Give BOOT the boot from education

In November 2000, the NSW Government released a Green Paper entitled 
(Private Financing of Infrastructure and Certain Government Services in 
NSW). As a Green Paper it has the status of a discussion paper and, indeed, 
submissions are invited with a closing date of February 28. The Government 
has already announced that the private sector will fund the construction of 
two new high schools and seven primary schools in rapidly-growing areas in 
Sydney's north-west.

The Green Paper states: "The NSW Government is reviewing its policy and 
guidelines on how the private sector can help to finance and supply 
facilities the government uses to provide some economic and social 
services."

It asserts that the paper puts forward the ideas to encourage debate on how 
the private sector might be involved.

It appears that Education Minister John Aquilina is not keen to wait for 
debate and has already declared his intentions within his portfolio.

He has stated that "while finance will be provided by the private sector, 
there will be no private sector involvement in the day-to-day operation of 
any of these schools".

However, the contracts would include private companies running security, 
heating and maintenance.

The Government quotes the United Kingdom experience in such schemes, but 
they are not terribly forthcoming in providing details about the negative 
ramifications. In England the Private Finance Initiative was introduced 
under the Tories but has flourished under the Labour Government.

These schemes involve using a private for-profit company to design, 
finance, build and operate (BOOT) the schools. The schools may be designed, 
financed, built and owned by the company, but leased to the school. 
"Operate" refers to the cleaning, maintenance, caretaker/custodian (in some 
cases), property management and the provision and maintenance of IT 
equipment.

The argument in support of the private finance is that the school can 
"forget about" the infrastructure and concentrate on education, and that 
the variation in spending from year to year (for example, a new roof) is 
smoother by an annual payment in a typically 30-year contract.

Arguments against BOOT include the school's potential loss of control of 
the building, the difficulty of foreseeing the future over 30 years in 
terms of the school's building requirements, the transfer of the existing 
cleaning, caretaking and maintenance staff from the employment of the local 
authority in the public sector to the private company.

There has been much recent criticism in Australia of the private 
involvement in public infrastructure provision, most notably with respect 
to build, own, operate and transfer in such things as motorways, where the 
private operator builds the facility, owns and operates it, and then 
transfers it to the public sector at the end of the contract.

In effect what BOOT schemes do is remove the funding from public scrutiny 
into areas out of the budget. There are numerous examples of such schemes 
in NSW, elsewhere in Australia and overseas, where it can be demonstrated 
that in the long run the cost to the citizens is greater than if it was 
directly publicly funded in the first place.

This is born of the obsession that governments have with delivering 
balanced budgets or surpluses. In reality, what happens is an accountancy 
sleight-of-hand, with a greater financial, and often severe social, cost.

Not only are the real funding arrangements hidden from scrutiny through 
"commercial-in-confidence" clauses, but what should be regarded as a whole-
of-community investment, and public asset — in this case provision of 
public education — comes to be seen merely as a cost to be born by 
(reluctant) taxpayers.

There is no mention in Minister Aquilina's statement of where the profit 
for the private investors is to come from. In London it has come from the 
sale of land deemed surplus, and the use of that land for the creation of 
private housing estates.

In Nova Scotia, Canada, it was through the closure of smaller schools and 
consolidation into larger units, in the face of community protests.

As well, in Canada the private enterprises were able to set the terms of 
conditions of access to the school, cutting school use time so that the 
buildings could be used for other purposes.

The bottom line for private investors is the profit that they will derive. 
The potential influence that multinationals have over the governance of the 
state is a critical community issue.

The NSW Teachers' Federation is seeking to meet with the Minister over the 
issue.

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Acknowledgements: Education