Government senators' dissenting report
This is very clearly the best thing that has ever happened
for primary education in Australia. It will deliver facilities for primary
school children that will enable them to learn the skills and knowledge that
they will need for their future throughout the 21st century. For
many school communities, this has literally been a dream come true.[1]
Overview
It is disappointing to see the Coalition refuse to acknowledge in
any way the evidence showing the success of and support for the Primary Schools
for the 21st Century (P21) program. Coalition senators have used a relatively
small number of examples in an attempt to discredit this successful and welcome
initiative. Submissions and evidence to the committee show a high level of
support for the new facilities being provided under the program. It is
transforming schools.
A program of this scale and complexity has not been undertaken
previously. The objectives were to provide economic stimulus and to build 21st
century learning environments. With the necessarily tight timetable to provide
stimulus to the economy and local communities, the government acknowledged and
anticipated that there would be some issues to resolve. For this reason
flexibility was built into the program and mechanisms were put in place at the
state and Commonwealth levels which have since been used to respond to and resolve
issues.
The program guidelines have been revised where necessary to
address issues which have arisen during implementation. This is a program which
has robust oversight and audit measures in place, and the Minister for
Education has acknowledged that, if further steps became necessary to address
concerns, they will be taken.[2]
Government senators note that action has already been taken in relation to public
concerns regarding achieving value for money. To add another level of assurance
to the program, on 12 April 2010, the Minister announced that a taskforce
would be established[3]
to ensure:
...maximum value for money and...that any allegations of waste
are investigated fully. The results of investigations to date do not lead the
Commonwealth to believe there are widespread practices of over quoting, over
charging or fraudulent or corrupt behaviour but with an investment of this
scale and as custodians of the public purse the Government believes the
establishment of the Taskforce is a prudent step. This will be a further
strengthening of what is already a heavily audited program with an ongoing
Auditor General’s inquiry under way. Setting up the BER Implementation
Taskforce is additional insurance for the Australian taxpayer.[4]
Government senators note that a particular focus of the
taskforce will be the way the scheme was implemented by state governments on
behalf of public schools, as the concerns regarding value for money were
predominantly from this sector. The validity of this focus has been confirmed
by a recent survey conducted by the Australian Primary Principals Association (APPA)
which found:
...given the breakdown of the results, it was clear that
difficulties with the program delivery at the State level lay predominantly
with the State education departments, and not with individual schools, or with
the federal Government.[5]
Government senators appreciate the concerns expressed over
value for money and welcome the work being undertaken by the taskforce to
further strengthen the P21 program and improve delivery and outcomes.
The Coalition has focused in its interim report on a small
number of issues which have received disproportionate attention. Government
senators note that the number of complaints received about implementation of
P21 projects amount to a very small proportion of the total number of projects
being funded. As at May 2010 there had been 61 complaints to DEEWR and around
30 to state education authorities.[6]
For 24,000 projects,[7]
this amounts to less than one per cent.
Government senators also note that Coalition senators have ignored
the principals, teachers and parents who are delighted with their P21 project. APPA's
survey found that the overwhelming majority of schools (97 per cent)
reported that their students would benefit from the program. The survey
revealed that:
...primary schools are enormously grateful to receive such a
significant boost because many have not, to this point, been able to raise
sufficient capital from community or governmental sources to substantially
extend their facilities for learning. Rural and small schools report
significant approval of the funding stream enabling projects formerly beyond
their reach. This program has turned that on its head.[8]
Government senators note that 98 per cent of projects have
now commenced, 68 per cent have commenced construction, 894 have been completed
and over 9, 000 are underway.[9]
While the Senate committee inquiry was taking place, the
Australian National Audit Office (ANAO) undertook a performance audit of the P21
element of the government's Building the Education Revolution (BER) program.
The audit objective was to examine the effectiveness of the Department of
Education, Employment and Workplace Relation's (DEEWR) establishment of the P21
element of BER.[10]
The Minister welcomed the audit, tabled on 5 May 2010,[11]
which recognised the suitability of school investments for providing immediate
stimulus to the economy. The audit also acknowledged the considerable challenge
for DEEWR, the state education authorities and Block Grant Authorities (BGAs)[12]
to deliver the projects in the compressed timeframes necessary to ensure timely
spending of the stimulus. The ANAO audit has also confirmed the strong support
for the program in the school community. The ANAO conducted a survey which found
that more than 95 per cent of school principals saw the program as providing
'ongoing value to their school and school community'.[13]
Government senators note that the ANAO made no recommendations to DEEWR
regarding its administration of the program.
While acknowledging that some implementation issues have
arisen, Ms Leonie Trimper, President of APPA, told the committee of the need
for greater balance in reporting on the program:
I would like to conclude by saying that we are not being
inundated with bad news stories and our members are very good at doing that
when they feel cross and grumpy. On the contrary, our three national presidents
of government, Catholic and independent schools are also not being inundated so
there are some good news stories....[14]
This dissenting report redresses the imbalances in the committee
majority report and presents the facts on the success of the P21 program. It outlines
the objectives of the program and its effects; steps through the administrative
processes; and addresses particular issues raised during the committee's
inquiry.
Objectives of the Building the Education
Revolution (BER) program
BER is the largest component of the government’s $42 billion Nation
Building and Jobs Plan announced on 3 February 2009 which aims to support jobs,
stimulate local economies and invest in important infrastructure for the long-term.
BER represents an investment of more than one per cent of gross domestic
product (GDP) and is the biggest school capital infrastructure program in
Australia’s history. The objectives of the program were agreed by first
ministers and are expressed in the Council of Australian Government's (COAG)
National Partnership Agreement on the Nation Building and Jobs Plan. This contains
the program's two main objectives: the first is to provide economic stimulus
through the rapid construction and refurbishment of school infrastructure; and
the second is to build learning environments to help children, families and
communities participate in activities that will support achievement, develop
learning potential and bring communities together.[15]
While both objectives of the program will be met, government
senators emphasise that the primary objective of the BER was as an economic
stimulus package. This was recognised by submitters such as the National
Catholic Education Commission (NCEC):
P21 has more than amply fulfilled its purpose. It has been a
powerful economic and employment stimulus in local communities at the onset of
the global economic crisis.[16]
Positive effect on the economy and employment
The positive effect of the economic stimulus package on the
economy is well documented. When releasing the 2009-10 Mid-Year Economic and
Fiscal Outlook (MYEFO), the Treasurer advised:
If not for the direct impact of the fiscal stimulus,
Australia would have experienced a technical recession and the economy would
have gone without growth for two consecutive years, in both 2008-09 and
2009-10.[17]
Treasury reported that the stimulus plan has had a significant effect
on the economy. In October 2009, Dr Ken Henry, Secretary, Treasury, advised the
Senate Economics References Committee of the following results:
At budget we estimated the stimulus would add a further 1.6
per cent to GDP growth in the present year, 2009-10, and that the stimulus
would then unwind and its impact on the economy would unwind as a recovery in
private sector activity took hold. Higher gross domestic product associated
with the stimulus was estimated at the time of the budget to support around
210,000 jobs and to reduce the peak unemployment rate by 1 ½ percentage
points...Without this stimulus, we estimate that the economy would have contracted
not only in the December quarter of 2008 but also in the March and June
Quarters of this year....[18]
During its inquiry into the government's economic stimulus
initiatives, Dr Henry told the Economics References Committee that without the
stimulus package the economy would have contracted by 1.3 per cent through the
year to the June quarter 2009 and added 'I think a contraction in the economy
of 1.3 per cent through the year would be regarded by most people as a fairly
significant recession'.[19]
Mr Glenn Stevens, Governor of the Reserve Bank of Australia,
told the Economics References Committee of the factors which contributed to
Australia's strong performance during the global financial crisis, including
the stimulus package, and concluded:
A straightforward reading of the economic outcomes would, I
think, suggest that the various policy measures have been effective in
supporting demand. In due course both fiscal and monetary support will need to
be unwound as private demand increases. In the case of the fiscal measures,
this was built into their design...[20]
The positive effect of the stimulus spending was again confirmed
at Senate estimates hearings in February 2010, where Treasury officials
reported:
...One of the things that has occurred—we drew attention to it
in the MYEFO—was that both business and consumer confidence bounced back much
more strongly than it did in other OECD countries, and much more strongly than
we had anticipated that it would. Our interpretation—and I think it is the
interpretation of most commentators—is that the macroeconomic stimulus, both
fiscal and monetary policy, was sufficiently quick and sufficiently big that it
convinced the community that things were not going to turn out that badly. That
was extremely important because it meant that businesses went on with their
normal activities. They did not hunker down and cut staff; they found ways to
cut hours rather than cutting staff.[21]
Treasury emphasised that it was critical to get the spending
into the economy as quickly as possible. Regarding the amount, Treasury stated 'you
would have needed to have spent something similar to have had a similar
effect'.[22]
The positive effective has continued to be proven over time. ABS
data released in June 2010 showed that the economy grew by 0.5 per cent in the
March quarter, a result helped substantially by an 11.6 per cent increase in
government investment. It is clear that the stimulus measures are responsible
for the growth in the economy.[23]
In its audit report the ANAO confirmed that the BER program is supporting
the economy and employment:
There are some positive early indicators that the program is
making progress toward achieving its intended outcomes. Lead economic
indicators, including construction approvals, show that the introduction of BER
P21 contributed to a reversal in the decline in non‐residential construction activity that
resulted from the global financial crisis. Education industry stakeholders, including
peak bodies, Education Authorities and a substantial majority of school
principals have also been positive about the improvement in primary school
facilities that will result from the program.[24]
Support for the construction
industry
BER has materially supported the non-residential construction
sector. ABS data showed a 2.2 per cent increase in total construction and 6.9
per cent annually to September 2009, seasonally adjusted.[25]
Research from Macromonitor noted the rebound in the non-residential sector and
the Director, Mr Nigel Hatcher, emphasised the importance of the stimulus
funding for the rebound: '...this rebound has been almost entirely due to the
boost to education building coming from the Commonwealth stimulus package.'
Importantly, he noted that the 'spending will play an important role in driving
the upturn during 2010'. He added that 'This is the first time that a program
of Government building work has been of adequate magnitude to offset a major
downturn in commercial building in Australia'.[26]
The effects on the non-residential construction sector were
reported to the committee by DEEWR:
Over the year to May 2009, before the BER effects started
boosting building approvals and while the global recession was adversely
affecting the Australian economy, the total value of building approvals fell by
almost 40 per cent in seasonally adjusted terms. This could have had a large
adverse impact on total employment given that almost a million Australians work
in the building and construction industry. Without a pipeline of approved
projects, many of these workers would not have a job. BER has triggered a
massive increase in the number of non-residential building approvals in the
education sector. Over the year to May 2009 the average monthly value of
non-residential building approvals in the education sector was around 330,000.
