More falsehoods of the $8bn BER ‘waste’ claims

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Wednesday, 21 March 2012 18:54 by JohnL
The first part of this post concluded by indicating the follow-up would reveal more of the fables around the Federal Opposition claim of $8 billion ‘waste’ in the Building the Education Revolution (BER) program.

The definition I am using for ‘fable’ is numbered 8 in the 1993 edition of The Shorter Oxford Dictionary at page 910, namely: “Something falsely claimed to exist, or having no existence outside popular legend”.

There could not be a better description of the Opposition’s $8 billion ‘waste’ claim on ‘school halls’.

But first, here’s something I found while doing research for this post.

BER waste tops $1.5 billion


The third and final report into the BER, conducted by former investment banker Brad Orgill… buildings of poor quality. Mr Orgill heavily criticised the Victorian governments handing of the scheme… 
8 Jul 2011 The Australian.

BER waste blows out to $1.1bn


The report, headed by former investment banker Brad Orgill, called for a Productivity Commission review… under the scheme. Mr Orgill found some governments had lost the expertise to properly manage building… 
9 Jul 2011 The Australian.

Wow, look at the dates and you’ll see The Australian saving $400 million in a single day!

False attribution:
The Australian has published many false claims about the BER. For example, the article with the headline ‘BER waste blows out to $1.1bn’ was based on the following false attribution in the second paragraph: “The third and final report into the BER, handed down yesterday found that $1.1 billion was wasted in delivering public school buildings to NSW and Victoria, when compared with their Catholic counterparts.”

The final BER Taskforce report contains no such finding. A computer search for the word “waste” in the 259-page BER Implementation Taskforce final report found one example – on page 250 in Appendix 14: Environmentally sustainable design case studies. The reference related to the fact that 80 per cent of construction waste during the work at Gold Creek Primary (ACT Government) was recycled and that topsoil removed during the construction phase was replaced prior to the completion of works.

The Australian goes on to repeat the $1.1 billion claim five paragraphs later when it says: “When comparing public school buildings delivered to NSW and Victorian schools with Catholic counterparts, $1.1bn was wasted in those states under the program. When comparing the cost of public school buildings in those states with independent schools, that figure blows out to $1.9bn. However, it is fairest to compare Catholic schools with public schools as both have centralised control structures.” An irony in this false reporting by The Australian is that applying its headline $1.1 billion claim to the whole P21 program exposes the Federal Opposition claims of $8 billion “waste” as “something falsely claimed to exist, or having no existence outside popular legend”.

The NSW and Victorian governments were responsible for 37 per cent of the expenditure of the entire P21 program. If their total ‘waste’ had blown out to $1.1 billion that would make the Australia-wide ‘waste’ $2.973 billion. The other 63 per cent of the P21 program would account for $1.87 billion of this.

So, on the basis of the report in The Australian, the “waste” is more than $5 billion below what the Federal Opposition claims. Even that estimation of the ‘waste’ is a gross exaggeration.

Double standard:
However, there is another interesting issue that arises from the approach by The Australian in calculating ‘waste’ that smacks of a double standard.

There is no doubt that the Taskforce figures show the regionally adjusted total project costs for halls/libraries/classroom per square metre/gross floor area (GFA) are higher for Government primary schools in NSW (the report claims 27 per cent) and Victoria (the report claims 28 per cent) than they are for Catholic primary schools in these two states.

From this, The Australian draws a conclusion that there is $1.1 billion ‘waste’ for NSW and Victorian Government primary schools when compared with Catholic primary schools in these two States.

There is also no doubt that these same Taskforce figures are higher for Catholic primary schools than Independent primary schools. In NSW (on the same basis The Australian uses to calculate percentages this equals 26 per cent) and in Victoria (22 per cent) than they are for Independent primary schools in these two States.

If The Australian uses these figures to claim ‘waste’ by Government schools against Catholic school costs, why does it ignore the apparent ‘waste’ by Catholic schools when measured against Independent schools?

Average size a factor:
The Australian also ignores a major factor affecting the cost of NSW Government primary schools.

The Taskforce report shows that the average square metre/GFA for halls + libraries + classrooms for NSW Government primary schools at 393 is 321 lower than NSW Catholic primary schools and 515 lower than NSW Independent primary schools. It is also only 68.5 per cent of the average project size for all schools involved in P21 projects of 574 sq metres.

On page 48 of its final report, the BER says: “A further variable driving building costs is average size of buildings. Given the smaller size of NSW Government buildings, the building cost per square metre in isolation, is notable relative to other authorities.”

The report goes on to note that projects with small floor areas may attract a higher cost per square metre than larger projects. It notes that the average project sizes vary from the NSW low of 393 sq. metres to the WA Independent average of 1599 sq metres.

Shooting from the lips:
Federal Opposition education spokesman, Christopher Pyne, showed his penchant for shooting from the lips with his comments immediately after the BER Implementation Taskforce was announced early in 2010.

The Brisbane Times of April 14, 2010 reported Pyne as saying the taskforce was a '’political fix'’ designed to neutralise negative publicity before the election. He said a judicial inquiry was needed, with powers to subpoena documents and compel witnesses to appear.

The Taskforce’s interim report, delivered on August 6, 2010 (15 days before the August 21, 2010 election), gave the lie to these comments.

