The Government will consider creating a new entity to manage the country’s school property portfolio. Video / Mark Mitchell
The Government will consider creating a new entity to manage the country’s school property portfolio after a ministerial inquiry found the Education Ministry’s management of the portfolio lacked transparency, clarity and efficiency.
The inquiry, led by former Foreign Affairs Minister and National MP Murray McCully, included scathing criticism of the ministry’s handling of the $30 billion property portfolio and found its ability to deliver cost-effective and timely development was lacking.
The inquiry also warned of a “significant and unsustainable gap” between delivery expectations and available funding given only 153 of the 488 school works projects were fully funded, meaning almost $3b of additional capital funding was needed.
Education Minister Erica Stanford says those projects will still be built, but they will require funding from future Budgets.
Stanford today attacked the previous Government for leaving “a pipeline of unfunded projects”. She said the ministry had itself realised there was a problem and begun looking into the matter before the change of Government.
The McCully inquiry’s primary recommendation was to establish a new entity separate from the ministry to “assume ownership and asset management responsibility for the school property portfolio”.
Infrastructure Minister Chris Bishop and Education Minister Erica Stanford in Lower Hutt with Niche Modular account manager Campbell Sutherland in a soon-to-be classroom. Photo / Mark Mitchell
This entity would take the form of a “Crown agent, Crown entity company, schedule 4A company, statutory entity, public benefit entity, or state-owned enterprise, based on further advice from the Treasury and the Public Service Commission”. Each of these structures comes with varying degrees of political independence.
Stanford said this proposal would go to Cabinet in the “coming months”.
“There was a strong consensus that school buildings funded by taxpayers should be simple, functional, cost-efficient and based on repeatable or standardised designs. The ministry’s failure to execute in line with these principles drew strong criticism,” the report says.
‘Huge loss of confidence in the current system’
Stanford and Infrastructure Minister Chris Bishop agreed the system was inefficient and bureaucratic.
“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,” Stanford said.
In response to the recommendations, the ministers said decisions would be made next year on whether a new entity was established or a new model still within the ministry was created to manage the portfolio.
“It’s absolutely essential that we clarify roles and responsibilities for school property management, provide greater transparency around decisions, and bring in disciplined and data-driven oversight of investment and delivery,” Bishop said.
He acknowledged other changes to come from the report would include investment in less “sexy” things like maintenance to ensure the Government makes better use of the assets it already has.
“Erica has done the right thing by having a much greater focus on maintenance. We need to be investing much more in maintenance and looking after what we already have,” Bishop said.
Other actions the Government had agreed on after the inquiry included instructing the ministry to improve communication with schools, focusing on simpler construction processes and appointing a functional chief executive and independent investment panel to be responsible for school property.
The ministers said they were open to a new entity being formed to manage the property portfolio. Photo / Mark Mitchell
The inquiry’s report, released this morning, summarised responses from principals, teachers, school board members, property managers, ministry staff and construction sector experts.
It found schools were “consistently critical of a lack of transparency, unclear prioritisation of projects, and generally inefficient project planning and delivery”.
It alleged a lack of transparency allowed schools to “jump the queue” and have their projects prioritised.
“We heard many times that there appeared to be no solid foundation to the ministry’s prioritisation of projects and that the most effective way to secure funding is to go public through the media or local politicians.”
It referenced “cumbersome” processes that had led to minor projects that should have lasted two months taking two years to complete.
The report acknowledged failures on the part of school leaders, noting “some principals and boards lack the inclination or capability to act as custodians of significant Crown assets”.
A relocation project in Marlborough was referenced throughout the report as an “extreme” example of a “more systemic malaise”.
The project arose after condition issues were found at Marlborough Boys’ College and Marlborough Girls’ College between 2011 and 2013.
The cost began near $25 million, but by 2022 it had ballooned to $400m “without robust analysis linking costs to measurable benefits”, the report says.
“While the ministry decided to pause the co-location project in December 2023, the extended planning and design for the new facilities has been an expensive mistake, with up to $25 million in sunk costs so far.”
The Marlborough project was one of several examples Stanford cited when announcing the inquiry in February.
Labour’s education spokeswoman, former Education Minister Jan Tinetti, called on the Government to be clearer about when remaining developments would be funded.
“Just saying “in future Budgets” isn’t good enough. Schools deserve certainty and clarity from the Government.”
Tinetti claimed she hadn’t been aware of the issues raised in the report while she was minister and accepted the findings had made her question whether official advice she was receiving before last year’s election was complete.
On the potential for a new entity to manage property, Tinetti said she could see value in the idea but wanted to assess how it could impact other aspects of education provision.
Ministry responds, avoids inquiry’s criticism
Secretary of Education Iona Holsted has avoided confronting the inquiry’s criticism of her ministry’s management of the property portfolio, instead focusing on developments it had completed.
The Herald’s request to interview Holsted was refused. A later statement said Holsted was “pleased” the Government’s decisions had been released.
“The ministry’s school property portfolio is the second largest social property portfolio in New Zealand and as the executive summary of the report notes, school property has been the focus of at least five separate reviews since 2012.”
In the past five financial years, the ministry had delivered 2270 classrooms and 120 school redevelopment projects, she said.
“In 2024/25, the ministry’s capital spend is forecast to be over $1.7b and our property team will continue to respond to the needs of the around 2100 state schools and kura.”
Adam Pearse is a political reporter in the NZ Herald Press Gallery team based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.