Over the next four months, the BER alone added $1.9 billion per month on
average to the value of non-residential building approvals and restored the
total value of building approvals to around the level it was before the effects
of the global recession hit the Australian economy.[27]
On 3 March 2010 the National Accounts for December quarter
2009 were released and showed a 0.9 per cent growth in GDP in the three months
to the end of December. Regarding the performance of the construction sector,
the Treasurer commented:
Despite the overall improvement in the investment climate,
non-residential building investment continued to fall in the quarter, the fifth
straight quarterly decline, and is now more than 20 per cent lower through the
year. This outcome would have been even worse if it were not for the impact of
the Government's Building the Education Revolution program in non-government
schools.[28]
In May 2010, Ms Lisa Paul, Secretary, DEEWR, provided an
update to the committee:
Based on ABS data DEEWR calculates that the BER now
represents 31.3 per cent of the total value of non-residential building
approvals in seasonally adjusted terms over the year to March 2010.[29]
The positive effect on the non-residential construction
sector was acknowledged by the ANAO and can be seen in the figure below.[30]
![Figure 7.6 Non residential building activity (actual and forecast)](d01_1.gif)
Views of state/territory
governments
The South Australian government supported the government's
initiatives to mitigate the effects of the global financial crisis and reported
that P21 has:
...played a crucial role in providing work to the construction
sector in South Australia at a time of declining private sector building
activity. It has provided positive flow on benefits for associated supply
chains, assisted in stabilising employment, and is building community capacity
across the State. It will also provide benefits to students and the education
system for many years to come through the provision of social infrastructure
that supports better learning outcomes.[31]
These views were reinforced by the Queensland government, which
stated that the BER program:
...is a significant and welcomed investment by the Australian
Government in Queensland state school infrastructure. There is much evidence
that the building industry has been revived, jobs have been sustained in the
building and construction industries and local economies stimulated by this
program.[32]
The Queensland government advised that the construction
industry in that state confirmed that the timing and amount of P21 work reduced
the effect of the economic downturn and helped avoid potential job losses.[33]
Similarly, the Northern Territory government indicated that:
At this early stage, it would appear that the aims of the
program to provide economic stimulus through the rapid construction and
refurbishment of school infrastructure and build learning environments to help
children, families and communities participate in activities that will support
achievement and develop learning potential has been well received and
successful.[34]
Employment
DEEWR advised that jobs are being measured at the level of the
entire economic stimulus plan.[35]
DEEWR spoke to the committee about the effect the program has had at the local
level on the retention of jobs and flow-on effects to other sectors:
It is not just about construction jobs that are being supported,
however. It is known that there are flow-on effects to other sectors such as
suppliers of products, the legal industry and the service industry. History
shows that it is indeed our young people, and training opportunities for these
people, that are most affected in economic downturns. For this reason the
funding agreements with education authorities require that schools use their
best endeavours to give priority in contracting and tendering arrangements to
businesses that have demonstrated commitment to adding or retaining trainees or
apprentices.[36]
The Catholic Education Office of Western Australia also stressed
the need to recognise that the employment being generated by the BER initiative
does not simply affect builders and labourers:
Other employment sectors such as Planners, Quantity
Surveyors, Architects, Electrical Engineers, Hydraulic Consultants and clerical
staff have also played important roles in the preparation and planning of these
projects and consequently, the need for people in these sectors has created new
employment.[37]
The South Australian government estimated that there will be
over 5,200 new full-time equivalent positions created from government
school projects over one year. When jobs indirectly linked to P21 are included
through production and supply chains, this figure rises to 21,000 new full-time
equivalent positions.[38] The 142 building contractors and their main sub-contractors in South
Australia were asked to report on employment outcomes as a result of the
additional BER work. Preliminary results indicated that 883 additional people
have been employed as a result of the additional work. Of the 883, 31 per cent
are apprentices/trainees and approximately eight per cent are indigenous.[39]
The New South Wales government also welcomed the employment
opportunities afforded to local employees and reported:
This is having a real impact on local employment with
hundreds of employment opportunities being created, small builders no longer
needing to put people off and a renewed focus on apprenticeships and Aboriginal
employment.[40]
Similarly, the Victorian Department of Education and Early
Childhood Development reported that the P21 projects will generate over 7,000
jobs during the life of the program.[41]
The Australian Capital
Territory government agreed with the positive effect on employment. It advised
that seven construction contractors were engaged to manage the delivery of 68
projects. Six of these are medium-sized companies operating in the ACT and one is
a national building contractor. It estimated that the 68 projects will
continuously support an average of 915 on-site workers each day, including 179
apprentices.[42]
Questions were raised about the collection of jobs data at the
project level. DEEWR confirmed this information serves a different purpose from
that collected by Treasury and is to provide an estimate of the number of jobs
supported by each project at the local level. DEEWR explained to the ANAO that
it is useful for schools and communities to be able to quantify the effect of
each project on the local labour market.[43]
Apprenticeships
The stimulus package had a 10 per cent target of contract
labour hours for apprentices.[44]
The NSW Government noted a renewed focus on apprenticeships and on Aboriginal
apprenticeships as a result of the stimulus.[45]
The South Australian government provided the following examples of apprentices
being hired after firms receiving additional BER work:
- WCK Pty Ltd in Port Lincoln hired an additional eight staff, six
of whom were apprentices;
- Kennett Pty Ltd in Mount Gambier hired an additional seven staff,
two of whom were apprentices/trainees;
- Taipan Constructions Pty Ltd in Adelaide employed two additional
staff, one of whom is an apprentice.[46]
Comment
Government senators note that the stimulus measures had a
real effect on local communities and employment well before any construction
commenced. Companies in the construction sector, for example, could anticipate
work and were therefore able to retain staff. This was acknowledged by the ANAO
in evidence to the committee.[47]
Withdrawal of the stimulus measures
The committee was cautioned against any sudden reduction in P21
funding. The South Australian government advised that any reduction in P21
funding from the announced levels would have a dramatic and far-reaching effect
on the building industry in South Australia. It also mentioned fairness as an
important consideration and argued that if commitments were reduced that would
result in some schools missing out on new facilities and disadvantage some students.[48]
The Independent Education Union of Australia supported the
program and expressed concern that the inquiry may have been initiated 'in an
attempt to roll back school building programs or retrospectively vary the terms
on which schools were able to participate in the program'.[49]
The Chair of the New South Wales Catholic Block Grant Authority, Bishop Anthony
Fisher, told the committee that 'it is essential that the program now run
through to its conclusion and building and cash flow schedules be kept intact'.[50]
The Australian Education Union also asked that there be no reduction in funding
and noted concern that the Leader of the Opposition was not prepared to give
absolute assurance that the funding commitment would continue.[51]
The planned withdrawal of the stimulus is outlined in the 2009-10
MYEFO, which advised:
By design, the fiscal stimulus will be withdrawn in line with
the gathering pace of the private sector recovery. Some aspects of the stimulus
have been recalibrated to allow flexibility in managing the demand for
individual programs and to ensure an appropriate level of support is provided
to the economy. The gradual withdrawal remains appropriate, with the economy
expected to operate below capacity for some time. A gradual withdrawal avoids
sudden changes in the profile of government spending that could threaten growth
and confidence.[52]
The MYEFO also noted that the gradual withdrawal of stimulus in
2010-11 is expected to result in around a ¾ percentage point detraction from
growth. However, a complete withdrawal in 2010-11 'would result in employment
being lower by around 100,000 persons in that year and a much sharper
detraction from growth'. It advised that a sudden withdrawal of the stimulus
would:
detract 2 ½ percentage points from growth in 2010-11. A
sudden withdrawal of public sector activity of this magnitude while the
recovery in private sector demand is not yet firmly established would have
significant costs in terms of lost output and higher employment.[53]
The government explained the planned withdrawal of the stimulus
measures:
The fiscal stimulus measures have been designed to ensure
they do not affect the sustainability of the budget and are withdrawn as the
economy recovers. As indicated in the 2009-10 Mid-Year Economic and Fiscal
Outlook, the stimulus peaked in the June quarter of 2009 and the gradual
phasing down is expected to subtract from growth through 2010. This means that
Australia is withdrawing stimulus one year ahead of the timetable recommended
by the IMF for advanced economies.[54]
Master Builders Australia agreed with this approach and advocated
that the BER measures should be allowed to run their course as '[t]he
Government's well targeted BER stimulus has underpinned what would have
otherwise been a certain collapse in commercial building activity across
Australia leading to job losses as high as 35,000'.[55]
Mr Wilhelm Harnisch, CEO, stated that the program was appropriately designed to
phase down over time but to stop it suddenly would have a negative effect on
the commercial building industry. He added: 'Master Builders does not agree
with calls for the BER to end early and certainly not when the economic and
employment benefits are demonstrably clear and in circumstances when the
recovery in the building and construction industry and the broader Australian
economy remains tentative'.[56]
Comment
Government senators note the current positive outlook for the
economy. The investment by the government supported the economy when it was
needed and it is being withdrawn as the economy recovers. The Treasurer has
reported that the stimulus had most effect on growth in the June quarter 2009
and the effect began to subtract from growth from the March quarter 2010.[57]
Government senators note that the gradual withdrawal of the stimulus package
was planned and built into the design. This is a sensible approach and avoids
sudden changes in the economy which may threaten growth, confidence and
employment.
Elements of BER
Education infrastructure is being delivered through three
elements of the BER Program. National School Pride provides $1.29 billion for
minor capital works and refurbishment projects in all eligible Australian
schools. Science and Language Centres for 21st Century Secondary Schools
provides $821.8 million for the construction of new (or the refurbishment of
existing sites) for science laboratories and language learning centres in
secondary schools. The largest element, Primary Schools for the 21st Century
(P21), provides $14.1 billion for eligible Australian primary schools to build
major new facilities such as libraries and multipurpose halls and to provide
upgraded existing facilities.[58]
The committee's inquiry is only into the P21 element of BER, and therefore this
dissenting report deals only with the P21 element.
Governance of the program
This report will now turn to detail the roles and
responsibilities of the various parties to the program, which are outlined in
the National Partnership Agreement on the Nation Building and Jobs Plan (NPA).[59]
As noted by the ANAO audit report, the delivery of intergovernmental programs
has been the subject of recent COAG reforms aimed to enhance accountability and
improve collaboration. The ANAO reported that the NPA for BER 'adopted more
elaborate oversight and monitoring arrangements than adopted for other national
partnerships due to the need to ensure timely implementation in support of
stimulus objectives'.[60]
The Office of the Coordinator General responded that:
Our view is that given the extraordinary circumstances and
the Commonwealth funding provided to the P21 program ($14.1 billion), it was imperative
that the Commonwealth had appropriate monitoring and oversight arrangements in
place. The arrangements that COAG outlined in the NPA were deliberate and
agreed with jurisdictions. The [ANAO] Report should acknowledge that the NPA
was not a ‘business as usual’ agreement.[61]
The response from the Former Commonwealth Coordinator-General
to the ANAO findings follows:
...the overall findings of the draft report do not in my view
fully reflect the different nature of the NPA agreed by First Ministers and the
objectives and implementation arrangements clearly specified within it. The
report suggests that overly prescriptive administration of the P21 was at odds
with Australian Government objectives. This is not the case. Nor is it at odds
with other jurisdictions objectives for the BER program. In my view the program
framework and the reporting requirements are consistent with the COAG
discussions in February 2009 and agreements reached by first Ministers on the
program. The NPA, as signed by COAG, sets out clear stimulus objectives,
detailed implementation arrangements and the need for tight project management
of key performance indicators. The [ANAO] Report needs to acknowledge the
balance sought in reporting requirements in ensuring that these stimulus
objectives were being met without unduly imposing additional burdens on the
jurisdictions project and program management arrangements.[62]
Government senators note that consistent with the federal
financial relations framework, the roles and responsibilities of the
Commonwealth and the jurisdictions were clear from the outset. Delivery of
agreed projects to agreed milestones is the responsibility of the states and
territories and the federal government is responsible for supporting
implementation through coordination at the national level.
