Michaelia Cash (WA, Liberal Party) Share this | Link to this | Hansard source

I present an interim report of the inquiry of the Education, Employment and Workplace Relations Reference Committee into the Primary Schools for the 21st Century program, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

I seek leave to have my tabling statement incorporated in Hansard.

Leave granted.

The statement read as follows—

Inquiry into Primary Schools for the 21st Century Program

I present the interim report of the Education, Employment and Workplace Relations References Committee on its inquiry into the Primary Schools for the 21st Century Program.

The committee has written this interim report to the Senate in order to highlight its serious concerns about the P21 program before the final tranche of Building the Education Revolution funding is released. The report contains a number of recommendations that the committee believes require urgent consideration and action.

Since the Senate referred this inquiry to the committee, it has received considerable evidence from a range of interested parties. Some of the evidence received raises serious concerns regarding the discrepancy between the largely positive outcomes achieved under the P21 program in the independent and Catholic sector and the poor value for money obtained in the government school sector.

Since the inception of the P21 program, there have been complaints from some government schools about overcharging, waste and mismanagement. The committee majority is not satisfied with the information available to it regarding the true costs of buildings and works carried out under P21 program. This has raised concerns as to whether value for money is being achieved by the P21 program, particularly in government schools.

The committee majority believes that the evidence provided to it demonstrates that the rapid rollout of the P21 program, combined with construction delays, inflexible bureaucracy and inadequate monitoring arrangements, a failure to properly identify the needs of individual schools and ensuring that the buildings constructed are fit for purpose, has resulted in significant waste and mismanagement of taxpayers’ money.

The report contains a number of recommendations that the committee majority believes require urgent consideration and action by government before the final tranche of funding is committed under the P21 program.

The committee will continue its inquiry into the P21 program. It has important work ahead in determining the actual costs of P21 program works, in particular in government schools, and in further scrutinising the P21 program review mechanisms, particularly the reports of the BER Implementation Taskforce.

Given that the primary objective of the BER was to apply timely stimulation to the economy in response to the global financial crisis by focusing on nation building and supporting economic growth and jobs, the government was under an obligation to ensure that adequate mechanisms were established to enable the number of jobs created by the P21 program to be calculated accurately, so that the success or otherwise of the program could be properly assessed, according to one of its two key indicators, by the parliament and the taxpayers.

The Committee Majority notes that it is an indictment on the government and DEEWR that the evidence presented to the committee demonstrated that there is no effective mechanism to enable the accurate calculation of the key criteria of the P21 program as set out in the National Partnership Agreement on the National Building and Jobs Plan, being ‘support for economic growth and jobs’. 

With in excess of $14 billion of Australian taxpayers’ money being spent on the P21 program, the committee majority believes that Australian taxpayers are entitled to more accountability from the government.

The committee was also disturbed to note the evidence given to it by the DEEWR that many P21 projects remain behind schedule and that have not been completed in accordance with the project completion dates. On that basis the committee majority finds that it is implausible for the government to justify its claims that the stimulus spending was timely.

The committee in its majority report also set out its concerns regarding the implementation of the P21 program.

The committee heard evidence that the guidelines were poorly designed and contributed to a lack of clarity; a lack of flexibility in targeting areas of need; and unnecessary duplication of existing facilities.

The majority report focused on the marked differences in processes and outcomes for government and non-government schools, including different approaches to tendering for projects.  Key issues for schools in the government system are discussed, including a lack of communication with school communities about their projects and a lack of transparency regarding costings. 

Case studies as well as systemic analysis included in the report illustrate that value for money has not been achieved under the P21 program in the government sector, because of a number of factors including problems with the states’ tendering processes, overcharging and inflated fees paid to managing contractors.

Evidence presented to the committee demonstrates that Catholic and independent schools have been able to achieve superior outcomes compared with schools in the government systems. This would seem to be counter-intuitive, as given the scale and the centralised management of projects in the government sector, it would be reasonable to expect economies of scale. The evidence suggests that better outcomes have been achieved in the non-government schools as a result of direct funding and local management of projects.

The committee received evidence which indicated significant success in the implementation of the P21 program for non-government schools. 

The committee majority notes that the P21 program was run for non-government schools in the same way as the Howard government’s Investing in Our Schools Program, that is, by enabling and empowering schools to manage their own projects and expend their own funds.

Evidence provided to the committee illustrated that local management and direct funding of projects is the most effective way to deliver projects which take account of individual school and student needs.

