Industry Advocate Bill

Second Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (17:39): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

This bill will secure local jobs in South Australia in the building and construction industry, along with other key industries, by establishing the role of the Industry Advocate as a statutory position and strengthening its powers to hold contractors to the commitments they make to utilise South Australian workers or materials.

Three years ago, the South Australian government took a nation-leading approach and introduced the economic contribution model which forms the basis of the South Australian Industry Participation Policy.

A key priority for the South Australian government is to grow the economy, create jobs and support the diversification of South Australia's industry sectors. One of the practical ways government can do this is by making sure that businesses creating jobs in South Australia are given every opportunity to deliver the goods and services to government itself.

The South Australian Industry Participation Policy recognises that the economic contribution to the state is a legitimate purchasing consideration for the government and it focuses on local jobs, investment and supply inputs.

It is fair to say that the state's Industry Participation Policy and the role of the Industry Advocate have made a marked difference for local businesses and the economy. Since the government incorporated the meaningful measure of economic benefit as part of the tender evaluation in 2014, the buying behaviour of both government agencies and head contractors has changed noticeably.

In developing this bill, the government has taken into account the strong desire from South Australian business leaders and industry associations to see the Industry Advocate role be given more teeth.

The bill recognises the important role the Industry Advocate plays in advocating to resolve complaints, removing impediments to South Australian businesses and improving procurement practices and processes.

The bill establishes a statutory role for the Industry Advocate and confers stronger powers on the advocate to hold contractors to their commitments to utilise South Australian workers or materials.

Under Industry Advocate Ian Nightingale's watch local products, materials and labour now make up an average of nearly 80 per cent of South Australian goods and services procurements or around 90 per cent of major infrastructure projects.

We want to continue to build on this success and make smart procurements central to the development of public projects, from conception through to delivery, and ensure that maximum economic activity is generated in South Australia, giving local producers, entrepreneurs and businesses every opportunity to be successful.

The bill requires the South Australian government to maintain an industry participation policy that seeks to promote -

(a) government expenditure, the results in economic development for South Australia;

(b) value for money in public expenditure;

(c) the economic development of the steel industry and other strategic important industries for South Australia; and

(d) full, fair and reasonable opportunities for capable South Australian businesses to participate in government contracts.

The government's steel policy has delivered outstanding results for Arrium and the steel industry more broadly. For instance, the Northern Connector road project, won by Lendlease Engineering, will use about 7,500 tonnes of reinforcing or structural steel from the Arrium steelworks in Whyalla in the $985 million construction project.

The functions conferred upon the Industry Advocate under the bill include advocating on behalf of businesses and investigating complaints about industry participation. This could include how government agencies and authorities are applying the policy through to enforcing the commitments made by businesses under the industry participation plan.

The bill provides some powers and functions for the Industry Advocate to ensure compliance with the South Australian Industry Participation Policy. The Industry Advocate will develop an enforcement strategy in consultation with key stakeholders to ensure these powers are carried out in a fair, transparent and measured way. This will include a strong emphasis on education, advice and persuasion in the first instance, before escalation to a more formal response.

The bill includes a power for the Industry Advocate to be able to require participants contracting with the government to provide information or documents in his or her possession.

The Industry Advocate must issue a notice to the participant and specify a reasonable time for the information or documents to be provided. What is a reasonable time will depend upon the nature of what is being requested. If a participant does not provide the documents or information within the time specified, a penalty of up to $20,000 can be applied. If a participant is found not to be complying with their contractual obligations, the Industry Advocate can direct the participant to comply with their obligations.

Following the principles of natural justice, the participant must be provided with an opportunity to respond to the notice and explain why their actions are reasonable and justifiable in the circumstances.

If after considering the participant's response the Industry Advocate remains satisfied that the participant should be required to comply with the direction, the advocate may refer the matter to the minister with recommendations for further action. The minister can decide to pursue a breach of contract in serious cases of noncompliance.

The bill is a flexible and modern piece of legislation that carefully balances obligations on participants in government contracts with the value of work being tendered for so as to not create unnecessary red tape.

