Chapter 2 - Maintenance of state spending efforts
Background
2.1
The National Partnership Agreement on the Nation Building and Jobs Plan,
under which the Primary Schools for the 21st Century (P21) program funding is
available, provides that the stimulus money is to be additional to
planned state and territory capital expenditure on primary schools and that
maintenance of state and territory spending efforts will be monitored through
reporting to Heads of Treasuries and the Ministerial Council for Federal
Financial Relations.[1]
2.2
On 30 November 2009, the committee received evidence from the Department
of Education, Employment and Workplace Relations (DEEWR) that the states and
territory spending effort is being monitored by the Treasury on a quarterly
basis, through the provision of quarterly reports from each of the states and
territories.[2]
Since that time, the committee has been seeking access to these quarterly
reports in order to assure itself that the states and territories are
maintaining capital expenditure on primary school infrastructure as agreed.
2.3
Following a 12 May 2010 order of the Senate that the quarterly reports
be laid on the table, the Minister representing the Treasurer responded on 13
May 2010 with a statement that to provide the reports, either in public or in
camera, could reasonably be expected to cause damage to relations with the
states and territories and would therefore not be in the public interest.[3]
As previously explained in the committee's Interim Report[4],
the committee is not persuaded by the reasons given for not producing the
reports because:
- if all states and territories have complied with
the requirement to maintain their spending efforts, it is difficult to see how
any damage could be caused by providing confirmation of this fact; and
- if any state or territory has not complied with
the requirement to maintain its funding effort, it is an explicit feature of
the National Partnership Agreement that such a failure to comply may be made
public.
2.4
The committee noted in its Interim Report that, in the absence of access
to the quarterly reports and the information contained in them, it was unable
to satisfy itself that the states and territories have met their obligations to
maintain planned school infrastructure spending efforts. This continues to be
the case, despite ongoing attempts by the committee to access the relevant
information.
2.5
The committee also noted in its Interim Report the broader implications
of its inability to properly scrutinise the spending of Commonwealth money
under the federal financial relations framework. The committee is concerned
that a similar lack of transparency is likely to apply to other
Commonwealth-funded programs governed by partnership agreements.
Direct appeal to the Ministerial Council
2.6
Correspondence from the Minister for Tertiary Education, Skills, Jobs
and Workplace Relations, Senator the Hon. Chris Evans, clarified for the
committee the central role played by the Ministerial Council for Federal
Financial Relations (the Ministerial Council) in assessing whether states
and territories are meeting their capital expenditure obligations. The Minister
explained the process in the following terms:
...the National Partnership Agreement required the Heads of
Treasuries (HoTs) to establish benchmarks for sectors that are receiving
additional funding and for these benchmarks to be agreed by the Ministerial
Council for Federal Financial Relations. These benchmarks have been
established.
The National Partnership Agreement also requires the States to
report every three months to HoTs on activity undertaken in the previous three
months against the benchmarks and for HoTs to provide these reports to the
Ministerial Council. The Ministerial Council is then to make an assessment
against the benchmarks, having regard to any explanation from states on why
they may not have been achieved. The States are reporting this information to
HoTs and HoTs have reported to the Ministerial Council.[5]
2.7
Given the government's stance in response to the Senate order for the production
of the quarterly reports, in December 2010 the committee resolved to write
directly to the Ministerial Council, seeking:
- confirmation that the Ministerial Council's role is as described
above;
- provision of detailed information on the benchmarks relating to
primary school infrastructure spending to which the Ministerial Council has
agreed;
- confirmation that the Ministerial Council has received all
quarterly reports due from all states and territories in a timely fashion and
that the reports have contained the required information;
- confirmation of whether the Ministerial Council is satisfied,
after reviewing the quarterly reports, that all relevant benchmarks are being
met; and
- provision of copies of the quarterly reports used by the
Ministerial Council to make assessments against these benchmarks, or, in the
event that any individual state or territory objects to the provision of these
reports, a statement of why the reports from that state or territory cannot be
made available to the committee.
2.8
At the time of writing this Report, the committee has not received any
response from the Ministerial Council.
Other potential sources of information
2.9
The committee has also made efforts to obtain information on state and
territory capital expenditure on primary schools from sources other than the
quarterly reports described above.
National Report on Schooling in
Australia
2.10
The committee is aware that the National Report on Schooling in
Australia has in the past included information on capital expenditure in
Australian schools at both the federal and the state and territory government
levels. The most recent report available, the report for 2008, includes capital
expenditure data for the year 2007-08.[6]
2.11
With a view to making comparisons between capital expenditure in 2007-08
(prior to the stimulus measures) and 2008-09 (with the stimulus in place) and
identifying any relevant trends, the committee sought information on
publication plans for the 2009 National Report on Schooling in Australia.