The committee majority notes that the evidence from the non-government sector highlighted the successful outcomes that the absence of bureaucratic imposts and the ability to self manage projects had.

The committee majority therefore recommends that when the next round of P21 funding is made available the remaining P21 program funds be provided directly to those government schools choosing to manage their own projects to completion.

The committee notes extensive evidence presented to the committee as well as available in the public domain that inescapably points to a conclusion that the problems with achieving value for money are not restricted just to a number of specific cases but are instead systemic in nature, with the entire state school system in particular achieving outcomes substantially inferior in terms of value for money than the independent and Catholic school systems in the same states.

The government referred to several audit and review mechanisms in an attempt to assure the community that P21 projects obtain value for money. However, on the evidence provided the committee majority is concerned that the audit and review mechanisms have serious limitations

In terms of the mechanisms for review of the program, the committee majority whilst acknowledging that much work has been undertaken to develop the partnership model, notes that responsibilities and accountabilities under the partnership model need greater clarification. The lines of accountability to the Federal Parliament under the model are not sufficiently clear. This lack of clarity has significant implications for the P21 program, and for other Commonwealth program: for example, the government’s new healthcare funding approach.

The committee majority recommends strengthening accountability mechanisms for oversight of state expenditure of Commonwealth money. This should include enhancing the powers of the Auditor-General to ‘follow the money trail’ to ensure value for money is achieved by the Commonwealth for state expenditure of Commonwealth monies.

The committee majority also concluded that the partnership model provides a means for avoiding appropriate scrutiny and accountability at the Commonwealth and state levels. The P21 program example has shown that the model fails to include appropriate oversight and assurance mechanisms at all levels, as evidenced by DEEWR’s inability to assure the parliament of value of money; the lack of an ANAO mandate to follow the money trail; lack of appropriate assurance that robust state-based review mechanisms are in place; and the committee’s inability to access the information it requires to properly evaluate spending under the program.

The committee also heard evidence of a lack of transparency with costings, including difficulty for schools in accessing costings and the questionable nature of the accuracy of these costings. Evidence was also received that access to costings for government school projects was significantly more difficult than for the non-government sector.

In the absence of detailed costings for individual projects, witnesses with knowledge of and experience in the construction industry pointed the committee to Rawlinsons Australian Construction Handbook.  This was referred to as ‘the bible in Australia of construction costs’ and is ‘accepted in the courts of the land as being the authoritative text’.

The committee heard that Rawlinsons was used in the non-government sector to estimate costs. Rawlinsons sets out that a school building should cost approximately $1300 per square metre. However evidence given to the committee indicates that P21 buildings for government schools are apparently costing as much as $4500 per square metre and more.

To ensure that further taxpayer money is not subject to waste and mismanagement, the committee majority recommends that the release of any further BER funding be delayed until the BER Implementation Taskforce reports to the Minister in August 2010.

In order to fully examine the systemic failure of Commonwealth oversight mechanisms, the committee majority recommends that a judicial inquiry be established to inquire into whether the BER program has achieved value for money.

Importantly, by August 2010, the Commonwealth will have paid $11.8 billion to the education authorities. The committee notes that the Commonwealth is due to release the next tranche of BER funding on 1 July 2010. It would be unconscionable for the Commonwealth to release this money before the BER Implementation Taskforce reports its initial findings and recommendations to the Minister in August 2010 on the improvements needed to ensure value for money is being achieved by the P21 program.

The litany of complaints concerning waste and mismanagement and lack of access to costings confirms to the committee majority that further investigation of the P21 program and its consequent outcomes is required.

In due course, the committee’s inquiry website will list further details about the information that the committee seeks, a new closing date for submissions and hearing dates.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I understand there are some time pressures today. I rise as the Deputy Chair of the Education, Employment and Workplace Relations References Committee to speak about its inquiry into the Primary Schools for the 21st Century program.

The government senators on this committee have provided a dissenting report to address the imbalances in the committee majority report and present the evidence showing the support for the P21 program. As noted in the dissenting report, 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 program, known as P21. Coalition senators in their interim report have focused on a relatively small number of examples, which have received disproportionate attention, 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. In addition, the head of the Building the Education Revolution Implementation Taskforce recently told a New South Wales parliamentary inquiry about the success of the program. You will see none of that evidence in the committee majority report.

Let’s start from the beginning with the facts. Building the Education Revolution, or BER, is the largest component of the government’s $42 billion Nation Building and Jobs Plan, announced on 3 February 2009. BER represents an investment of more than one per cent of GDP and is the biggest school capital infrastructure program in Australia’s history. The objectives of the program were agreed by ministers and are expressed in the 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.