Role of the Commonwealth
The Commonwealth is responsible for implementation of the
national partnership and providing funding to the states and territories as set
out in the agreement.[63]
Role of DEEWR
DEEWR detailed its role to the committee:
The Department of Education, Employment and Workplace
Relations has entered into bilateral agreements with eight states and
territories, and funding agreements with 14 block grant authorities which
represent non-government schools. These agreements specify the policy
objectives, the conditions of funding and the reporting requirements...[64]
The committee received many positive comments on DEEWR's work. For
example, the Catholic Education Office of Western Australia (CEOWA) reported
that:
The DEEWR staff who oversee the non-government sector
projects in Western Australia are to be commended for the manner in which they
have assisted the CEOWA. Responses and outcomes to submissions have been
professional, prompt, competent, courteous and helpful. This assistance has
been given in an environment when all concerned have been transacting under
prescriptive timeframes for this new program that has had deadlines that are challenging.[65]
Similarly, the Independent Schools Council of Australia (ISCA)
reported that 'DEEWR were responsive to the issues that emerged during
implementation and attempted to provide immediate responses to queries on
matters of policy and administration'.[66]
The National Catholic Education Commission noted that DEEWR's
management of the program has been of a high standard with 'frequent, proactive
and effective email correspondence, tele/videoconferences and face-to-face
meetings with BGAs...'.[67]
In addition, the NSW Catholic Block Grant Authority indicated
that 'the responsible officers in DEEWR have consulted with stakeholders on a
regular basis and responded to suggestions for change'.[68]
The ACT government indicated that it wished to place on record:
...its appreciation of the high level of commitment and
professionalism displayed by Commonwealth officials in seeking to implement
this significant program in a very short timeframe.[69]
Role of state education authorities
As part of the division of responsibilities, the states and
territories agreed to implement the agreement.[70]
DEEWR explained this process:
...In relation to Primary Schools for the 21st Century, both
government and non-government education authorities are responsible for working
with schools and school communities to develop and submit proposals for
projects for managing the construction and refurbishment projects that are
funded, for monitoring and reporting progress to DEEWR, and financial
management and other accountability requirements.[71]
The state education authority has a role in terms of monitoring
and reporting to the Commonwealth. DEEWR advised that, even where a school is
self-managing its P21 project, the relevant education authority would have an
oversight role and be receiving regular reports which are then provided to
DEEWR.[72]
The committee received positive reports regarding working
with the state education authorities. The Principal of All Saints Grammar, NSW,
reported on his experience with the state education authority:
Due to the approach the department has taken in listening to
us regarding timing, concerns, requests and additional information, all I can
say is that all those we have dealt with have been very helpful and
understanding. They have guided us from the start and for that I
thank them...[73]
Catholic Education South Australia (CESA) advised that its
working relationship with the Office of the Coordinator General (OCG) had been
'exceptional' and 'where problems have arisen with a planning approval, mainly
due to objections raised by local communities, the OCG has facilitated
discussion and actively worked with all concerned to resolve issues'.[74]
The Catholic Education Commission for the Archdiocese of
Canberra and Goulburn reported that 'the ACT Government has been very
supportive of the BER program and moved quickly to streamline the planning
approval processes through the relevant government agencies for BER projects'.[75]
The NSW Catholic Block Grant Authority reported that the
assistance received from the NSW State Government has:
been of particular assistance in fast tracking building
approvals through its national building Taskforce. The Taskforce has scheduled
regular meetings with the schools sector and assisted in whatever way possible
to approve projects, assist with finding builders in remote areas in
conjunction with government schools, and the monitoring and scheduling of
building supplies. The role of the State Coordinator-General and Taskforce is
much appreciated.[76]
Differences in the government and
non-government approaches
Government senators note that the funding agreements made it
clear that DEEWR's relationship would be with the state and territory education
authorities, and with BGAs, rather than with individual schools. This was due
both to the timeframes involved and to DEEWR's established relationships with
the education authorities responsible for managing these schools.[77]
In response to questions raised about implementation of the
program, Government senators emphasise that government and non-government
education authorities have long-established processes for planning, assessing
and implementing school infrastructure projects. In order to meet the tight
timelines, the P21 program made use of these existing delivery systems.[78]
There are obvious efficiencies in using existing processes. As noted by DEEWR:
Each education authority typically used the system that they
already had in place for the management of capital infrastructure programs, and
they differed from state to state and from block grant authority to block grant
authority in the case of non-government schools.[79]
Non-government schools
Mr Bill Daniels, Executive Director, Independent Schools
Council of Australia, told the committee that the Commonwealth provided a
separate allocation for independent schools to work through their BGAs, which
he believes was instrumental in the effective and successful rollout of the
program for his sector.[80]
He explained to the committee that Catholic and independent schools are
familiar with managing their own projects and have established relationships with
local architects and builders. Mr Daniels pointed out that the associations of
independent schools and their BGAs have been administering Commonwealth capital
programs for more than 20 years. Therefore, notwithstanding the unprecedented
scale and complexity of the program, independent schools are very experienced
in this work:
In effect, the Commonwealth outsourced the administration of
those programs to the independent sector and indeed to the Catholic sector at
least 20 years ago, so there was already infrastructure in place in those block
grant authorities and the mechanisms in place to roll out a capital program,
albeit this was a very substantial capital program that was much bigger than
any of the sectors had ever seen before. So, first of all, the infrastructure
is in place.[81]
Government schools
The government system of schools, managed centrally, recognised
the magnitude and complexity of the program and the need for quick
implementation. The ANAO acknowledged that the government system faced the
additional challenges of ensuring the investment would cater for the immediate
and long-term needs of the system, including taking account of demographic
changes; trends in school enrolments; the age and quality of existing infrastructure;
evidence about the optimal size of schools; the ability of the infrastructure
to cater for special needs; and the fact that some schools were under
consideration for closure or amalgamation.[82]
This centralised management decreased the visibility of some elements,
such as costings, to the schools and Parents and Citizens (P&C) associations.
This has perhaps fuelled the perception, further encouraged by the media, that the
program is not achieving value for money. Government senators understand that a
lack of access to costing details may have created feelings of frustration and
lack of empowerment for school communities and led to assumptions being made about
lack of value for money. However, it should be acknowledged that organising and
overseeing construction activity would not be possible for some schools that lack
the necessary experience, skills or time.[83]
In these circumstances it was decided that the support of a centralised
management system was required.
The government has acknowledged the concerns about transparency
and value for money which appear to focus on the government sector. It wishes
to ensure value for money has been achieved and to this end it has set up the
BER Implementation Taskforce, headed by Mr Brad Orgill, to investigate claims
regarding value for money.
Comment
Government senators note the differences between the government
system and the non-government sectors. Independent schools are very experienced
in organising capital works. They have existing processes and established relationships
with architects and builders. It is clear that, despite the increased scale and
complexity of the P21 program, these mechanisms worked well for the independent
sector and the Catholic system.
However, government senators note the extra challenges facing
the government sector, where schools are managed in a system. In many cases the
knowledge and skills to run large projects and the established relationships
with builders and architects did not exist. Central management was therefore
seen to offer the best solution to achieving the challenging timeframes for
projects.
Administration of the program
The report will now turn to describing the administration of
the program. Government senators note that the National Coordinator's
Implementation Report, which was provided to the committee, presented a more detailed
account.[84]
Timelines
As noted in the National Partnership Agreement, the primary
objective of the P21 program was as an economic stimulus measure, which therefore
required a rapid roll-out of the program. DEEWR told the committee about
a small number of complaints received regarding timelines:
The compressed time frames have attracted the criticism from
a small number of schools that there was insufficient time for consultation or
consideration of the design options. These concerns must however be considered
in the context of the policy intent, which is to provide economic stimulus
through the rapid construction and refurbishment of school infrastructure. The
national partnership requires states and territories to fast-track the design
application and assessment process with minimal red tape. Furthermore, the BER
guidelines state that projects which are unable to demonstrate their ability to
be completed within the specified time frame will not be funded. Although it is
understandable that some schools may have liked more time to consider project
designs, it is important to recognise that the vast majority have appreciated
the need for timely decision making in the context of economic stimulus and
have acted accordingly.[85]
While noting the challenging timeframes, evidence to the
committee indicated that they were achievable. For example, Giant Steps School
in Sydney, which caters for students with a diagnosis of Autism Spectrum
Disorder, reported that:
The timeframe has meant there has been a very dynamic
response which has focused our attention intensively and drawn us together as a
school community.[86]
The Queensland government noted that the timelines for delivery
of projects are considered tight by industry standards but implementation of
the program continues, with 1,664 projects in various stages of delivery. It
added that it remains optimistic the projects will be completed on time or in
advance of the timelines outlined in the BER program guidelines.[87]
Catholic Capital Grants (Victoria) also noted the short
timeframes but reported that:
The meeting of these timelines has been made possible as a
result of the hard work and dedication of our school principals, staff,
teachers, parents and their architects. They have worked energetically to meet
the timelines imposed by the program.[88]
The Northern Territory government pointed out the 'uniqueness
of the NT's portfolio of schools' which required a high level of consultation
and a considered design response to achieve value for money while meeting the
requirements of the Building Code of Australia. Despite these requirements the
NT 'fully expects to deliver the P21 within the overall timeframe and
completion date...'. The NT Chief Minister, the Hon Paul Henderson MLA, advised
the committee on how the timelines were being achieved:
Overall, the benefit to the NT is substantial and I am
advised the level of innovation and cooperation between governments, industry,
schools and their communities will ensure projects are completed by March 2010.[89]
The ACT government summarised its plans to meet the timelines:
When combined with the ACT's own ambitious capital works
program for its public schools, the increased funding and tight timelines
required under the BER program have posed a significant challenge. The ACT
Government has placed the highest priority on meeting this challenge, and as a
result of streamlined processes and high level[s] of cooperation between school
communities, government agencies and employers, is confident of meeting its
commitments under the BER.[90]
Comment
In order to meet the primary objective of stimulating the
economy, government senators note that rapid implementation of P21 was
required. This was recognised by submitters and the committee was told that,
although the timelines were challenging, they were achievable.
BER Guidelines
Guidelines were developed by DEEWR to assist states,
territories, BGAs and schools submit project proposals. The guidelines set out
the arrangements for the administration and delivery of the program. Given the
scale and complexity of the program, it was anticipated that the guidelines
would need to be amended as issues arose which required to be addressed.[91]
The committee heard that the guidelines were easy to deal with
and sufficiently flexible, and that when issues arose they were dealt with
sensibly and quickly.[92]
Mr David Robertson, Executive Director, Independent Schools Queensland advised
that they have been able to work very successfully within the guidelines and
reported that for their 214 projects in Queensland, as of May 2010, 87 per cent
have commenced construction, some 22 per cent are completed and 51 per
cent are over 50 per cent completed.[93]
The NSW Catholic Block Grant Authority reported that the
management of the program has been efficient, consistent and courteous. While
noting a few 'teething' problems, which were not unexpected in a program of
such magnitude, adjustments were made which were not disruptive, and the basic
structure and guidelines published in February 2009 remain intact and
operational.[94]
Eligibility
I have seen magnificent facilities being built, and they are
facilities that school principals have said to me, ‘Well, we may have had this
on our master plan’—because most independent schools would have a master
plan—‘but it was somewhere there in the distance.’ In Queensland in particular
the growth is so strong that the demand for capital in our schools is for
classrooms and basic facilities. They have certainly had a tremendous boost.
