This paper explores recent changes in tertiary education policy in New Zealand, which are designed to address legitimation deficits. By offering an analysis of the making, and the subsequent unmaking, of quasi-markets in tertiary education, this paper attempts to describe how the state dealt with legitimation deficits resulting from providers' of tertiary education use of the adult and community education funding category to increase their revenues. In providing this description, the paper helps to provide a way of understanding how the state in New Zealand has responded to legitimation deficits by introducing a new regime of governance. The paper concludes by arguing that, in terms of its treatment of category 5.1 funding, this regime is supportive of neo-conservative goals. [ABSTRACT FROM AUTHOR]