The evidence shows that the program has been successful in its primary aim of supporting the economy and jobs in local communities through the global financial crisis. As a stimulus measure there is no denying the program’s success. It had a real effect on local communities and employment well before any construction commenced. BER has materially supported the non-residential construction sector, and this was acknowledged by the Australian National Audit Office in their audit of the program. Companies in the construction sector, for example, could anticipate work and were therefore able to retain staff.

The committee was advised that jobs are being measured by Treasury at the level of the entire economic stimulus plan. DEEWR added that the collection of job data at the project level serves a different purpose and is useful for the schools and local communities to be able to quantify the effect of each project. It is worth noting that P21 has supported employment not only in the building and construction sector but in other employment sectors as well. Planners, quantity surveyors, architects, electrical engineers, hydraulic consultants and clerical staff are among the occupations supported. It is pleasing to note that not only jobs but skills and apprenticeships are being created. Again, you will see none of that in the committee majority’s report.

Government senators note that the number of complaints received about implementation of P21 projects amount to less than one per cent. Ninety-eight per cent of projects have now commenced and 68 per cent have commenced construction. Eight hundred and ninety-four projects have been completed and over 9,000 are underway. These projects are transforming schools. This is what you will not hear about in the committee majority’s report. Coalition senators have ignored the principals, teachers and parents who are delighted with their P21 projects.

Let’s hear the evidence of this support. The committee heard that the program has brought forward capital works for some schools by 20 to 30 years. The Australian Primary Principals Association conducted a survey which found that the overwhelming majority of schools, 97 per cent, reported that their students would benefit from the program. The Australian National Audit Office conducted its own 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’. The committee received positive submissions from schools and evidence showing support for the program.

Evidence provided to the committee showed that the P21 program has sufficient flexibility built in to recognise the diversity of school and student needs and sites. Guidelines were developed by the Department of Education, Employment and Workplace Relations to assist states, territories, block grant authorities and schools to submit project proposals. Given the scale of the program, it was anticipated that the guidelines would need to be amended as issues arose. 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. Government senators note that the ANAO made no recommendations to DEEWR regarding its administration of the program.

The dissenting report notes the differences between the government and non-government systems. Independent and Catholic 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.

The dissenting report also notes 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 do not exist. Central management was therefore seen by some states to offer the best solution to achieving the challenging time frames for P21 projects, and the overwhelming evidence is that it has.

Turning to questions of value for money, the dissenting report emphasises that 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. Effectively, the decision was taken that, as government schools operate in a system, the total money available was pooled across the system and common contractual arrangements were entered into for buildings of a certain size. It is important to remember that there will be variations in construction costs depending on location and specific site requirements. 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.

Importantly, and of course you will see no acknowledgement of this in the committee majority report, the committee received no evidence of any criminal or illegal behaviour. The committee heard that the National Partnership Agreement on the Nation Building and Jobs Plan makes explicit reference to adopting the best value approach in contracting and tendering. 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 which encompass the concept of value for money. DEEWR also told the committee that if there are any problems money can be withheld, suspended and repaid.

However, the government is nonetheless concerned to receive assurances 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. Mr Orgill is due to report during August 2010 and again in November 2010. It has not been acknowledged in the committee majority’s report that there will be time to respond to any recommendations made by Mr Orgill. The next $2 billion payment will be made on 1 July 2010 and then further payments totalling $3.5 billion will not be released until November 2010 and then March 2011. The money will not be fully expended on 1 July but will be held by education authorities. If there are any problems, money can be recovered and payments can be suspended. Government senators note the significant disruption and confusion that would be caused by delaying all BER funding, as is being recommended by the coalition. Appropriate investigation of schools with value for money concerns is underway by the BER Implementation Taskforce and any recommendations in this area will be carefully considered.

In summary, mechanisms are in place to ensure that genuine issues are addressed. The imbalance in the committee majority’s report needs to be addressed with the facts. The government took action to protect the economy and jobs during the global financial crisis. In addition to that, the personal accounts provided to the committee and quoted in the dissenting 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.

Brett Mason (Queensland, Liberal Party, Shadow Parliamentary Secretary for Education and School Curriculum Standards) Share this | Link to this | Hansard source

Mr Acting Deputy President Trood, let me ask you a question. Who has been responsible for the greatest administrative failure, the greatest waste of money and the greatest administrative shambles since Federation? Let me give you a little clue. I might just tease the Senate for a second. It is a $16 billion question.

