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Standing up for Private Training Establishments (PTEs)

Opinion Piece – Feroz Ali, Chair of Independent Tertiary Institutions (ITI)

In Budget 2014, the Minister for Tertiary Education, Steven Joyce, confirmed that private providers would be funded at the same level as public providers for delivering the same courses.  There had previously been a gap, sometimes significant, in the funding rates and Minister Joyce worked carefully over several Budgets to remove this discrimination.

The move was understandably welcomed by the Private Training Establishment (PTE) sector as it eliminated an inequality which was created largely for ideological reasons.  Private institutions feel it is fair that students receive an equal amount of Government support for their education.  The focus should be outcomes for the learners, communities and employers – not the ownership status of the institution.

Not everyone was quite so happy.  Perhaps the most vociferous group criticising the PTE sector is the Tertiary Education Union (TEU) which represents a number of staff at tertiary institutions, including some PTEs.  In a series of opinion pieces, I’m going to tackle a few myths about private tertiary education which are perpetuated by the TEU.

In this piece, I’m going to look at the TEU’s view of the PTE sector and private education.  I take issue with their characterisation of the sector being “for profit” and their central assertion that private ownership and/or commercial activities are incompatible with quality tertiary education.

The TEU usually refers to PTEs as “private for profit companies”, “private companies who make a profit off students” or even “private companies that want to make a profit from selling education.”  While TEU does occasionally concede there “there are some great PTEs in New Zealand and some great staff working in them,” these glimmers of praise are almost always followed by a “but” or a caveat which shows what they really think about PTEs in general.  The language is hostile and loaded.

Private tertiary education is described by the TEU as “ensuring profit for business owners or shareholders,” and as shareholders trading education “back and forth in the hope of making a profit.”  Sandra Grey argues most PTEs are companies which “believe education is a service to be bought and sold for a profit.”

I take great issue with that characterisation.  Firstly, not all PTEs are companies or for-profit so the assertion is immediately false.  There is a wide range of ownership structures in our sector including charitable trusts, community trusts, not-for-profit organisations and charities.  These non-commercial providers are sometimes acknowledged by the TEU who seems prepared to give them ‘honorary’ public education status, presuming they don’t get in the way of public providers. Their “place” in the TEU scheme of things is described as “supporting the public education system.”

Secondly, even in commercial operations it is important to remember that PTEs are first and foremost educational providers.  Some certainly look to make a modest profit but running a PTE is not an easy way to make money.  People run PTEs and work in PTEs because of what they achieve for learners, the community and employers.  This involves working efficiently, in a similar way to universities and polytechnics that have to ensure their books stay in the red and they meet the requirement to run a surplus.

TEU head Lesley Francey is adamant that private tertiary education “cannot and must not replace the public system.”  I would agree.  I think everyone would.  The diversity of our tertiary education sector is a strength.  There is absolutely no suggestion from the private sector to take over – even if such a move was actually possible.  However, the TEU sees a deliberate Government policy “directly transferring both students and public money out of high quality public institutions, and into private companies.”  We see a Government supporting student choice and educational success, wherever it occurs.

The main problem the TEU has with PTEs is that they seem to believe the private or commercial model is fundamentally incompatible with education.  By definition, they believe no PTE can deliver education to the same standard as public tertiary education.  In their submission opposing changes to university governance, the position is laid bare:

“Those working in the tertiary education sector understand that tertiary education institutions have distinctive characteristics that differentiate them from organisations in the private or commercial sector, such as the need to maintain close relationships with the communities they serve...”


I disagree with this claim.  Private providers have a strong record of building close relationships with communities and with industry.  Not only is this the best way to raise educational performance, but PTEs have to remain connected and relevant because, unlike public providers, we can be allowed to fail.  The Government will not bail us out of any predicament.  Relationships are critical for PTEs and they have every incentive to perform.

Next time I will examine the issue of Government funding for PTEs, including new contestable funding at the foundation level which has caused some controversy.




Feroz Ali

Chair of Independent Tertiary Institutions (ITI)

July 2014

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