The Post Primary Teachers Association says organisations will try to make financial profit by running charter schools.
The Education and Science Select Committee reported back to Parliament on Friday on the legislation allowing New Zealand's version of the schools to be set up next year.
The PPTA says the change will allow companies to make a profit from the state school system. It says that might not happen in the short-term, but overseas experience shows it will eventually occur.
President Angela Roberts said the charter schools will not be good for New Zealand.