Michael Ronaldson (Victoria, Liberal Party, Shadow Special Minister of State and Scrutiny of Government Waste) Share this | Link to this | Hansard source

The Prime Minister.

Brett Mason (Queensland, Liberal Party, Shadow Parliamentary Secretary for Education and School Curriculum Standards) Share this | Link to this | Hansard source

It is a $16 billion question, and you guessed it, Senator Ronaldson: it is the Prime Minister—brought to the Australian people by the union movement; part of that gang of four who ran the country who are responsible for our lows. Those with a historical bent like you, Acting Deputy President, realise that Ms Gillard is more the madam now of the gang of four. Mr Garrett presides over the pink batt fiasco and wastes about $2 billion and now he spends most of his time shepherding koalas across the road. Ms Gillard presides over the shambles of the school hall program, and what happens to her? She becomes Prime Minister. Mr Garrett would no doubt feel upset that he did not waste a bit more money—because then the union movement might have thought that he qualified to become Prime Minister as well.

The Senate committee’s report details some themes out of about 10,000 school projects, and some very important themes have emerged. It has emerged that Catholic and independent schools who managed their own school building projects are nearly universally happy with the outcomes. If school principals, P&Cs and local communities controlled the building projects, they were happy with the outcome. But, on the other hand, state schools—attended by about 70 per cent of students in Australia—are largely unhappy. These are the building projects administered by state Labor governments, and nearly 60 per cent—three in five—state primary school principals were not satisfied that there was value for money in their school projects. Nearly 60 per cent of school principals were not satisfied.

And why would they be satisfied? The building costs were typically double for government schools and often much, much more. Rawlinson, who produce the most respected benchmarks for the construction industry, described the cost of state school buildings as ‘insane’ and ‘anomalous’. Billions of dollars spent by Ms Gillard and those costs were ‘insane’ and ‘anomalous’. The current Prime Minister presided over a scheme where the expenditure was—as described by Rawlinson—’insane’ and ‘anomalous’. Imagine this: state Labor governments ripping off state schools. Can you imagine it? A party supposedly indebted and committed to state schools and state Labor governments rip off state schools. And what was Ms Gillard doing while this was happening? She was sleepwalking; she did nothing. Supposedly, the Labor Party are friends of public education—and they did nothing.

What is even worse than that is that Ms Gillard and her department are spending $16 billion and yet, as the Auditor-General found in evidence, they have failed to put in place sufficient oversight mechanisms to properly ensure that state governments got value for money for school projects. That is the crux of the problem. They failed to put in place proper oversight and accountability mechanisms to ensure there was value for money. The Auditor-General was absolutely unequivocal. It was Ms Gillard’s responsibility and the Auditor-General said she did not do enough. She failed to administer the program efficiently and properly—that is what the Auditor-General found. Now, the union movement—her union bosses—have made Ms Gillard the Prime Minister. So, now, instead of a $16 billion fund that she is in charge of, she is in charge of a $1 trillion economy. Is that not wonderful? What are the prospects for the country now? Hold your breath and hold on to your purse.

This is the nub of it: in the entire time that this project has been going—more than 12 months now—over 10,000 projects have been approved and not on one occasion out of more than 10,000 did the department refuse to approve a project on the basis of value for money. That is absolutely appalling. Not once in 12 months in over 10,000 projects did the department—Ms Gillard’s department, she is responsible—refuse to accept a project on the basis of value for money. The department apparently could not say no; they were not up to it.

What did Ms Gillard do during this appalling waste? We know now that she was sharpening her knife to take out the embarrassing Mr Rudd—not that I blame her for that; however, let us not mix pleasure with business. But Ms Gillard was the minister responsible for a program that had been unequivocably criticised by the Auditor-General. It is now commonly viewed as the greatest fiasco in administration since Federation. It has cost something of the order of $5 billion more than it should have. Why? Because Ms Gillard did not put in place oversight mechanisms to make sure that state Labor governments spent the appropriate amount and got good value for money for their schools. That was an appalling oversight.

In addition to that, we know about Ms Gillard’s failure with laptop computers and trade training centres. Strangely, the press has never focused on this appalling administrative failure—the greatest waste of money since Federation presided over by our new Prime Minister. All I can say is that I fear for our country and I hope that Ms Gillard performs better as Prime Minister than she ever did as the Minister for Education.

Question agreed to.