The interim report of the independent inquiry into the school building component of the government’s stimulus package has endorsed the massive program, declaring it “is delivering much-needed infrastructure to school communities while achieving the primary goal of economic activity across the nation”.

Orgill’s team said the program, “one of the largest national public works programs ever funded by the Commonwealth” had attracted complaints relating less than 2.7% of the 10,550 individual projects. Those complaints are now under investigation by the inquiry, even where school principals have indicated they are satisfied with the project

The bulk of complaints related to the NSW government’s administration of the program. The NSW government oversaw about one-quarter of all projects under the program but attracted more than half of the complaints. Unlike other authorities, as many as three-quarters of the complaints in NSW related to value-for-money — in comparison, only a third of complaints in Victoria related to value for money. The NSW Department of Education is the only agency singled out in the recommendations.

In addressing the issue of “value for money”, the inquiry tried to move away from anecdotal evidence (which has been a staple of media criticisms of the program) to establish an evidence-based definition.  When the Commonwealth issued guidelines for the program, for example, it referred to the need for value-for-money but didn’t define it. So the inquiry developed a definition based on the views of industry and school principals, and public expectations, centred on quality, time and cost.

The inquiry found that NSW government’s overall costs per square metre were much higher than anywhere else — $3900 per square metre. The next highest was in the NT at $3400.  The Victorian and Queensland governments spent $2800; the NSW Catholic system about the same, the Victorian and Queensland Catholic and independent systems lower still (the WA Catholic system was much higher than the WA government, but the report notes that half of all WA Catholic projects were in regional areas).

There was a strong correlation, the report finds, between using “business as usual” procurement methods and lower costs. The inquiry investigated anecdotal suggestions that NSW government had more stringent design and building standards, but could find only limited evidence to back it up. But jurisdictions that emphasised speed of implementation paid more. “In some jurisdictions it appears that education authorities placed a lower relative emphasis on cost and quality, in order to achieve a very rapid implementation program and associated economic stimulus. For example, evaluation of the NSW government’s BER implementation must be framed in the context of its emphasis on delivering rapid implementation.” The report acknowledges “NSW has delivered impressively against the required implementation timeframes” — 95% of NSW projects are already under construction, but only 60% of Victorian or Queensland government projects.

However, large project fees also contributed to costs. Both the NSW government and the NSW Catholic sector had high projects fees — 21% and 18% respectively, compared to 11% and 14% for the Victorian and Queensland governments, which were around the average for all projects. Governments, and the NSW government in particular, tended to bundle projects together, enabling faster roll-out, while Catholic and independent systems managed them on a one-off basis.

“The large volume of projects to be delivered, the use of multisite outsourced delivery management arrangements and the allocation and cost involved in transferring risk to the managing organisations appear to have all contributed to the level of fees paid for NSW government projects,” the report finds. “The higher management fees paid by the NSW government prima facie reflect a higher assumption of risk and liability by the managing contractors in NSW than managers in some of the other contract models.”

While the impact of the abysmal standards of administration in the NSW government can’t be ignored, it seems NSW paid more for projects because it rolled them out more quickly, delivering more stimulus more rapidly.

Other jurisdictions that stuck closer to “business as usual” models of procurement and project management had lower costs, but took longer to deliver projects and the associated stimulus. Speed is not necessarily the best means of delivering stimulus, though – as the report notes, the Queensland Government structured its initial delivery rounds with the aim of spreading stimulus as widely across the construction industry as possible, rather than try to get money out the door as quickly as possible.

But this is the nub of the issue: like the rest of the stimulus package, the schools program was intended to deliver jobs, and fast, in the face of economic meltdown. To that extent, the program delivered in spades. Based on its consultations with industry, the inquiry concluded “the BER provided the construction industry with a significant economic stimulus which prevented many construction organisations from reducing staff and/or the size of their operations to match an otherwise decreasing workload resulting from the GFC. Some indicated that without the work generated by the program they may have had to cease operation.”

Rather than being judged from the point of view of construction companies that might have been forced to shut down, the program is being judged with the luxury of success, in which we continue to enjoy strong employment, which was propped up by the government’s support for the retail and construction sectors.

But even judged against normal capital works standards, the schools program appears to have been remarkably successful, with less than 2.7% of projects generating complaints.

The schools stimulus program has been under sustained attack from the right-wing media and the ABC, who have continuously claimed the program is wasteful and a “debacle”. Like the ANAO report in May, this interim report discredits this campaign comprehensively and in detail. And like the ANAO report, this review will be misrepresented in those outlets.