland Central
Private Bag 18041
Dear Ms Kaye
PARTNERSHIP SCHOOLS: REQUEST FOR INVESTIGATION
Thank you for your letter dated 20 February 2018 requesting that the Auditor-General investigate the way the Government
is managing its contract negotiations with partnership schools and the possible transition of partnership schools to
other schooling models. Staff from our Office subsequently met with you and Hon Christopher Finlayson on 28 February
2018 to discuss this in greater detail. You also provided further information on 8 March and 18 May 2018.
After careful consideration, we have decided not to conduct a formal inquiry at this time. Our reasons are detailed in
Your request follows the Government’s decision to remove the partnership school model from New Zealand’s education
system. The Government has introduced the Education Amendment Bill, which will repeal the sections in the Education Act
1989 that provide for the approval and operation of partnership schools. The Bill has transitional arrangements that
will allow existing partnership schools to operate until their contracts expire or are terminated. The Bill’s
explanatory note states that the purpose of these transitional arrangements is to allow time for negotiations about the
future of existing partnership schools.
Partnership school sponsors that wished to continue to provide schooling for their students had to apply to the Minister
to become a state school.
The Ministry of Education (the Ministry), on behalf of the Minister of Education (the Minister), is currently engaging
with partnership school sponsors on the termination of their contracts and applications to establish new state schools.
You have expressed several concerns about the processes underway. In summary, you have concerns that:
• The Minister and Ministry have put undue pressure on partnership schools to terminate their contracts.
• The Minister, who is the decision-maker on applications by partnership schools to establish new state schools,
has made public comments that indicate he has a closed mind about the future of the schools.
• Ministers have been giving partnership schools “mixed messages” about their futures, with different messages
being given to different schools.
• Some Ministers have potential conflicts of interest because of their personal connections with particular
schools: Hon Kelvin Davis (Associate Minister of Education), Hon Willie Jackson, and Hon Peeni Henare.
• Despite these Ministers’ potential conflicts of interest, Cabinet decisions have been made about partnership
schools with no Ministers declaring any interests.
• Schools with connections to Ministers are receiving preferential treatment.
The primary role of the Auditor-General is to report on how public money has been used and what has been achieved with
it. The focus is on providing assurance on public accountability documents and selected areas of public sector
The Auditor-General has an associated power to inquire into a public entity’s use of resources under section 18 of the
Public Audit Act 2001. Factors that we consider when deciding whether to inquire include:
• whether the issues involve a public entity’s use of resources;
• whether there is any indication of systemic issues, such as whether there might be problems with the entity’s
overall governance or management;
• the seriousness of the issues; and
• whether the issues are relevant to the wider sector.
The Auditor-General cannot inquire into or question Government policy. In such circumstances, the Auditor-General’s
inquiry power is limited to the extent to which a public entity is using its resources consistently with that policy.
We have carefully considered your request under section 18. As part of our work, we have obtained information from the
Ministry and reviewed media statements, statements made in Parliament, and publicly available Cabinet papers. We paid
particular attention to the steps being followed, and who the decision-makers are, in each of the processes.
You gave us the names of three partnership school sponsors and suggested that we contact them to get their perspective
on the processes being followed. One of those sponsors contacted us independently with their concerns. Given the reasons
we outline below, we decided that it was not necessary to contact the remaining two sponsors.
Contract negotiations and applications for new schools
The contract negotiations and the applications for new schools are a result of the Government’s clear policy to remove
partnership schools. Governments are free to pursue their chosen policies, even if some people or organisations consider
that they will be negatively affected by policy changes. As mentioned above, the Auditor-General’s inquiry power is
limited to the extent to which a public entity is using its resources consistent with that policy.
The partnership school contracts allow for termination by mutual agreement or at the Minister’s convenience. The
Ministry has told us that the contract negotiations with schools are being approached on a “without prejudice” and
The process for sponsors applying to establish a new state school will depend, to an extent, on the school model they
have chosen. At its most basic, the Ministry will assess the applications and provide advice to the Minister, with the
Minister being the decision-maker. The Ministry has said that each application will be assessed on its individual merits
and against relevant legislative criteria. The same process and requirements will be followed as for any application to
establish a school in the state system.
The two processes are being managed by different divisions in the Ministry and staff maintain a separation between the
decision-making processes. In particular, the Ministry has stressed that staff involved in the application process for
new schools have no involvement in the contract negotiations.
The Ministry has also told us that it considers it desirable to ensure that changes in the schooling of students are
managed seamlessly. The Ministry would like to ensure that there is no avoidable gap between a partnership school
closing and the opening of a new state school.
If any partnership schools have concerns about how the Ministry’s processes have affected them, they might wish to
consider making a complaint to the Ombudsman. The Ombudsman is the appropriate agency for investigating complaints by
individuals about the administrative acts and decisions of government agencies.
Potential conflicts of interest
You raised concerns that several Ministers might have potential conflicts of interest and that Cabinet has made
decisions on partnership schools without any Ministers declaring interests.
Cabinet has made policy decisions that apply generally to the removal of partnership schools. However, it has no formal
role in decisions about individual partnership schools. Only the Minister is responsible for making decisions on the
termination of partnership school contracts and applications to establish new state schools. There have been no
suggestions that the Minister has any potential conflicts of interest.
Other Ministers, including Hon Kelvin Davis, Hon Willie Jackson, and Hon Peeni Henare, are not decision-makers on
individual partnership schools. While Hon Kelvin Davis is an Associate Minister of Education, he does not have
responsibility for partnership schools. This responsibility lies with the Minister.
For these reasons, it was not necessary for us to speak to any Ministers about the allegations and so we cannot comment
on the nature of interests that may exist.
The Ministry has told us that the Minister is keeping Cabinet informed and might need to seek Cabinet approval if any
policy changes or new funding are necessary. The Minister might also seek Cabinet’s input or guidance on particular
issues. Depending on the nature of these decisions or input, any potential conflicts of interest will need to be
identified and managed. This is the responsibility of the relevant Minister, the Prime Minister, and the Cabinet Office.
A copy of this letter is being sent to the Ministry. Also, given the public interest in this issue, we intend to publish
this letter on our website.
Thank you for writing to us about your concerns.
Deputy Controller and Auditor-General