The role to investigate and monitor a contractor's compliance with the commitments made will also extend to participants in local government contracts where councils have chosen to adopt industry participation policies. It is not the intention of this bill to require councils to adopt industry participation policies, but it is a function of the Industry Advocate to encourage them to do so.

The other important aspect of the Industry Advocate's role is building the capability and the capacity of businesses based in South Australia. The Office of the Industry Advocate has run many very successful Meet the Buyer events over the past few years, with almost 5,000 businesspeople attending.

To ensure the integrity of the position, the Industry Advocate will be a statutory officer. Under the Public Sector Act 2009, the advocate will be required to produce an annual report, which will be tabled in parliament, and is a senior official for the purposes of the Public Sector (Honesty and Accountability) Act 1995.

The bill evidences the government's commitment to ensuring that the procurement practices of the state government will provide long-term benefit to the state by supporting economic diversity and employment growth, rewarding businesses that want to work in our state, employing South Australians and creating jobs, and, at the same time, investing here and buying supply inputs from South Australian businesses.

I commend the bill to the house and seek leave to have the second reading explanation inserted in Hansard without my reading it.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

3—Interpretation

This clause defines certain terms used in the measure.

Part 2—Establishment of SAIPP

4—Establishment of SAIPP

This clause requires the Minister to establish and maintain the South Australian Industry Participation Policy.

Part 3—Industry Advocate

5—Industry Advocate

This clause provides for an Industry Advocate to be appointed by the Governor.

6—Functions

This clause sets out the functions of the Industry Advocate (including taking action to further the objectives of the SAIPP).

7—Ministerial direction

The Minister may give directions to the Industry Advocate in accordance with this section.

8—Terms and conditions of appointment

The Industry Advocate is to be appointed for a term not exceeding 5 years and on conditions determined by the Governor (and will be eligible for reappointment at the end of a term). The clause also sets out grounds for termination of appointment.

9—Deputy and Acting Industry Advocate

The Minister may appoint a Deputy Industry Advocate or an acting Industry Advocate.

10—Honesty and accountability

The Industry Advocate, the Deputy and any person appointed to act as the Industry Advocate are senior officials for the purposes of the Public Sector (Honesty and Accountability) Act 1995.

11—Staff etc

This clause makes provision for staff of the industry Advocate.

12—Delegation

The Minister and the Industry Advocate may delegate functions and powers. The Industry Advocate may not however delegate any prescribed powers and functions.

13—Power to require information and documents

The Industry Advocate may, by written notice, require a participant in a contract to provide (within a reasonable time specified in the notice) information or documents in the participant's possession that the Industry Advocate requires for the performance of the Industry Advocate's functions. Failure to comply is punishable by a maximum fine of $20,000, however the clause does not override the privilege against self-incrimination or legal professional privilege.

14—Issue of directions

The Industry Advocate may give directions to a participant in a government contract if the Industry Advocate reasonably believes that they are not complying with their contractual obligations in respect of the SAIPP. The participant may provide a response if they believe the failure is reasonable and justifiable.

Part 4—Miscellaneous

15—Reports to Minister

The Industry Advocate may report to the Minister on relevant matters and must report in relation to any failure to comply with a direction under clause 14 (unless the Industry Advocate is satisfied that the failure to comply with the obligations was reasonable and justifiable).

16—Confidentiality

This clause provides for confidentiality of personal information, information relating to trade secrets or business processes or financial information acquired in connection with the administration of this Act, except in certain circumstances.

17—Application of Freedom of Information Act 1991

The Industry Advocate is to be an exempt agency under the Freedom of Information Act 1991 except in respect of—

(a) financial and administrative information relating to the operations of the Industry Advocate; and

(b) statistical information that does not identify any particular person or business.

18—Regulations

The Governor may make regulations for the purposes of the measure.

Debate adjourned on motion of Hon. J.S.L. Dawkins.

At 17:40 the council adjourned until Wednesday 5 July 2017 at 11:30.