Inquiry recommends new entity to manage school property

Key points:

An inquiry into school property has recommended a new entity is created to take control and ownership of the assets from the Ministry of Education, but the Government says it will make that call next year.

The Ministerial Inquiry into School Property was released today, delivering six recommendations for the Government, which also included clarifying responsibility for the funding, planning and delivery of school property and reviewing and simplifying the current funding model.

The inquiry was headed by former Minister of Foreign Affairs Murray McCully and was announced on February 26 by Education Minister Erica Stanford.

The report described the current model as a “lose-lose-lose” scenario for schools, the Ministry of Education and taxpayers.

There was “widespread consensus” between the schools and Ministry of Education staff that the status quo didn’t work and change was required. The inquiry found the problem was significant and the need for solutions was urgent.

Schools reported Ministry requirements for school property planning were “cumbersome and bureaucratic”, the report said.

They also criticised the Ministry’s use of architects and designers, and extensive consultation with stakeholders “often without adequate regard for budget constraints”.

“The Ministry’s use of architects who had failed in earlier school projects received regular comment.”

The report said there was also strong consensus that school buildings funded by taxpayers should be “simple, functional, cost efficient, and based on repeatable or standardised designs” but the inquiry had also heard a “very clear message” that the Ministry’s current one-size-fits-all approach failed to “recognise the diverse needs of different schools across New Zealand”.

There was also concern that prices charged by consultants, project managers and contractors for Ministry-led projects were “excessive”.

“It was not clear to us whether this tendency is a market response to the inefficiency of Ministry processes or genuine over-pricing aimed at a captured client.”

There was also criticism of the Ministry’s procurement of offsite-manufactured buildings (OMBs).

“We were told that schools hoping to benefit from simple, repeatable, OMB solutions were disappointed to find costs exceeding $1.2 million per teaching space.”

Schools advised inquiry they knew of other options which could be cheaper.

They also criticised a “lack of transparency”, the report said, around the prioritisation of projects and funding, saying some schools appeared to be able to “jump the queue” and that some times the most effective way to secure funding was to go to the media or lobby local politicians.

“Many schools told us about significant delays in delivery, with predictable impacts on costs. We heard examples of minor projects which might require two months of construction work, but with approval processes taking two years.

“Several principals told us that their attempts to secure property modifications for students with high needs resulted in solutions that were delivered by the Ministry well after the relevant students had left their schools.”

Government responds

Education Minister Erica Stanford said it was critically important the school property portfolio — worth $30 billion — was managed properly.

She said the report confirmed the National-led coalition government “inherited a struggling system with a pipeline of unfunded school upgrades that were over scoped and couldn’t be delivered”.

“The gap between what schools were led to expect of delivery compared with the reality of funding available, has resulted in a huge loss of confidence in the current system and uncertainty for school communities.”

She said Cabinet had accepted the findings of the report and would take a three-phase approach to its response to its recommendations.

Phase 1 included instructing the Ministry of Education to focus on offsite manufacturing solutions and improve communication with schools.

In the first quarter of this year, over 60% of new classrooms were initiated as offsite manufacturing, up from under 20% in the fourth quarter of 2023, she said.

A “value for money review” had also been completed to ensure a more fiscally responsible approach.

The second phase was “interim improvements” including “consolidating property and network planning functions within the Ministry of Education as much as practicable, [and] appointing a Functional Chief Executive with expertise in delivering infrastructure to have responsibility for all operational aspects of school property”.

It would be a two-year appointment.

“A new independent investment panel will also be established to provide the chief executive with expert advice on ongoing property decisions and future improvements. Appointments are expected to be completed by the end of the year.”

Phase three would be deciding on the new permanent model or entity for “operational school property”. That was expected next year.

Infrastructure Minister Chris Bishop said it was “absolutely essential” the Government clarify roles and responsibilities for school property management and provided greater transparency on decision-making.

“We want to reassure school communities that works and improvements currently underway at schools across the country will continue as planned while the Government develops a more efficient and sustainable solution for how we deliver school property going forward,” Bishop said.

Schools still have uncertainty – Labour

Labour’s education spokesperson Jan Tinetti said there needs to be “momentum” on school renewals and maintenance, but the Government’s announcement left schools waiting on more than 100 projects with no indication on whether they would go ahead.

Tinetti said Labour upgraded 98% of schools and delivered more than 2200 new classrooms.

“Everyone will remember children learning in damp, mouldy classrooms and schools with no space under the last National government, who were comfortable with kids being taught in gyms and hallways. We don’t want to go back to that.

“Labour was already growing the use off-site manufacturing for classrooms and other government build programmes, driving the uptake of offsite manufacturing by government agencies by a minimum of 10% year on year.”

Tinetti said leaving funding for future budgets wasn’t “good enough” and schools deserved certainty.

The report’s recommendations were: