Education as a business opportunity?

New Zealand, like many countries is a mix of private businesses, government owned businesses and community owned organisations.

Knowing who provides what, who controls what and even more importantly who pays for what is important for new comers to New Zealand who wish to participate in the economy.

As a starting point, it is a fact that New Zealand is one of the easiest countries in the world to start a business.  Our Government encourages competition in the provision of goods and services. However they frequently have quite onerous restrictions in the delivery of those goods and services to ensure that they are of sufficient quality and safe so no harm is done to the consumer, the staff or the environment.  These laws are policed and infringements can bring heavy fines. It is the individual owner responsibility to know and understand what these “rules” are.

At Stellaris these boundaries are frequently discussed and embedded in our business classes.

In many cases the Government provides services to the community and owns the “business”.  Examples include some of the provisions for health and education where there is a mixed model of provision.

In this blog we will look at education, further blogs will cover other sectors.

Education is broken up around traditional provision lines without much rational consistent policy.

Pre-school education (up till 6 years old) can be provided privately by community organisations such as the Play Centre movement, kindergartens which are usually privately owned businesses and small in home service delivery.  These are all partially paid for by the Government (i.e. the tax payer).  Anyone providing preschool education must be licensed and follow very rigid rules and regulations.  There is alot of forms and paper work required and staff must be qualified in appropriate disciplines.

After preschool the child progresses to Primary School. Most Primary Schools are owned by the State although a small number of “Special Interest” private schools do exist.  These are usually schools run by the church who meet the needs of religious teaching as well as standard education required.  These schools get government funding if they meet specific requirements.

When the child gets to High School they usually attend the High School in the community that they live in due to ‘zoning’. Homes in the zone of the best high schools fetch the highest prices and are in demand.

Maori have special interest schools where most of the teaching is done in Maori. Traditions and beliefs are the basis of their teaching. These are funded by the Government.

The previous Government (National) approved a further category of private schools called “Charter Schools” where there was more freedom to innovate which were provided for more challenging students.  These have been tremendously successful but the new Labour Government is determined to close them down for ideological grounds.  These schools are usually owned by trusts or private companies and permitted to make a profit, although this is unlikely given the fact that the Government pays them less overall than the state schools.

We then come to the Tertiary sector and again this is made of a mix of private and public funding.

The Government owns and pays for all the Universities.  In the world context this is very unusual, there are usually many privately owned foundations or similar who own the University with the State filling in the gaps by providing Tertiary education where it is absent in the community.

However there is a very strong ideological bias in the current government and some in the community that say the State should own and control education and research of what is seen as the senior sector of the education system.

There is one Maori University which is owned by the local tribe (Iwi) and has special legislation.

Next come the Polytechnics which deliver a mix of trades courses and university level degrees and these are again owned and funded by the State.

Then come the PTEs, Private Training Establishments.  As the name implies these are privately owned.  However the ownership does not grant them immunity from all the rules and regulations.  The State controls them too and in many cases provides no funding at all.  In fact for International students the rules are extremely onerous and have to be funded completely by the students themselves.  If the student is a New Zealander they may get Government funding as they would at the Polytechnic but this is usually less than it is for the comparative Polytechnic.
Government money is competitively bid for against other providers and is allocated on the basis of performance, fits the government approved plan for subject matter, demographics, and sometimes political agenda.

So is there an opportunity for people to enter the education market as a business proposition? There is a small window for the pre-school market which would be worth investigating, but you must accept that the regulations are onerous.  It is not just a matter of looking after the littlies.

And there is a small niche to own a PTE but be warned this is expensive to set up and has very big hurdles to jump through to gain approval.

This is my first of several blogs on the interface between government and the business sector in the provision of business services.

Frances Denz, MNZM

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