School land used to secure loan

The trust behind the Whangaruru charter school took out a $150,000 loan to complete the school. Photo / John Stone

A problematic Northland charter school used land bought with taxpayer money as collateral to take out a $150,000 loan.

The loan came after the kura had already been given $1.75 million in government grants to set up the school.

Te Kura Hourua ki Whangaruru, located on a farm about 65km northwest of Whangarei, is a bilingual secondary school which opened on February 10 last year.

The kura, renamed Te Pumanawa o te Wairua in December, was given a one-month lifeline by Minister of Education Hekia Parata ending on March 20 to address ongoing issues. Financial statements by the trust behind the kura, Nga Parirau Matauranga Charitable Trust, show it took out a term loan of $150,000 with Westpac Bank as of December 19, 2013.

The loan was secured by property owned by the trust, a 81ha farm which the trust bought for $620,000 with set-up costs allocated by the Ministry of Education. The financial statement stipulated the loan was for 18 months, which ends on June 19 this year.

However, trustee Wayne Johnstone said he understood the loan would be repaid in full by August. "As I understand, the loan was necessary to complete the infrastructure, as the money allocated for infrastructure was not enough. The costs to move three classrooms out from town to the school site was astronomical and then there were charges for the septic sewage system etc."

Ministry of Education head of sector enablement and support Katrina Casey said the ministry had been advised of the loan and the repayment plan. "We understand that the establishment grant was not sufficient to cover all the costs associated with setting up the school."

According to the trust's statement the largest expense, apart from land and buildings, was salaries which the trust spent $120,756 on in the four months covered.

Te Tai Tokerau Principals Association president Pat Newman questioned the school's ability to service the loan as the quarterly funding was expected to drop this year.

NZ First deputy leader and spokeswoman for education Tracey Martin said: "What happens if they can't pay it back? The only asset that trust has is that land."