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Thursday, 24 June 2010
Page: 4377

Senator CASH (4:07 PM) —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.

Senator CASH —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.