The feedback I get from our schools is that there will be very significant,
long-term, positive benefits from the facilities that have been built under
BER.[95]
P21 funding was available to every eligible government or
non-government primary school according to school enrolment numbers.[96]
Catholic Education South Australia advised that basing the conditions for
funding on student enrolments was generally seen as being fair and equitable.[97]
The NSW Catholic Block Grant Authority commented that project allocations by
school enrolment were '...reasonable and allowed for facilities appropriate to
school size. The use of February 2009 enrolments as the base gave every school
opportunity to be considered at its current enrolments'.[98]
Mr Bill Daniels, Executive Director, Independent Schools
Council of Australia welcomed the inclusive nature of the program which meant
that all independent primary schools were able to access funding and explained:
...This is particularly welcome for our sector where 80 per
cent of the capital funding investment is sourced from parents, not from governments...[99]
In addition, Mr Daniels summarised the effect of the program on
the independent sector:
If you go back to the objective of the program—which was
economic stimulus at the local level—that is exactly what it has done in our
sector. All 900 independent primary schools have benefited from a project. Many
of those would not have had projects in their communities of any sort in the
near future. This is roughly the equivalent of 15 to 20 years worth of
Commonwealth capital programs for the independent sector being put into the
sector in the space of two years, so it is something that our communities have
very much welcomed.[100]
Providing for flexibility
Infrastructure
Contrary to some reporting, the P21 program had flexibility
built in at many levels. First, the provision of infrastructure was flexible. The
P21 program provides funding in priority order for: the construction of new
libraries; the construction of new multipurpose halls, or, in the case of
smaller schools, covered outdoor learning areas; the construction of
classrooms; the replacement of demountables or other buildings as approved by
the Commonwealth; or the refurbishment of existing facilities.[101]In
addition, where a school and its community determined that a school had no need
for any of the above but had determined the need for an early learning centre,
it could apply for this funding under P21.[102]
Mr Terrence Leavy, Manager, Government Programs, Queensland
Catholic Education Commission reported that the priority list was easy to work
with and DEEWR were very accommodating in relation to it.[103]
This view was supported by Mr John Barker, Head, Finance and Planning, Catholic
Education Office, Catholic Education Commission (Canberra and Goulburn).[104]
Many submissions expressed the view that the guidelines and
implementation allowed sufficient flexibility. The Catholic Education Office of
Western Australia told the committee that there was sufficient flexibility in
the guidelines to serve the needs of almost all schools eligible for the
funding.[105]
Specifically commenting on the potential for duplication, it said:
...careful planning and co-operation between the schools and
the CEOWA has enabled the WA Catholic System to avoid the replication of
existing facilities.[106]
Similarly, the Catholic
Education Commission of Western Australia told the committee that the criteria
for projects provided ample scope for the provision of facilities that would
improve the educational environments in schools.[107]
Catholic Education South Australia (CESA) advised that it found
sufficient flexibility within the criteria for school communities to have constructive
input into designs and achieve projects which met broad community needs while
still meeting the requirements of the program.[108]
The Catholic Education Commission for the Archdiocese of
Canberra and Goulburn commented on the 'misnomer in some quarters that schools
must build libraries or halls'. It stated that 'there is sufficient flexibility
within the program to allow schools to build or refurbish to their immediate
needs where they can demonstrate they already have a hall or contemporary
library'.[109]
The NSW Catholic Block Grant Authority advised that there was
sufficient flexibility for every school to propose a project to meet its
requirements and the variations process allowed by DEEWR enhanced the
flexibility in facility options. It added:
Contrary to some media reporting, schools were not forced to
accept or duplicate facilities they did not want or need. In our sector,
schools were pleased to accept the Government's priorities and those with
modern hall and library facilities (such as newly built schools or schools in
receipt of recent major upgrades) were able to nominate for other facilities
they needed.[110]
Cringila Public School, NSW, provided a specific example of the
ability to take into consideration specific school requirements. The principal Mr
David Lamb reported that additional dialogue and communication was required but
that the result will be a feature that 'will compliment the work already
occurring in the school academically and the social context for the community'.[111]
The National Catholic Education Commission (NCEC) also advised
that:
Contrary to some media reports, there is no evidence of
Catholic schools using P21 to unnecessarily duplicate existing facilities or
accept unwanted facilities or building templates.[112]
Funding
Flexibility was also built into the funding. The guidelines
allow for variations to funding amounts with the agreement of the school
involved.[113]
The National Coordinator's Implementation Report showed that 77 per cent of
schools received their full notional funding allocation, 14 per cent received
more and nine per cent received less.[114]
These figures show the flexibility built into the P21 element of the BER to
ensure the program's effective and efficient delivery.
This flexibility has been used in some circumstances to direct
funding to schools with greater need.[115]
DEEWR explained the considerations:
There were funding allocations based on a school’s enrolments
with more funding for more students, and that was considered an indicative cap.
But we did not want to be prescriptive around that because if a school did not
need funding it would not have been sensible to stick with that. For example,
if a school was brand new it would not need that level of funding, or if it had
recently had major refurbishment or something. At the same time, there are also
schools with much higher needs that have not had any capital improvements for a
while. So there was always the flexibility for the education system to be able
to give a school a project less than their cap and use that additional or
leftover funding for schools that had a greater need, and we have seen that
happen. But as you can see, with 77 per cent getting their cap—and the majority
have—then the education authorities have used that flexibility to direct
funding that was not needed to schools that did need it.[116]
The flexibility in the program was able to cover not only the
diversity of student needs but also the diversity of sites where the same
building would attract different costs due to extra architectural work
required.[117]
The NSW government provided examples of increased costs for some schools:
...schools in remote locations may find that their projects are
more expensive simply because of the cost of transporting building supplies and
tradespeople to the site. In other cases the school may be located on a very
difficult site, leaving little room available for construction of new
buildings. Other schools might be subject to multiple easements, flooding, or
even be home to koala colonies which cannot be disturbed. All these factors can
add to the expense, as the new building may need to be on a sloping part of the
site, or the school may need to have existing buildings removed before new
construction can commence.[118]
Comment
Government senators believe the evidence shows that the P21
program has sufficient flexibility built in to recognise the diversity of
school and student needs and sites. The evidence received by the committee is
contrary to impressions created by the media that schools were forced to accept
or duplicate facilities.[119]
The flexibility to move funding is discussed in more detail later in this
dissenting report.
Applications for P21 projects
Applications were made through the state education departments and
BGAs to DEEWR. The education authorities collected the information from their
schools and submitted applications on behalf of schools. DEEWR explained the
process:
...Each education authority was responsible for seeking
applications from their schools. Typically, the process would work such that
most education authorities put in place some kind of form that the schools
filled in to put down their desire against each of the building priorities for
P21. Then the education authority, on behalf of a school, filled in the
application form that we had—we had an online application form. That,
typically, gave us all the information about the program, including the name of
the school, the name of the school principal and the name of the contact
officer within the relevant education authority.[120]
Catholic Education South Australia commented that the
application process, while rushed, was well coordinated by DEEWR and proceeded with minimal disruption.[121]
Sign off from school principals
Government senators note that the approval process included project
sign off from the principal of the relevant school. DEEWR officers advised the
committee that this occurred prior to the application being submitted:
...My understanding is that most educational authorities
received sign-off from their school principals prior to the application being submitted
to us—that is, as part of the form they filled in. Many of those forms required
not only the school principal’s signature but also that of the president of the
school council or P&C. That would have been done before the application was
submitted to us.[122]
In addition, any changes as a result of discussions between
DEEWR and the education departments were also signed off by school principals.[123]
Assessment process
DEEWR assessed each application against eligibility and quality
assurance criteria in accordance with the guidelines. Extensive eligibility and
quality assurance tests are listed in the National Coordinator's Implementation
Report and the DEEWR submission.[124]
Each application was assessed by a team within the BER Taskforce. DEEWR
explained the assessment process:
...Because it was an online system, each application had to go
through a series of eligibility ticks to move through the system, where it
ultimately came out at the other end as a project that met the guidelines and
was one that we could recommend to the minister for approval. As part of that
process we would negotiate back and forth with education authorities when we
had questions—for example, about projects where an application was unclear. So
there were opportunities for education authorities to clarify and refine
applications to make sure that they did meet the guidelines.[125]
Funding
Program funding
Funding was calculated based on the school's full time
equivalent primary level student enrolments. Notional funding per school is set
out in the following table.[126]
Size of primary school (enrolments)
|
Notional cap $
|
1 to 50
|
250,000
|
51 to 150
|
850,000
|
151 to 300
|
2,000,000
|
301 to 400
|
2,500,000
|
401+
|
3,000,000
|
Additional funding
Government senators note that the additional funding
required for the program[127]
has been dealt with comprehensively through parliament by the minister[128]
and the senate estimates process by relevant departments.[129]
There was greater demand for funding than originally anticipated. It was
unknown at the time of developing the program whether schools would be able to
take advantage of the program to the maximum amounts available within the
limited time to develop and submit applications. The ANAO acknowledged it was
evident and transparent to the Strategic Priorities and Budget Committee ministers
that, depending on the response from schools, an estimates variation might be
required. The further funding was provided with offsets made from within the
$42 billion Nation Building and Jobs Plan.[130]
Funding rounds
The P21 program was divided into three funding rounds. It was
intended for 20 per cent of schools to be included in the first round, 40 per
cent in the second round and 40 per cent in the last round. DEEWR explained
that the first round was smaller as the timeframe for applications was much
shorter.[131]
The NSW Catholic Block Grant Authority supported the use of three funding rounds,
saying that it allowed more time to develop proposals for the more difficult
projects.[132]
DEEWR explained to the committee that if substantial changes were required an
application could be held over:
...Because we had three funding rounds, where an application
might have required substantial changes or a lot of negotiation it may have
been held over to allow time for the negotiation with the education authority
and the relevant school. For example, an application that came in in round 1
may have been held over to round 2 or round 3.[133]
Funding approval
Once the eligibility
and quality assurance tests were completed, funding approval of successful
projects was recommended to the Minister for Education.[134]
DEEWR advised the state education authorities of the successful schools in each
round. The Deputy Prime Minister then wrote to the school principals
congratulating them on their successful applications. Funding agreements were put
in place with the education authorities, and the schedule to those agreements reflected
the approved project.[135]
An identical process was undertaken for government, Catholic
or independent schools. The distribution of funding was $9.5 billion for the
government sector, $2.7 billion for the Catholic system and $1.6 billion for
the independent sector.[136]
Related to percentages of children, these figures translate into 68.6 per cent
for the government sector, 19.9 per cent for the Catholic sector and 11.5 per
cent for the independent sector.[137]
The table below provides the breakdown of P21 funding by education authority.[138]
![This table provides the breakdown of P21 funding by education authority](d01_2.gif)
Education authorities or schools can add a co-contribution to
the project funding in order to address specific requirements:
If they have applied for a hall and we have given X amount of
funding for that, if they wish to add a further amount of money to add extra
rooms or extra features, they can. That needs to be clearly identified to us,
and they do that in their monthly reporting. That is happening in some
instances.[139]
DEEWR advised that as at 18 January 2010, 1038 schools had
added a co-contribution to a total value of $574,732,300.[140]
The BER Guidelines make it clear that the funding allocations
are indicative and a state education authority or BGA may decide to fund some
schools at slightly lower amounts and some at higher amounts than indicated.[141]
Mr John Barker, Head, Finance and Planning, Catholic Education Office, Catholic
Education Commission (Canberra and Goulburn), told the committee that the
guidelines gave the Commission the capacity to reallocate funding and they took
up this opportunity. In order to be transparent about this:
We made it very clear from the start of the program to our
principals and communities that the allocations are indicative and as a system
authority we have the capacity to distribute that funding on the basis of need.[142]
This was also the case for the government system, and this is
discussed in more detail later in this dissenting report.
Funding for program administration
The National Partnership Agreement (NPA) recognised the
additional cost of BER administration to the education authorities and that
they had not budgeted for BER. COAG agreed to allocate education authorities
1.5 per cent of the BER funding approved for their schools to administer the
BER program on behalf of their schools. This amounted to $207.8
million.[143]
DEEWR explained:
Built into the program is a 1.5 per cent administration
funding amount for each education authority; that is 1.5 per cent of the total
dollar value of the projects that they were funded for. Education authorities
have used that funding to bring in additional staff where they have needed it
to help with the volume.[144]
Catholic Education South Australia advised that the
provision of a fair administrative allowance enabled it to employ experienced
staff to administer the program.[145]
The Queensland government recorded appreciation for this funding which is being
fully utilised to support the BER program at central and regional levels.[146]
Dr Geoff Newcombe, Executive Director, Association of
Independent Schools of NSW told the committee that having the administration
funding separate was a 'very sound position for the government to take' as it
was clear that the administration funding would not affect the amount of money
to be spent on schools.[147]
The table below details the administration funding for
education authorities for BER.[148]
Maintenance of funding by states
and territories
The NPA also made it clear that the P21 funding was to be
additional effort and that the states and territories and non-government
authorities are required to maintain funding efforts. Mr David Robertson, Executive Director,
Independent Schools Queensland told the committee that the guidelines were very
clear that new money could not be put into any existing contracts and that
capital expenditure must be maintained.[149]
Maintenance of state funding will be monitored through
reporting to Heads of Treasuries and the Ministerial Council, and sanctions for
any state's failure to meet spending benchmarks may include making this failure
public.[150]
DEEWR advised the committee that the maintenance of effort was
being monitored through the Department of the Treasury.[151]
The committee wrote to the Secretary of the Department of Treasury and
requested the quarterly reports on the maintenance of funding effort. The
Secretary to the Treasury, Dr Ken Henry, responded:
Given that the Agreement between the Commonwealth and the
States provides for making the assessment public as a sanction, I consider that
providing these reports to the Committee would be against the public interest
as doing so would damage relations between the Commonwealth and the States. The
information in the reports was provided by the States in confidence and on the
understanding that they would only be made public, in respect of a particular
state, if the Commonwealth decided to impose a sanction on that state for
failure to meet its benchmark. Provision of the reports to the Committee
outside this context could have an impact on the Commonwealth's future dealings
with the States.[152]
The chair of the committee then wrote to the Treasurer, The Hon
Wayne Swan MP, who responded:
I consider that the release of the quarterly reports on
progress under the National partnership Agreement on the National Building and
Jobs Plan would harm the national interest on the grounds that their release
could reasonably be expected to cause damage to relations with the States.
