NZ govt to spend $650M on school upgrades, repairs in 2015

NZ govt to spend $650M on school building upgrades, repairs in 2015

By Paul McBeth

Jan. 28 (BusinessDesk) - The New Zealand government expects to spend $650 million this year upgrading and maintaining its $8.32 billion school property portfolio, and anticipates repair costs for leaky buildings largely damaged by faulty cladding will be about $90 million.

Associate Education Minister Nikki Kaye last week said major projects this calendar year include new schools in Auckland, Hamilton and near Queenstown, and redevelopment of Otahuhu and Warkworth schools which will add up to 240 extra classrooms. In addition, a public-private partnership will invest in schools in Christchurch, Queenstown and Auckland.

Of the total annual spend, some $382 million will go into maintaining and modernising the existing portfolio, $169 million into building new schools and adding classrooms, $58 million on rebuilding Christchurch schools and a further $4 million in building technology in schools.

"It's important we get ahead of demand to ensure there's sufficient school capacity in our biggest city, and we've begun moving to acquire sites to meet the needs of Auckland's rapid population growth," Kaye said in a statement. "I expect to make further announcements about this and other school infrastructure developments during 2015."

The Treasury estimates primary school rolls will rise to more than 516,000 by 2019 from almost $498,000 in 2014, while secondary school rolls will remain largely static at about 267,000, and the Ministry of Education flagged more than $2 billion of capital spending on school buildings between the 2013/14 and 2016/17 financial years, according to its 2013/14 statement of intent, which includes both earthquake strengthening and fixing leaky buildings, as well as upgrading school infrastructure as part of its plan to link the nation's education network with ultra-fast broadband.

Government figures show the value of building consents for education buildings rose to $668 million in the year ended Nov. 30, 2014, up 26 percent from a year earlier, and a record for a November year. The value of education building work put in place was $752.5 million in the year ended Sept. 30, 32 percent higher than a year earlier.

In recent years, the Education Ministry has been contending with repairing leaky buildings, about 90 percent of which it says was caused by defective cladding used on buildings erected after 1994. It expects the cost of repairing buildings with serious leaks will be between $1.1 billion and $1.3 billion.

A spokesman for Kaye said about $90 million will be spent in the year ending June 30, 2015 to repair school buildings with weather-tightness issues, the same amount spent in the 2014 financial year.

The $650 million spend tagged for this calendar year includes repair work carried out through the ministry's business improvement programme, and is often part of larger maintenance projects meaning it's difficult to break out the cost, he said.

"The ministry works closely with schools where there are multiple building issues, so it can integrate solutions into a single project where possible," the spokesman said. "Often it takes the opportunity to modernise or replace poor quality buildings at the school at the same time."

The Education Ministry embarked on court proceedings against cladding manufacturers in 2013, and has since settled with building materials makers James Hardie Industries and CSR, and is in talks with Carter Holt Harvey, the remaining defendant in the product liability claim.

The CSR and James Hardie settlements contained confidentiality clauses, but the ministry has said arrangements were entered into to help address the risk of weather-tightness failure in existing school property, support future school property developments across the country, and maintain continuity of building supplies manufactured in New Zealand.

As at November 2014, the ministry's remediation recovery programme covered 1,792 buildings, of which 343 were active, 1,346 were discontinued, 91 had settlements in place and 12 were on hold. In addition to the existing settlements in place, a further 57 buildings have settlements agreed in principle, Campbell said.

The cost of leaky schools was first recognised in the education ministry's accounts in 2010 when it took a $930.4 million impairment charge on the $8.12 billion carrying value of its school building portfolio, made up of 16,981 buildings across 2,143 schools. As at June 30, 2014, that provision was $828 million, and was recalculated after 211 buildings had undergone remediation costs, prompting a reduction of $103 million from a year earlier. As at June 30, 20214, the building stock was valued at $8.32 billion.

Because of the number of buildings that required remediation, the ministry couldn't afford to fund the programme through its baselines, and since June 2012 has redirected part of affected schools' Five Year Agreement (5YA) funding based on the area needing remediation.

The 5YA funding is a capital funding budget allocated to school boards of trustees to use over a five-year period.

(BusinessDesk)

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