In its executive summary of this report the Taskforce said: “In response to the issues identified in NSW, the Taskforce recommended to the Australian Government in June that $75 million of funding be withheld from the NSW Government. The Taskforce has been working actively and collaboratively with the NSW Department of Education and Training in respect of the value for money issues identified and in exploring solutions to complaints and we are encouraged by the early progress on a number of issues.”

By the time it had finished its work, the Taskforce had conducted 137 case studies of value for money (VFM) at schools by using quantity surveyors to provide separate costings (130 of these case studies were for Government schools). It also made more than 460 visits to schools to inspect and report on work and to interview principals and staff.

That seems far more practical than just sitting in a courtroom and hearing witnesses.

Deliberate deceit or ignorance:
The Federal Opposition’s most misleading approach of all is using the BER’s total budget of $16.17 billion to arrive at the $8 billion ‘waste’ claim.

As shown in the previous article, Pyne arrived at the $8 billion figure by managing to calculate that $8 billion is 50 per cent of the $16 billion total BER budget.

I do not know if it is deliberate deceit or ignorance (or perhaps both) that the Opposition did not take into account that the $16.17 billion BER program has the following three components:

- The $14.060 billion P21 project, of which $13.852 billion was funding for projects and $207.787 million allocated to 22 education authorities for administration. These 22 education authorities comprise the 8 State or Territory education departments, 6 Catholic and 6 Independent Block Grant Authorities (BGAs) and 2 combined Catholic/Independent BGAs. This program funded around 10,500 projects for some 7900 primary schools.

- The $1.288 billion National Schools Pride (NSP) project to fund minor capital and maintenance projects for around 10,000 primary and secondary schools in Australia, with amounts per school varying between $50,000 to $200,000 (depending on size) per school. The actual project funding was $1.269 billion with administration funding $19.049 million.

- The $821.8 million Science and Language Centres for 21st Century Schools (SLC) to fund 500 science laboratories or language learning centres across Australia. About $809 million was available for project funds and some $12 million for administration funding.

Why NSP and SLC should be excluded:
The combined $2.11 billion cost of the NSP and SLC programs should be eliminated from the $16.17 billion used in the 50 per cent claim for the following reasons:

- The Federal Opposition did not consider them significant enough to include when it sponsored a referral of the P21 element of the BER program to the Senate Education, Employment and Workplace Relations Committee for inquiry and report.

- The July 2011 final report of the BER Taskforce shows that of the total 332 complaints received 7 (2.1 per cent) related to the NSP and 13 (3.9 per cent) were about the SLC. However, only 4 (1.2 per cent) were designated as value for money (VFM) complaints – 2 each in the NSP and SLC.

- The 7 NSP complaints represent 0.07 per cent of the 10,000 primary and secondary schools involved in this project. The two VFM complaints represent 0.02 per cent. This does not indicate any outcry about “waste” of funds in this component of the BER.

- The 13 SLC complaints represent about 2.6 per cent of the 500 projects involved. Most of them involved eligibility to participate and ranking issues.

- The October 2009 Department of Education, Employment and Workplace Relations (DEEWR) submission to the Senate P21 inquiry notes on page 8 that the SLC budget was decreased in August 2009 to $821.8 million (that’s a cut of $178.2 million) “due to target of 500 science and language centres being exceeded at lower than forecast cost.” (emphasis added).

Like must be compared to like:
If the Opposition is claiming 50 per cent ‘waste’ on the spending on Government primary schools, it is illogical to add the total spending on Catholic and Independent schools or the spending on the NSP and SLC to calculate that 50 per cent ‘waste’ by Government schools equals $8 billion.

Put simply, if 50 per cent ‘waste’ is claimed on Government school spending, the ‘waste’ in dollar terms can be related only to the total spending on Government schools.

The total funding allocated to Government primary schools under P21 was $9.508 billion. If 50 per cent of this was “wasted”, then the ‘waste’ in dollar terms is $4.754 billion.

So, on Pyne’s figure of $8 billion ‘waste’, there needs to be another $3.246 billion of ”waste” found in the P21 program.

The only other expenditure items in the P21 are the $4.344 billion on Catholic and Independent primary schools.

The $3.246 billion shortfall represents 74.7per cent of that total.

That’s where Pyne’s claim leads – to the utterly ridiculous notion that nearly three-quarters of spending on Catholic and Independent primary schools was ‘wasted’ while at the same time using the efficiency of these two systems as a way of slamming Government school ‘waste’.

What is equally obvious is that Pyne’s deliberate distortions and falsehoods and Abbott’s enthusiastic adoption of them was assisted greatly by the unprincipled campaign against the BER by The Australian. Instead of examining the claims of Pyne and Abbott objectively and putting them into context, The Australian enthusiastically promoted all unfavourable comments.

The Australian, shock jocks, and most of the other media did not bother to examine the lack of credentials of self-servers such as Craig Mayne. He was regularly described as a whistleblower and expert on building. Yet as early as May 19, 2010, Mayne’s evidence to a Senate inquiry revealed that he was not a civil engineer, and had not worked in the construction industry for nearly 25 years. Try finding any reports about this in any of the mainstream media, let alone corrections of Mayne's wrongly stated qualifications.

It is obvious that The Australian in particular, and much of the other media, were not going to let facts get in the way of their dishonest and false reporting.