Further, I consider that the damage could result equally from the disclosure of
the information or document to the Committee as in camera evidence.
The States are important partners in implementing the Nation
Building and Jobs Plan and collaboration between the Commonwealth and the
States continues to be critical in ensuring Australia can respond to economic
challenges with immediate and concerted action. The information in the reports
was provided by the States in confidence and on the understanding that they
would only be made public, in respect of a particular state, if the
Commonwealth decided to impose a sanction on that state for failure to meets
its benchmark.
I have noted the Committee's arguments in support of the
release of these reports. Contrary to the Committee's assertions, I consider
the fact that making the assessment public is an explicit sanction in the
agreement supports my conclusion that releasing the reports would not be in the
public interest.[153]
The chair of the committee has also called for the
production of the documents in the Senate chamber.[154]
The following statement responding to the resolution was tabled on 13 May 2010
by Senator the Hon. Nick Sherry, Assistant Treasurer:
I have noted the Committee's arguments in support of the
release of these reports. However, contrary to the Committee's assertions, I
consider the fact that making the assessment public is an explicit sanction in
the agreement ...supports the Treasurer's conclusion that releasing the reports
would not be in the public interest.
I consider that the release of the quarterly reports on
progress under the National Partnership Agreement on the Nation Building and
Jobs Plan would harm the national interest on the grounds that their release
could reasonably be expected to cause damage to relations with the States.
Further, I consider that the damage could result equally from the disclosure of
the information or document to the Committee as in camera evidence.[155]
Comment
Government senators consider this an appropriate response to
avoid damaging relations with the states, as releasing the information was
specifically listed in the National Partnership Agreement as a sanction.
Rephasing
In the context of the 2009-10 MYEFO, the government
announced on 2 November 2009 that $500 million of the P21 funding will be moved
from 2010-11 to 2011-12 to provide flexibility for a small number of projects
requiring additional time to either obtain value for money by delaying the project
or deal with unexpected environmental or site challenges. DEEWR is working with
the education authorities on how the rephasing will be managed, and the
authorities have been asked to provide a proposed strategy.[156]
DEEWR provided some examples where rephasing was necessary to achieve the best
outcomes:
...The
other need for flexibility is around where there are unexpected site or
environmental issues. For example, we know that, in northern Australia, if the
wet season is excessively long it can have an impact on building because there
is a particular window for building. We know already that, when construction
has started on some schools, there have been some unexpected site challenges.
So the rephasing is allowing education authorities to address those particular
issues.[157]
DEEWR also provided other reasons for rephasing:
It might be the case in a primary school where there is not
sufficient ground space to relocate classes in the school, so the majority of
work may have to be done during school holiday periods. They have to carefully
plan, scope and sequence that to ensure that the learning of the children is
not interrupted and that there is space for the children to go. So, where there
are high enrolments at some primary schools, they are nearly at capacity and
they are doing building work, they will plan and sequence so that particular
building works are done only in school holiday periods so that they do not have
to relocate some of the classes. It is right down to that level of detail.[158]
Use of local contractors
Having recently completed our new Junior School facility at
[the] end of 2008, the School was permitted to choose the existing
builder/contractors and architect. All these individuals were local companies,
and were selected initially based on correct tender procedures. Although they
have tendered for this current project, they were familiar with our various
requirements, environment etc and quoted realistically on the intended project.[159]
It is a requirement of the BER Guidelines that states,
territories and BGAs endeavour to identify and communicate opportunities in
local areas for tradespeople and other small businesses. The Guidelines and
funding agreements with BGAs specify that they must give priority in
contracting and tendering to local businesses and must report to the
Commonwealth on this matter.[160]
DEEWR advised that, while tender processes vary between jurisdictions, all have
measures in place that will facilitate the use of local contractors or
sub-contractors and provide information to local businesses on how to take up
work opportunities.[161]
The NSW government reported that the BER Program Office and
Managing Contractors have 'proactively engaged local businesses to get them
involved in the delivery of the program'. This included:
- advertising information on how local businesses can become
involved;
- providing information sessions for local businesses interested in
obtaining work; and
- providing the ability for suppliers to register their interest in
participating on-line.[162]
The NSW government further
reported that evidence to date indicates that the managing contractors are
overwhelmingly using local contractors to deliver the P21 program.[163]
The Victorian
Department of Education and Early Childhood Development similarly reported that
it held industry information sessions across Victoria to encourage builders to
register with the Victorian Government's Construction Supplier Register. Local
tradespeople were encouraged to contact the Industry Capability Networks to
link them with contractors. It reported that all contractors engaged through
the BER program have been encouraged to use local tradespeople and
sub-contractors as a first preference and where available.[164]
Government senators note that the first P21 project to be
completed was located at Yandina State School in the hinterland of Queensland's
Sunshine Coast. The Queensland government informed the committee that it aimed
to utilise local contractors where possible on P21 projects. Accordingly, the Government
reported that 90 per cent of the contractors who worked on the Yandina State
School project were based on the Sunshine Coast.[165]
Other examples of the use of local contractors include the
ACT Catholic Education Commission, which reported that:
All successful building contractors for P21 projects in ACT
Catholic System schools are local contractors and are engaging local
sub-contractors.[166]
The NSW Catholic Block Grant Authority also advised:
...our experience is that in most cases local builders have
been engaged where they could demonstrate sufficient experience and ability in
projects of P21 scale.[167]
Mr Daniels, ISCA,
advised that in NSW 84 per cent of independent schools are using local builders
and about 93 per cent are using local tradespeople.[168]
Giant Steps in Gladesville NSW reported that all local contractors were used
during the project and a number of apprentices have been working on the site.[169]
The National Catholic Education Commission reported that the widespread use of
local contractors was crucial and most beneficial.[170]
The NT government advised that it encouraged the use of local contractors by
following existing procurement guidelines which provide a weighting for local
development.[171]
In addition, DEEWR
advised that the Catholic schools sector reported maximum use of local project
management and local building contractors, subject to industry experience and
being able to offer value for money. In the independent schools sector, the
schools have the freedom to choose local contractors. Evidence of the use of
local contractors and sub-contractors was also reported in the media, with Mr
Terry Schuster, Head of College at St Stephen's College in Gladstone reporting
that 'the use of a local builder and project manager was very important to us
to ensure the success and quality of the project'.[172]
Comment
Government senators note that wherever possible and practical
local contractors were encouraged and engaged to work on P21 projects.
Monitoring and reporting
There is a comprehensive monitoring and reporting regime in
place to support the implementation of the P21 program. DEEWR took the
committee through the process:
...Each month education authorities submit a detailed report at
project level, which enables DEEWR to monitor project progress and expenditure.
Any anomalies in this reporting are immediately investigated. In addition,
DEEWR officers visit education authorities regularly to discuss local
implementation issues. Recent visits have included school sites and discussions
with principals.
As part of routine program assurance, DEEWR has recently
engaged Walter Turnbull to assess the implementation of BER across six
education authorities against the program’s policy objectives and business
rules. In addition, education authorities are required to submit a detailed
annual statement of income expenditure, which details the use of project
funding, administration funding and interest earned on funds. This multilayered
program assurance approach has been designed to support the rapid
implementation timeframes and to provide robust monitoring of public funds.[173]
The committee received some evidence suggesting the level and
frequency of the reporting requirements could have been more tailored. For
example, Catholic Education South Australia (CESA) suggested that formal
accountability and acquittal processes that have been in place for over ten
years could have acted as the basis for the BER process, and then frequency and
detail could have been customised.[174]
However, the Victorian Department of Education and Early Childhood Development
supported the reporting arrangements and noted that all project expenditure is
subject to rigorous monitoring and accountability processes and audit scrutiny
at both the state and federal levels.[175]
While some customisation of reporting requirements was suggested,
it was recognised that:
...at the end of the day this was taxpayer money and it is
perfectly legitimate to have detailed reporting arrangements.[176]
Comment
Government senators note that the P21 reporting requirements
appear to have attracted little comment in submissions and been accepted by the
vast majority of schools.[177]
It should also be noted that it is important to have appropriate monitoring
mechanisms in place and the arrangements that COAG outlined in the NPA were
agreed with jurisdictions.[178]
Signs and plaques
The Coalition tried to make much of the requirement for signs
and plaques to be placed on P21 projects by including this in the terms of
reference. However, the committee heard that the approach taken to signs and
plaques is consistent with previous infrastructure programs. DEEWR submitted:
Reflecting recognition protocol arrangements that have
applied to previous school programs, there is a requirement to acknowledge the
Commonwealth's contribution to public funding programs. Signs that contain
information about building and infrastructure projects are part of the
Government's obligation to the Australian public to provide information about
how their tax dollars are being spent.[179]
The committee
was advised that the total cost of the signs and plaques is
estimated to be $3.6 million—that is, $3.37 million for signs and $226,000 for
plaques. The average cost of a sign is $295[180]
and the average cost of a plaque is $27.[181]
Regarding arrangements for the recognition ceremony:
...The guidelines say that a school is to have a recognition
ceremony within three months, I think, of the completion of their project. They
come to us about two months in advance seeking to settle their date and start
the arrangements....[182]
Evidence showed nothing unusual or of concern in the
requirement to acknowledge that the funding has come from the Commonwealth
government. The Catholic Education Office of Western Australia commented on the
requirement for signs and plaques:
For many years there has been a requirement for signs and plaques
to be erected in order to recognise the contribution made by Governments toward
school building projects. There is no objection to this occurring in the case
of BER projects and this has always been welcomed by the CEOWA and school
communities.[183]
Similarly, the Principal of All Saints Grammar, NSW, stated:
I have absolutely no issue with these requirements [for signs
and plaques] and agree that we have an obligation to indicate where public
money has been spent.[184]
Evidence showed that the requirement for school signs was not
viewed as anything departing from normal practice and requirements were not
onerous.[185]
In fact, it was noted by the Catholic Education Commission for the Archdiocese
of Canberra and Goulburn that an advantage of the BER program over other
capital programs 'is that the Commonwealth is providing the plaques and signs
rather than them having to be purchased from project funds'.[186]
Giant Steps in Sydney commented on the issue of signs and plaques that:
This is such a minor matter. It is difficult to understand
why this should be the concern of a Senate Inquiry.[187]
Comment
Government senators note that BER recognition costs for a P21
project equate to 0.014 per cent of the total project funding—half as much as
for the Investing in Our Schools Program, where recognition costs equated to
0.39 per cent of the total project funding.[188]
Government senators also note that DEEWR has received no direct complaints
regarding signage.[189]
Issues raised during the inquiry
Government senators acknowledge that a small number of issues
have been raised in relation to aspects of the program. This was anticipated
and procedures were put in place between DEEWR and the education authorities for
issues to be addressed. Evidence showed that in the vast majority of cases issues
were addressed as they arose with solutions being found quickly. In a small
number of cases the issues raised required more consultation and took longer to
resolve. This in no way detracts from the overall success of the program. Below
are summaries of the main issues raised with the committee in relation to the
program, which focus on communication with the school community and projects achieving
value for money.
Consultation and communication
The committee heard from some witnesses about what was perceived
as a lack of consultation and communication with the school community about some
projects.[190]
This appears to be an issue for some government schools but was not raised in
relation to the Catholic or independent sectors.
