Export education levy decision defies logic

The government's decision to hike levies for private education providers by 55 percent defies logic, private providers argue.

The Government last week tabled the Education (Export Education Levy) Amendment Bill, which includes an export education tax on private training establishments.

The levy is partly to refund international students if a private training establishment (PTE) fails and to cover associated costs incurred by the government.

Dave Guerin, executive director of Independent Tertiary Institutions, said the move set a "very strange precedent" in holding an industry accountable for a competitor's failings, when it had no market-entry control.

"The government controls entry to this industry and it must take joint responsibility for any failures," Mr Guerin said.

"The proposal creates serious risks that have not been addressed. The biggest risk is moral hazard - that PTEs on the financial edge will now simply close because they know that the government will, using the levy, cover any liabilities to students."

Mike Roberts, spokesperson for the New Zealand Association of Private Education Providers, said most public sector institutions also ran full fee courses for international students, and if they could participate in the profits they should be required to share in the losses.

"To single out the private sector in this way is to support public sector inefficiency at the taxpayers' expense," Dr Roberts said.

Education Forum policy advisor Norman LaRocque said the government's hypocrisy was breathtaking.

"Will Mr Mallard hold polytechnics financially responsible when polytechnics get into financial trouble and require government bail out?”

"In recent years, the government has provided financial assistance of one kind or another of at least $100 million to bail out polytechnics that were in financial difficulty. In 2001/02 alone, the government appropriated $40 million to sort out the mess with Wanganui Polytechnic."