Although the report was previously produced by the Ministerial Council on
Education, Employment, Training and Youth Affairs, from 2009 it is the
responsibility of the Australian Curriculum, Assessment and Reporting Authority
(ACARA) to compile and publish this report. The committee therefore wrote to
ACARA seeking information on the timing, format and content of the forthcoming
2009 report.
2.12
ACARA has indicated to the committee that the 2009 report may not be
available until mid-2011 and that negotiations are currently underway with
representatives from all jurisdictions to gain agreement on the format of the
report. Although there is an expectation that the report will be published in
broadly the same format and contain broadly the same information as in previous
years, this cannot be confirmed at this time.[7]
2.13
This means that it is not possible for the committee to use the 2009
report as a data source within the timeframe of its P21 inquiry.
State and territory budget papers
2.14
The committee also considered whether state and territory budget papers
would contain useful information for its purpose. However, inconsistencies in
reporting formats and timeframes mean that it is not possible to make valid
comparisons between the states and territories.
2.15
For example, it is difficult to report on capital expenditure because of
the nature of capital budgets. Grants for projects may be allocated in one
financial year and then expended over a number of years as the project develops
and is completed.[8]
Further, the information in state and territory budget papers is not
comparable.[9]
Most state budget papers do not disaggregate or provide expenditure data by
funding source or by level of education. Some state and territory annual
reports do break down expenditure by school, but not all.[10]
2.16
For these reasons state and territory budget papers cannot be used to
specifically identify state capital expenditure on primary schools. The
committee concludes that the state budget papers are not useful to it as a source
of confirmation that states and territories have met their spending
obligations.
Committee view
2.17
For more than a year the committee has been seeking to confirm that a
basic condition of receipt of P21 program funding has been met. It is of
significant concern to the committee that, contrary to an order of the Senate,
the government has not provided the committee with the necessary information.
As a result the committee has not been able to assure itself that the states
and territories have maintained the level of capital expenditure on school
infrastructure. Without this information, the committee is unable to allay
anecdotal concerns about P21 funding being used inappropriately for projects
that should have been state and territory government responsibilities.
2.18
The committee remains unpersuaded by the government's argument that to
release the requested data might in some way damage relations between the
Commonwealth and the states. The committee considers that, if the states and
territories accept public money from the Commonwealth for a particular purpose,
they should have an obligation to confirm publicly that the money has been
spent for that purpose and no other. The committee therefore has no option but
to reiterate a key recommendation from its Interim Report, namely that the
quarterly reports be made publicly available immediately.
Recommendation 1
2.19
The committee recommends that all quarterly reports on state and
territory spending on primary school infrastructure be released for public
scrutiny immediately.
2.20
The committee's frustrating
experience in relation to the P21 expenditure has clearly demonstrated that the
current system of accountability through the Ministerial Council does not allow
sufficient transparency for the Parliament or the Australian people to be
confident that expenditure is in line with the underlying agreement. The
committee's view is that public reporting should be a mandatory requirement
under all future funding granted under National Partnership Agreements.
Recommendation 2
2.21
The committee recommends that all future National Partnership Agreements
explicitly require states and territories to report publicly on the expenditure
of funding received and to demonstrate in those public reports that funds have
been used in accordance with the agreement under which they have been received.
2.22
The committee is firmly of the
view that its inability to access sufficient information to properly scrutinise
the P21 program is indicative of broader accountability gaps associated with
the granting of Commonwealth funding under partnership agreements. With this in
mind, the committee also reiterates a recommendation from its Interim Report
that the Auditor-General be given enhanced powers to scrutinise state and
territory expenditure of Commonwealth monies.
Recommendation 3
2.23
The committee recommends strengthening accountability mechanisms
for oversight of state expenditure of Commonwealth funding. 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.
2.24
The committee's frustrations have been exacerbated by the changed
arrangements for the National Report on Schooling in Australia, with the
delay in the availability of 2008-09 capital expenditure data preventing the
committee from drawing its own conclusions about state and territory commitment
in this area. The committee encourages ACARA to complete and publish this
report as soon as possible and to put in place measures which ensure more
timely completion in future years.
Recommendation 4
2.25
The committee recommends that the Australian Curriculum, Assessment and
Reporting Authority complete and publish the 2009 National Report on
Schooling in Australia no later than 30 April 2011.
2.26
In the next chapter the committee summarises the limited evidence
received by the committee since June 2010 from managing contractors and
builders involved in delivering P21 projects.
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