In NSW, Mr Michael Coutts-Trotter, Director-General, New South
Wales Department of Education and Training (NSW DET), acknowledged that in
order to meet project deadlines the timeframe for consultation with the school
community was necessarily compressed. However, he also noted that it was a
requirement that projects were signed off by the principal and the principal
had to confirm that the school community had been consulted.[191]
The committee also heard that some principals felt pressured
into not taking on management of their projects.[192]
Mr Coutts-Trotter explained that NSW has the most stringent occupational health
and safety (OH&S) environment and that the project manager would be subject
to the prevailing OH&S, legal and procurement environments as well as
taking on reporting requirements. In responding to concerns about pressure
being applied to principals to not manage the projects, he stated:
[T]hat was a pretty confronting exercise for a number of
people. I do understand that but I think I would have been deficient and failed
my colleagues if we had not ensured that they really know what they would be
taking on.[193]
The committee heard that it was an objective of NSW DET to
provide more opportunities for principals to take control of projects. As an
example of facilitating local management, Mr Coutts-Trotter told the committee that
initially advice from the Coordinator-General in NSW was that, given the
financial risks, a school electing to self-manage a project should lodge a 10
per cent security deposit with NSW DET. However, after receiving strong
negative feedback on this from school principals, NSW DET changed the
requirement that a deposit be lodged but continued to advise that project
managers should maintain a 10 per cent contingency fund from within the
project budget.[194]
Mr Coutts-Trotter reported that his department endeavours to
communicate well, be open to feedback and respond to concerns. He added that
specific measures were taken to assist principals with school community
communication. This included recruiting public schools principals with
considerable experience to act as a liaison point with their colleagues within
the delivery unit.[195]
Responding specifically to allegations of pressure or bullying, Mr
Coutts-Trotter said that he takes such allegations seriously and they would be
investigated. However, he noted that people have to respect their
responsibilities as employees of an organisation.[196]
In summary Mr Coutts-Trotter stated:
...We take every concern of every school community seriously.
They are the people we serve. They are the people we get out of bed for in the
morning and how they have experienced the way we work for them is of vital
importance to us. It is of vital importance to public education. In a huge
program under extraordinary time pressures, sometimes that is not going to be
done as well as a school community would expect of us. But taken as a whole,
this program is being done extraordinarily well in New South Wales public
schools.[197]
Process for issues to be raised
The government recognised that, given the size and necessary
speed of the program, issues would arise, so it ensured that there was an
appropriate process in place to address and resolve issues as they arose. The
BER Guidelines outline this process:
If a school considers that a proposed allocation of funding
under the BER program is not in accordance with the BER Guidelines or a school
has complaints about the administration of the BER, the school may put its
concerns in writing to the national BER Coordinator who may, where appropriate,
after considering the objectives of the BER program and the BER Guidelines,
discuss the school's concerns with the relevant state, territory or BGA for the
purposes of ensuring that funding is allocated in accordance with the BER
guidelines or to investigate a complaint.[198]
The National Coordinator's Implementation Report to 30
September 2009 advised that there had been 55 complaints out of 25,489
applications received and 24,382 projects funded, which amounts to 0.22 per
cent of applications received and 0.23 per cent of applications funded.[199]
On 30 November 2009 the National BER Coordinator provided
the committee with an update and went on to describe the three main areas of
concern raised:
...One is about value for money and project management fees.
The second is around the implementation time frame and the third relates to
negotiations between government schools and the state and territory education
authorities regarding the nature of the projects. I will just briefly go
through each of those areas of concern.
Due to the unprecedented scale of the program and the
compressed time frames, achieving value for money remains a key priority for
all the education authorities—government and non-government—that are involved
in the delivery of the program. DEEWR has investigated any concerns about value
for money as they have been raised. To date we have been satisfied that
education authorities have actively sought to achieve value for money.
Similarly, claims that education authorities have applied
project management fees in excess of four per cent, which is the cap, have not
been substantiated. Our analysis has shown that reported cases of high project
management fees have generally resulted from the inclusion of items which are
not regarded as project management, such as architects’ fees or site fees,
which should actually be classified as project costs and not project management
fees.[200]
Regarding complaints between schools and the state education
authorities, DEEWR advised:
A total of 7,962 schools are receiving funding for P21
projects. A small number of these schools have publicly expressed
dissatisfaction with the projects submitted by their education authorities.
DEEWR has examined each of these cases. We are satisfied that the schools
concerned have been adequately considered by the relevant education
authorities. In the vast majority of cases, a mutually acceptable solution has
been negotiated. There are some cases however where the school’s preference
simply cannot be accommodated because of the longer term impact on the
education system as the preferred project will generate unreasonable
maintenance costs or population projection statistics show a declining school
enrolment, which means that the desired facility may not be utilised in future
years. The funding agreements with education authorities require them to be
fully responsible for all ongoing current costs and maintenance of any new or
refurbished infrastructure that is built or refurbished under the program.[201]
DEEWR also
addressed criticisms by school principals or P&Cs:
Generally we have found that in those instances where a
principal might have agreed to the initial phases of a project—time lines have
been quite short, so all of this was done quite quickly—as time has passed
sometimes they have reconsidered that. Many times a principal has changed or
the P&C composition has changed or they have heard about other projects
that have been funded and had second thoughts. That has happened over the
months after the application going in.
...We have found that as they have raised complaints the
relevant state department has entered into discussions with them and that the
vast majority of those have been resolved. Sometimes it has meant that the
project has been slightly rescoped to compromise. At other times the school has
ultimately agreed with the education authority’s call. It has been a matter of
working those things through.
...There had been a couple of cases where, despite
negotiations, the schools at this stage still had some concerns. But, as I
indicated, they seem to be around quite legitimate issues. For example, a
school wants to build something which will have a quite excessive, long-term
maintenance cost for the education authority to bear, or in another instance, a
school might want additional facilities but the state authority’s view is that
long-term population projections show that numbers will actually be declining
over future years and so it is judged that it is not reasonable to invest in
new facilities that will not be used. It is about system-wide approaches, I
guess, versus the individual schools.[202]
DEEWR told the committee that each state and territory had its
own complaints process:
I think you can be reassured that most jurisdictions—in fact,
all that I am aware of—and educational authorities do have a complaints process...and
many of those report through their annual report. They have places where they
have time taken to resolve complaints. I think, as Ms Wall has pointed out, the
escalation point of coming to her as the national coordinator would be exercised
by those who have not been satisfied with what is happening in a jurisdiction.
I think that is widely known through the website and I think principals are
very attuned, in my meetings with both primary principals and secondary
principals, to the mechanisms that they can go through with their education
authority. If it is not suitably resolved at that level, then they have the
option of complaining by coming forward to the national coordinator.[203]
The Deputy Prime Minister's office indicated that, if
individual schools had any issues with BER funding, they could contact the BER
Coordinator anonymously if that was their preference.[204]
Through DEEWR, state education authorities advised of the
numbers of complaints they had received which shows the numbers are few and
most are resolved.[205]
DEEWR explained the process if a complaint is escalated to them:
When they are sent to me, I look at them and I discuss with
the officers in my team what we will do to investigate those. The officers in
my team will do that and then they will provide advice to me. At such time as I
am satisfied, I will write to the person who has written. In most instances,
that means discussing first with the relevant education authority, getting the
information. Sometimes we will phone the school or the person directly if we
need further information. Then, at such time, I will write back to them. As I
said, in most cases the situation has been resolved by that time. There are a
couple—and I am afraid I do not have the numbers with me at the moment—where
the education authority is still in negotiations with the school or the school
community and we are waiting to see the outcome of that.[206]
The Independent Education Union of Australia reported that, where
concerns were raised in relation to operational issues and function, there is
evidence that:
...the parties, including the Australian Government, are
working cooperatively and with flexibility, sensitive to the needs of school
communities, to ensure that the best possible outcomes are achieved.[207]
Value for money
There have been questions raised in evidence and by the media regarding
whether some P21 projects in the government sector are achieving value for
money. Under the partnership model, the responsibility for ensuring value for
money on a project basis rests with the relevant education authority and this
was recognised by the ANAO.[208]
DEEWR advised the committee that it asked the 22 education authorities how
they were determining value for money as well as their audit arrangements and
undertook to provide this information to the committee.[209]
At the 30 November 2009 hearing DEEWR advised:
...Certainly the state departments have a responsibility around
value for money under the program. But, in accordance with their state
requirements, they would have certain standards around procurement which all
the schools would need to adhere to regardless of whether they were self
managing or not. In the non-government sector, again, that might vary. An
independent school would not need to comply with those state system
requirements, but obviously under our contracts we were requiring value for
money as well. So again it would vary.[210]
Education authorities sought to achieve value for money through
a number of procurement and contracting methods. Evidence on this aspect from
the centralised government systems and decentralised Catholic and independent
schools is outlined below.
Government systems - QLD
The Queensland Department of Education and Training spoke to
the committee about the central management of the program and the processes in
place to ensure value for money. The decision to manage the projects centrally
was taken to allow school principals to focus on their job as they are not
qualified or paid to manage projects. Ms Julie Grantham, Director-General, Queensland
Department of Education and Training informed the committee that the
procurement methods used had been selected as they provided the capacity to
ensure conformity with the BER guidelines. For all projects, audit quantity
surveyors review the prices submitted at a preliminary stage and this is
repeated when tenders are received. The committee heard that the department
engaged PricewaterhouseCoopers to independently examine the implementation of
BER and investigate any questions regarding costings. Ms Grantham told the
committee that the department had registered 12 formal issues, with five of
them relating to value for money. These have been referred to Pricewaterhouse
Coopers (PwC) for further investigation.[211]
Ms Grantham also reported to the committee that the Queensland
Department of Education and Training has engaged regional advisers and project
coordinators who work with the school principals and school P&Cs. Each
major project has a project definition plan, which includes a design for the
building and a detailed cost breakdown. These are provided to the school and
P&C, which sign off on the documentation.[212]
Ms Grantham then provided an update on two schools which were specifically
raised with the committee, Holland Park State School and Hendra State School.
Both projects are currently out to tender. The committee was told that the
principal of Holland Park State School is pleased with the project and the
current P&C have supported that position. However, the department was aware
of a complaint raised by Mr Craig Mayne, the former president of the P&C.
Ms Grantham informed the committee that they have not found any basis for Mr
Mayne's complaint but they have referred it to PwC for their independent audit
of these complaints.[213]
The complaint about Hendra Primary School centred around some
early documentation that a domestic construction would give greater value for
money. Ms Grantham reported that the department has spent time with the
school community and explained that school infrastructure is not undertaken
along the lines of domestic construction. She added that, once the tender
closes, the department will of course examine the tender very closely to ensure
it satisfies the requirements of the school.[214]
Mr Graham Atkins, Acting Deputy Director-General, Queensland
Department of Education and Training advised that each project has a
contingency allowance of between five and ten percent depending on the assessed
project risk. This is not given to the contractor unless there is a valid claim
which is independently assessed by a project quantity surveyor. If there is
contingency money remaining at the end of the project it is used to supplement
the project and add things that may have been a wish of the school but not
achievable in the original budget.[215]
When Queensland departmental officials were asked about the
appointment of construction managers, the committee was told that the intention
was to distribute the work as widely as possible. The construction managers
provided a mechanism to engage smaller contractors who would partner with
larger companies to deliver the projects. Expressions of interest from 12 of
the larger contractors were called for and, after assessing their submissions,
eight construction managers were appointed to deliver work all over Queensland.[216]
NSW
In NSW, Mr Michael Coutts-Trotter, Director-General, NSW
Department of Education and Training told the committee of the magnitude of the
program:
For us in New South Wales public schools, just under the P21
program, that meant undertaking twice the size of the Olympics on 100 times the
sites in half the time. It meant spending $3 billion on around 2½ thousand
projects in 1,800 schools. A third of our schools are heritage listed and more
than a third are in bushfire zones. Under our usual program it takes about four
years from go to whoa from the point at which we engage with the school to talk
about a school hall to the point at which it is delivered, including about 52
to 78 weeks of planning with the school community. Under the stimulus, in order
to create jobs quickly, we had six, 12 or 20 weeks to plan and 18 months to
deliver the program. The construction program under P21 is 10 times as large as
our existing school building program, which we had to maintain as well in order
to get the benefit of the economic stimulus.[217]
He explained that, because of the P21 timelines, the NSW
department needed a different process to business as usual and decided to use
experienced construction companies with a proven track record for safety and
delivery of high-quality buildings to budget and on time.[218]
On selecting the managing contractors, Mr Coutts-Trotter
told the committee that it was a fully competitive process where the department
went to 13 major construction firms with a track record of delivery.[219]
He advised the committee '[w]e have designed a program that in its contractual
form, in its oversight and in its review aims to secure value for money'.[220]
Responding to questions about allegations of rorting and secret fees[221]
Mr Coutts-Trotter stated:
...any substantial allegations specifically made should be put
and would be investigated. I am not aware of any substantial allegation of
secret fees or any of the other things you have outlined. There are questions
about value for money but they are quite separate to questions of propriety and
the application of government procurement policies and so-called secret fees.
