At the time of integration the Ministry of Education conducted an inspection of the school buildings, and drew up a schedule of work that the Proprietor was required to have done in order to bring the school up to the standard of a comparable State school.

This schedule of work included both maintenance and capital works.

Initially the cost of the required work was met entirely from the Proprietor’s own funds.

There then followed a period when the Government answered the call of the Proprietors for assistance to find funding for the work. This began with partial finance being made available, to a subsequent level of 100%, through loans from the Housing Corporation. For the majority of these loans, the interest rate was set at 7.5%, and the Ministry of Education subsidised the loans by covering any interest rate above that.

The Housing Corporation loans were sold off by the Government, and the Catholic Integrated Schools loans for the whole of New Zealand were bought by ICHTHUS Ltd, a company formed by the Archdiocese of Wellington for the particular purpose of securing the loans within the Church system.

When Proprietors realised that they could not service any further major loans, they petitioned the Government once again, and were granted a series of suspensory loans to complete the capital works programme required under the Integration Agreement for each school.

Suspensory Loans were made available on the basis of a 25 year write-off period.  The loans were made for particular capital projects, and were generally secured by way of a mortgage over the Proprietor’s property. The loans are currently administered by KPMG for the Ministry of Education.

Each year, at the common date of June 30th, a write-down is recorded against each loan by the administrators. The outstanding balance of the loan owing is reduced by one-twenty-fifth of the original amount paid.

Since January 1993, the suspensory loans received have been GST inclusive. Each year the Proprietor is required to pay back the GST on the 1/25th of the loan. The portion of the loan that is written off becomes a grant, and it is then that the GST becomes payable.

The main condition of the suspensory loan is that the school will remain functioning as an integrated school for the period of the loan, 25 years. If the school were to be closed during this period, then the Ministry would seek from the Proprietor the repayment of that portion of the loan that had not been written off (or such other lesser payment as might be deemed appropriate).

While the Proprietor might show the suspensory loans as a liability in the accounts, this liability will automatically reduce each year without any expenditure on the part of the Proprietor to make such a reduction, provided that the school remains open.