Managing contractors are paid to do a job. They go on site. They take an
architect. They take a surveyor. They take an engineer. They work out what is
to be built, where it is to be built. They check the prevailing breezes for
naturally ventilation. They do a lot of work. It appears as a fee.[222]
He
added:
We have been absolutely open about these fees. If those fees
were not paid, the work would not get done. The only element of this that does
not directly generate a service—an architect coming; a check being made—is a
profit margin. These firms bid an average profit margin of 2.85 per cent. They
are at risk for $3,000 million worth of delivery and they are getting a profit
margin of 2.85 per cent. We struck arrangements with them that are sound but
represent good value for money and we did it at a time when they were willing
to be very competitive in the prices they offered the Australian community.[223]
Clarifying the fees in NSW, Mr Coutts-Trotter told the
committee that the project management component of four per cent is split, with
2.7 per cent going to the managing contractors and 1.3 per cent to the regional
delivery teams, who manage the contract with the managing contractors at a
regional level.[224]
In response to allegations of rorting by managing contractors, Mr
Coutts-Trotter emphasised:
The notion that, somehow, someone is just scooping up money
and doing nothing for it is absolutely wrong. Taken as a whole, for the work
they do—including the work they do as builders—the seven firms will receive
$345 million of $3,000 million, and they have the potential of earning a
further $50 million if they deliver on time and below budget. They are wearing
the whole risk of doing that—the financial risk, the operational risk. They are
absolutely guaranteeing the quality of what they produce for us. If there is a
problem they have to fix it. There is no risk to the taxpayer in that. It is a
good arrangement.[225]
Compared with business processes outside P21 work,
Coutts-Trotter told the committee his current assessment is that using managing
contractors has cost a premium of two or three per cent.[226]
He told the committee that the next step with the program is to look at where a
project has been delivered below cost and move any excess funds to schools
which have had the scope of their project reduced.[227]
In
conclusion, Mr Coutts-Trotter told the committee:
...it is a minority of projects that are attracting attention
in a huge program. I think, taken as a whole, the program is running extremely
well. I think it represents excellent value for taxpayers' money. I think that
will be proven over time. I think we need to do our best to resolve–as we try
and do, day by day–the issues that school communities confront us with.[228]
Government senators note the response provided to the NSW
parliament inquiry from the NSW Infrastructure Coordinator General which noted:
There has been ongoing public debate centred around value for
money issues that affect a very small number of projects out of more than 2,
300 projects in the P21 Program. In NSW, cost estimates for whole projects
including all development, planning, design, construction and handover
activities were published early on in the program to ensure transparency and
accountability. Unfortunately, the cost estimates have been used in some cases
to draw invalid comparisons, which on individual projects themselves are not
supported by the actual scope of final costs, and are certainly not indicative
of systemic problems...[229]
Catholic and independent schools
The Catholic school sector reported maximum use of local
project management and building contractors subject to industry experience and
their ability to offer value for money.[230]
Mr Victor Lorenz, Assistant Director, Finance and Resourcing, Queensland
Catholic Education Commission told the committee that generally the tenders for
their projects are coming in under estimate. He added that they relied on their
existing processes and procedures to achieve value for money:
...the project gets approved by the block grant authority, then
goes through the normal process to get government approval and, after that, all
projects go out to the tender market. So it is the tender market that really
dictates good value for money. I will give you an example. I went to a social
function recently where there was a primary school principal from a Catholic
school and I just asked her how it was going. She said: ‘We got 32 expressions
of interest to tender. We use a selective tendering process, which means we
require a minimum of six.’ She said they took seven, in case one pulled out,
and they were expecting good value for money. That is more than anecdotal
evidence, because all the authorities provide us with the tender outcomes. We
are getting good value for money.[231]
Mr John Barker, Head, Finance and Planning, Catholic Education
Office, Catholic Education Commission (Canberra and Goulburn), told the
committee of their processes around achieving value for money:
...our tenders remain strong and competitive. They are always
around or within the quantity surveyor estimates before we go to tender. The
management fees or the professional fees of our architects have been capped
within 10 per cent. I have seen no evidence of any price g[o]uging in any of
our programs.[232]
Other monitoring mechanisms
Government senators note that the P21 program has a number of
checks and balances included to ensure value for money, including independent audits
and reporting requirements.[233]
For example, the Minister described the protection mechanisms in the system
working when she reported that Hastings Public School is being audited by the
New South Wales audit squad. The audit was commenced before the name of this
school appeared in the media. She added that the New South Wales audit squad has
audited around 102 schools.[234]
In responding to specific examples, Mr Coutts-Trotter informed
the committee that Eungai Public School is the subject of a value for money
audit which is currently underway. He also told the committee that an audit had
been undertaken on the cost estimates for a covered outdoor learning area
(COLA) for Hastings Public School.[235]
Mr Coutts-Trotter then responded to questions about Tottenham Central School[236]
where concerns about value for money had been raised:
It is about $450,000, I think, for the canteen, $50,000 to
solve ponding on the school playground and a further $100,000 to upgrade the
main switch and to run electrical cables 150 metres underground. The process to
get that work done was competitively tendered. What we have within our
arrangements is a lump sum price with the possibility of savings. So in the
process we are able to go back to our managing contractors once we have amassed
a fair pool of BER projects delivered around the state—both in their region and
elsewhere—and we can draw some cost comparisons between similar projects
undertaken in different parts of the state to fully test the value for money.[237]
Issues raised about Gordon East Public School and the cost of
the buildings built there in 2005 were also fully addressed by the Minister
after she took the time to personally consult with the school principal, who
told her:
The school is so excited. The four new classrooms are just
beautiful. The plans are on the Web. The classrooms are state-of-the-art with a
sink, a withdrawal room, an environmentally friendly natural cooling system
with a special roof cavity and water tanks. The classroom should be finished
towards the end of the next term and will be home to the kindergarten class,
two year 1 classes and a year 2 class. The kids can't wait.
The workers are working hard to deliver the new classrooms,
even working on Saturday. Some concrete was poured yesterday and the kids were
just so excited. From whoa to go the school community has been involved. The
plans went to the P&C. To compare there classrooms to the 2005 classrooms
is just not right because the 2005 classrooms are modular. The new classrooms
are brick. The 2005 classrooms do not have any of the facilities like the
withdrawal room, the sink, the cooling system and the water tanks, The BER
money extended so far it went to refurbishing the administration building – which she described as stunning. It was a once-in-a-lifetime chance.[238]
APPA told the committee that they had no hard data regarding
allegations of rorting in the state systems. What they did have were comments
received from principals on the perception that they were getting buildings that
were somehow less than what they would have organised themselves. This was
compounded by concerns about 'descoping'. APPA explained to the committee that
these comments were based on the principal's level of experience in their
school but they had no evidence of rorting.[239]
Comment
Government senators understand that the achievement of value
for money in the government sector cannot be assessed by simply dividing the notional
amount of money a school could receive by the size of a building to come up
with the cost per square metre. This important point does not appear to have
been well understood and perhaps not well communicated.[240]
Effectively, the decision was taken that as government
schools operate in a system, the total money available was pooled across the
system. Common contractual arrangements were entered into for buildings of a
certain size. However, it is important to remember that there will be variation
in construction costs depending on location and specific site requirements—a
fact that was acknowledged by some witnesses.[241]
For example, the committee heard about a number of sites where unexpected
issues arose to explain increased costs such as white ants, contaminated soil,[242]
hidden stormwater[243]
or asbestos removal.[244]
In addition, there can be extra costs associated with some sites such as those
with a steep slope.[245]
In these cases the buildings will cost a particular base amount plus additional
amounts to deal with site-specific factors. In the government system,
therefore, not every school was given the full notional amount in dollar terms.
Where a project comes in under cost, it will subsidise those projects where
additional factors mean that they are more expensive.
Government senators note that many reports relating to value
for money issues have proved unfounded upon investigation. Apart from
perceptions voiced to the committee, and fuelled by the media, no evidence of
any criminal or illegal behaviour was presented. Government senators understand
and accept that these perceptions and feelings of disempowerment have been
intensified for some by what appears in some cases to be poor communication
with government schools by the education authorities.
Government senators also note the concern expressed by some
schools over lack of access to costings. In response to this the committee
heard that tender processes are still underway in some states and would be
compromised by the release of this information. Government senators note that
NSW has made estimates available publicly and expects that in time costings of
finished projects will be made available in NSW and by other jurisdictions. For
example during May/June 2010-11 estimates DEEWR advised the committee about
some completed projects in NSW:
I thought it might be helpful just to share an example or two
of the variance that we see between the New South Wales published estimated
costs. For a couple of projects that have completed, where they have got their
final invoices and so on, I can tell you what the final cost of the projects
were, just to give you a sense of the deviation. If I can quote first a school
called St Peters Public School. It is a school in St Peters in Sydney, some six
kilometres south of the GPO in Sydney. The figure that you will find on the New
South Wales Department of Education and Training website will show that the estimated
cost for that school is $795.692. There is a Covered Outdoor Learning Area being
delivered, so that is $800,000 round about. When all the tallying up was done
and the project was finished, that project came in at $628, 248. A second
example is Carinya School which had an estimate of $246, 895 for refurbishment
of classrooms. The final cost for this project was $180, 880. I have got a calculator,
but I have not done the maths, but you can see that there is a fair bit of
margin.[246]
Government senators emphasise that the National Partnership
Agreement on the Nation Building and Jobs Plan makes explicit reference to
adopting a best value approach in contracting and tendering.[247]
In addition DEEWR told the committee that the bilateral agreements with each
state and territory include the requirement that each education authority
require compliance with relevant procurement rules:
It is important to note in that context that each state and
territory does have its own procurement laws...all of which encompass the concept
of value for money as a central principle.[248]
Government senators also note that accountability mechanisms
have been established for the P21 program, as well as processes to report issues.
With a program of this size and complexity, issues were expected and from the
start the program had complaints mechanisms built in to deal with issues that
arose. This included a process to escalate any complaints that could not be
resolved at the local level. The complaints processes have been shown to work
most effectively. Government senators note that the vast majority of issues
have either been resolved through the mechanisms set up or negotiations to
resolve them are well underway.
DEEWR told the committee that of the around 61 complaints
only around four remain outstanding[249]
and that when claims regarding value for money were investigated it was found
that costs were not being compared correctly. Ms Lisa Paul, Secretary DEEWR
explained they had found errors in comparisons:
...Interestingly, I suppose I would comment that in some of the
cases we have looked at in the past—we have had some of this discussion at
estimates—what we have tended to find even on the value-for money question—I am
not saying this is the case here at all—is that there has been a kind of
comparison of apples and bananas, if you like, or something like that. In some
of the cases we have looked at we have said, ‘Why did this cost this amount?’
or ‘Why were the project management fees outrageously high?’ et cetera. Then,
when we have peeled it back, we have found that actually this was an entirely
different basis for comparison from that or that things were being counted in
fees which are not actually, in the industry standards, counted as project
management fees and so on. So you really have to look at each case.[250]
DEEWR cautioned that it is important to look at each case on
its merits and noted that these issues are exactly what the BER taskforce will
be investigating.[251]
Coalition senators and the media claim that people with
complaints did not feel able or were too scared to come forward.[252]
This is clearly false as evidenced by media reports and by APPA.[253]
Government senators note that the government is nonetheless concerned to receive
assurance that projects are achieving value for money and that any genuine
issues are addressed. To this end the government has established the BER Implementation
Taskforce headed by Mr Brad Orgill to respond to allegations regarding value
for money. Government senators note that Mr Orgill detailed for the committee
what the taskforce will focus on:
We are looking at the complaints and they tend to fall into
four categories. The first category is how many students did we have and how
much funding did we get? The second category is what product was delivered and
what was the consultation process for product? The third category relates to
policy type issues and the fourth category, which is really our focus, is value
for money. Often cases where a walkway has been forgotten or it is too hot... are
the result of de-scoping. So it is a value-for-money issue and, therefore,
clearly falls within our purview.[254]
Mr Orgill added that he has received excellent cooperation
from the states in providing cost data for his investigations.[255]
Government senators note that Mr Orgill is due to report during August 2010 and
again in November 2010.[256]
There have been calls made by the Coalition to delay the release
of BER funding pending the report from the BER Implementation Taskforce.[257]
The Minister clarified that the next $2 billion payment would be made on 1 July
2010 and then further payments totalling $3.5 billion would not be released
until November 2010 and March 2011. The money will not be fully expended on 1
July but will be held by education authorities. If there are any problems sanctions
are available. Money can be withheld, payments can be suspended or money
recovered.[258]
The Minister has stated that there will be time to respond to any recommendations
made by Mr Orgill.[259]
Mr Orgill confirmed this with the committee.[260]
Government senators note the disruption and confusion that would be caused by
delaying BER funding when appropriate investigation of schools with value for
money concerns is underway by the BER Implementation Taskforce.
Support for the program
Evidence to the committee demonstrated a very high degree of
support for the program. It is important to record this support here, to
introduce more balance into the reporting on the P21 program. The program has
been enthusiastically supported by state governments and the construction
industry for providing and supporting jobs during a period of decline in residential
building activity. It has also been supported by the education sector and
parents who noted the educational benefits provided by the new facilities:
It [the P21 program] has enabled us to build eight new state
of the art learning areas, thus replacing old, small and unproductive
portables. The excitement of parents, staff and kids is intoxicating. Children
and teachers will thrive in these new learning areas, big, bold and beautiful.[261]
The Federal Government's Primary Schools for the Twenty First
Century program for our school has been fundamentally positive in a range of
areas. The new spaces created and re-furbished have meant an increase in the
quality of the programs we can now deliver, it has also minimised the risks to
both staff and students given that spaces are now designed to assist students
with significant behavioural challenges. We have been able to pay attention to
good design in a special school environment that was previously unavailable to
us due to the costs.[262]
The Independent Education Union of Australia conducted a survey
and reported on the usefulness of the program:
P21 will ensure that more Primary Schools teachers than at
any other time are teaching in buildings designed in and for contemporary
learning. It is axiomatic that students need a healthy and stimulating
environment in which to learn. Members commented variously that:
- new planning and design principles have incorporated educational
considerations for the first time;
- students were consulted in respect of decisions significant to them such
as the replacement of school sporting facilities;
- until this project linking behavioural objectives to spatial needs has been
an impossibility and at the margin of capital investment considerations owning
to the necessarily piecemeal nature of building improvement and replacement;
- healthy and comfortable buildings increase student participation,
enquiry and achievement;
- the need to comprehensively examine projections for student spatial
learning needs in itself drove a new program of analysis of learning space
design principles which for the first time involved students and the community;
the new building processes in maximising energy savings, light and ventilation
has provided a core learning opportunity in social responsibility for students.[263]
The Minister has personally visited a number of schools which
indicated their support for building school infrastructure.[264]
Support from government
The Queensland government welcomed the investment in state
schools and noted:
Prior to the BER program, Queensland's state primary schools
were not generally provided with multipurpose halls. Investment in these
facilities, particularly the multipurpose halls, along with libraries and other
facilities, has received overwhelming support from principals and local
communities.[265]
The Queensland government also indicated that 'school
communities have overwhelmingly welcomed the program and are indicating their
satisfaction with its implementation'.[266]
The NT government advised that:
...all schools have indicated they are satisfied with the level
of consultation undertaken and the types of projects being funded under the
initiative. Naturally some of the smaller schools would like more funding and
some could argue a higher need compared to the large urban schools that
received the highest level of funding. However, overall every school will
benefit from the program by way of additional and/or upgraded infrastructure.[267]
Support from business
Supporting employment, particularly in the construction
industry, is discussed in detail at the beginning of this report. Employment property
and construction consultants Davis Langdon, involved in a number of BER projects,
told the media:
Without the BER program, which is projected to be complete
first quarter of 2011 there is no doubt there would be wholesale job losses in
the construction industry.[268]
Support from school principals
...builders are also coming in to start on a teaching block
that means the temporary transportable classrooms...that have been on the site
for 21 years...can be removed and Year Sevens will finally have proper
classrooms. The covered assembly area will be commenced too...replacing a large,
flat, grey metal roof with no sides for 800 students to gather during winter.
Huntingdale would never have been lifted to this new standard without the BER
funds...[269]
A survey conducted in September 2009 of 300 principals at the
Australian Primary Principals Association (APPA) conference found that 85 per
cent of principals highly strongly supported the P21 program.[270]
Participants were asked to rate the program from 1(lowest) to 5 (highest) and
to provide comments:
The data showed that 85% of respondents strongly supported
the program, giving it a rating on 4 or 5. Only 9% gave it a low rating, giving
it 1 or 2. Only 4% of respondents (13 out of 305) rated the program as a 1,
while 64% (almost two-thirds) rated it as a 5. This data clearly indicates that
the program has been successful in the vast majority of primary schools across
Australia.[271]
APPA emphasised that, of the small number of negative comments,
almost none of them were about the program itself but were about the
implementation of the program at the local and/or jurisdictional level.[272]
A more recent survey[273]
conducted by APPA of 2,438 principals found that 97 per cent said their
students would benefit from the program. Ms Leonie Trimper, President, APPA,
told the committee that:
...from our dealings with principals and our research there are
lots of good news stories for primary schools in this scenario.[274]
In fact, Ms Trimper told the committee that while at a function
with about 60 principals she was asked numerous times when she was going
to say something positive about BER. She had to explain that she had said a lot
of positive things but they were not being reported. She told the committee
that it is important to get more balance into the debate.[275]
The Minister for Education said that the APPA survey reflected
the 'overwhelming feedback the government has received from principals and
school communities around the nation'.[276]DEEWR
also told the committee of professional support for the program:
Putting the economic impact of the program to one side, it is
important to also note that there is strong professional support for the
program and its positive impact on school communities. Results from a survey
conducted by the Australian Primary Principals Association showed that 85 per
cent of primary school principals strongly support the Primary Schools for the
21st Century program and the BER, with one principal stating that the funding
from the program ‘has brought forward our plans, hopes and dreams for our
school by at least 20 years!’ The project profiles demonstrate that schools are
taking this unique opportunity to enhance their learning environments, to
install energy efficient features, to improve disability access for students
and the community and to address occupational health and safety standards.[277]
The NSW government reported that principals and communities
have publicly supported the program. For example Mr Ron Brown, Principal of
Maitland Public School, stated in a letter to the Sydney Morning Herald:
Soon my students will have a real library rather than two
empty classrooms. Two teachers will be able to develop their innovative class
structure with a soundproof moveable wall. The dance and gymnastics groups will
no longer have to practice on pebblecrete. The concert band will not have to
dismantle equipment after each rehearsal. The cost of hiring a hall for our
annual performance will disappear. The success of speech day will not depend on
the weather. In more than 30 years of teaching I am experiencing a most
exciting and rewarding time. My school and its community will be forever
grateful.[278]
Giant Steps, which caters for students with a diagnosis of
Autism Spectrum Disorder, emphasised their positive experience and outlined
particular areas:
The new spaces created and re-furbished have meant an
increase in the quality of the programs we can now deliver, it has also
minimised the risks to both staff and students given that spaces are now
designed to assist students with significant behavioural challenges We have
been able to pay attention to good design in a special school environment that
was previously unavailable to us due to the costs.[279]
The committee was also informed that the project undertaken for
the infants' areas is now short-listed for an architectural award as a project
of great value.[280]
Also speaking about his positive experience with the program was Mr Anthony
Tsoutsa, Principal All Saints Grammar.[281]
Government senators also note the examples of support for the program by a
number of schools on the Queensland government website.[282]
The Minister for Education, the Hon Julia Gillard MP, provided
the following example:
At Bellaire Primary School in Geelong, Victoria, $3 million
is funding a new learning facility that allows flexible, state of the art
teaching and learning strategies. The school has won a national award for this
new way of teaching and learning in the senior primary years. The new building
will allow it to expand to the middle years students. When I visited the school
the principal, Jane Warren, explained how BER is helping them to integrate
teaching, curriculum, new technology and social relationships to support
children’s achievement.[283]
Conclusion
Government senators note that the P21 element of the BER
program is a central part of the government's economic stimulus strategy. The
evidence shows that it has been successful in its primary aim of supporting the
economy and jobs in local communities through the global financial crisis. It
has supported employment not only in the building and construction sector but in
other employment sectors as well, including planners, quantity surveyors,
architects, electrical engineers, hydraulic consultants and clerical staff. It
is pleasing to note that not only jobs but skills and apprenticeships are being
created. This has left Australia much better off than other countries which are
now facing almost double digit unemployment figures.
Supporting the economy and jobs meant tight timeframes were
required. Evidence to the committee showed that this was well understood. School
communities worked hard to achieve the challenging but achievable timeframes.
Government senators note advice from Treasury that it was critical to get the
spending into the economy as quickly as possible. Regarding the amount,
Treasury emphasised that a similar amount would have to have been spent to
achieve a similar effect.
Due to the necessarily tight program implementation timeframes,
the government recognised that issues would arise and put in place mechanisms
to address them quickly. The success of this is evidenced by the relatively small
number of complaints relative to the number of projects, most of which have
either been resolved or are being resolved.[284]
Government senators note that evidence received by the
committee shows the P21 program has sufficient flexibility built in to
recognise the diversity of school and student needs and sites. The evidence
addresses false impressions that schools were forced to accept or duplicate
facilities.
BER is the biggest ever capital injection into our school
system, representing an approximate doubling of recent levels of capital
investment in educational infrastructure,[285]
and it is also the biggest school modernisation program ever seen. But the
Coalition voted against it and they are not committed to its continuation.
The new facilities in Australia's primary schools turn
around a decade of underinvestment. Importantly, the program was inclusive in
nature with funding being provided to government and non-government schools. In
addition to its primary aim of supporting the economy and jobs, the P21 program
is also about creating the infrastructure required to provide quality teaching
and learning which will contribute to boosting innovation capacity and
performance through a better educated workforce. And, just as important, these
new facilities will be accessible to the wider community as well as the current
school students and staff. This will help build social capital in local
communities and encourage school-community partnership.
Government senators note the importance of documenting support
for the P21 program in this dissenting report to redress the imbalances in the
committee majority report and place the facts on the record. The issues
reported in the media and by the Coalition are not across the whole program but
reflect some frustration around particular issues. Government senators note
that the government is concerned to receive assurance that projects are
achieving value for money and that any genuine issues are addressed. To this
end the government has established the BER Implementation Taskforce, headed by
Mr Brad Orgill, to respond to allegations and concerns regarding value for
money.
The personal accounts provided to the committee and quoted
in this report show that the P21 investment is transformational for schools. This
program will leave a legacy of improved school infrastructure and facilities
which will contribute to the quality of education provided in schools and lead
to improved educational outcomes.
Senator Gavin Marshall Senator
Catryna Bilyk
Deputy Chair
Navigation: Previous Page | Contents | Next Page