Bills

Industry Advocate Bill

Second Reading

Adjourned debate on second reading.

(Continued from 10 August 2017.)

The Hon. R.I. LUCAS (15:34): I rise on behalf of Liberal members to support the second reading of the Industry Advocate Bill. The bill seeks to capitalise on increasing community and industry stakeholder support for a buy South Australia type of policy over recent years. The bill essentially locks in the current advocate position for a five-year term and gives the advocate greater powers to require information. For example, there are new penalty provisions of up to $20,000 for persons and organisations that do not comply with an order to provide information. The advocate will have the power to recommend action by the minister for noncompliance with commitments under tender arrangements.

The stakeholder consultation the Liberal Party conducted is that, broadly, most stakeholder groups indicated support for the legislation to varying degrees. Some did raise some concerns and issues that they wanted raised during the parliamentary debate. However, overall, as I said, the broad stakeholder position was one of general support for the legislation the government has brought to the house.

I think it is fair to say that the most sceptical response the Liberal Party received did come from the Master Builders Association, which supported the role of the Industry Advocate but certainly questioned the need for it to actually be a statutory position, as is being proposed in the legislation. I think that concern about what the argument was for it to be a statutory position was reflected in one or two of the other stakeholder views as well.

The government has claimed that the current arrangements have been, in their words, a roaring success, and they quote figures and statistics to indicate their belief in that respect. Therefore, stakeholders have said that, if the government's view is that the current arrangements have been operating successfully, they are unclear as to why there was the need for it to be made a statutory position.

The Master Builders Association has also raised concerns about the possibility of increased costs to taxpayers from increased red tape and government intrusion into the private sector. They have also raised concerns about increased costs to their members in terms of complying with what they term red tape and increasing compliance costs in relation to tendering arrangements for government contracts.

In looking at some of the individual submissions made to the Liberal Party in relation to the legislation, if I refer to the submission we received from the Ai Group, they indicated that they had been a strong supporter of the role and activities of the Industry Participation Advocate. They indicated that they had lobbied for the position to be put in place initially and they continue to support what they saw as the existing role of the Industry Participation Advocate.

The Master Builders Association indicated on behalf of their members that they believed the majority of their members also believe that there has been a net benefit from the arrangements that were currently operating. They support the legislation, but they have raised a number of issues. They have raised the issue about the appropriateness of a five-year term. In their view, they thought it would be more appropriate to have a three-year term for that position.

I was interested in recent evidence to the Budget and Finance Committee from the new chief executive officer for the Department of the Premier and Cabinet. I might stand corrected on that. I am not sure whether it was the chief executive, but certainly in recent evidence to the Budget Finance Committee a senior executive did express the view to the Weatherill government that the position of five-year contracts perhaps was too long; that is generally in the public sector. It was this chief executive's view that three-year contracts were more appropriate. On reflection, I think it might have been the previous chief executive of the DPC, not the current one, who expressed that view in evidence to the Budget and Finance Committee.

The second point the Ai Group raised was the role of the Industry Participation Advocate. The Ai Group states that its view is that in an overarching sense the advocate should play a key role in educating participants about their obligations under the industry participation policy, review those policies once they are formulated and then report to parliament and other stakeholders about the extent and success or otherwise of the advocate's role. I now quote them:

We would have a concern if in fact the Advocate's role extended to a formal position around the table with successful contractor and potential sub-contractors negotiating the appropriateness of an Industry Participation Plan.

Whilst it is not clear in the Act that this would be the expanded role of the Industry Participation Advocate, we would have some concerns if this was the case in practice.

In the second reading, I did put that question to the government on behalf of the Ai Group. I outlined their concerns, and I seek a government response to the concerns the Ai Group has raised about this legislation. They conclude their submission to us by saying that they fully support the present role and activities of the Industry Participation Advocate and, as I said, they have raised some questions and concerns about the proposed role.

I refer to a submission that the Liberal Party received from the Master Builders Association in detail. As I said, they were unconvinced of the need to create a statutory authority. In their words:

By the Government's own statistics, local products, materials and labour now make up around 90 per cent of major infrastructure projects. This is positive news.

They then go on to say that if the current arrangements are in essence working, what is the need or requirement for change?

Further on in their submission to us, they raise issues about the complexity of the tendering process. They indicate on behalf of members the concern that has been expressed about the increasing complexity of the tender process, especially measuring the commercial benefit of local inputs. They believe that consideration must be given to commercial realities. This is a quote from their submission:

We believe ongoing costs for our members must be monitored and investigated by the Industry Advocate if required. The cost impact should be written into the legislation as a consideration, and the office of the Industry Advocate should be required to report on this point annually.

Clearly, the government has not taken up that particular position. I seek a response from the government, given that they are not taking up that particular position, what if anything do they propose to do in response to the concerns of the MBA; that is, that they believe the Office of the Industry Advocate should be required to report on the costs of complying with the tendering arrangements and in terms of the formal procurement process for government contracts? If it is not to be the Industry Advocate reporting on it, does the government believe it is an issue, and how might the request to the MBA be met in some other way? Finally, they have also advocated

…the introduction of a formal review mechanism to assess the program and cost effectiveness of the new authority. Master Builders SA would suggest that this is better managed as a legislated review requirement rather than a sunset clause.

I give those two submissions. There were a number of others that did raise similar issues, not to the same extent, in relation to the legislation. I place on the record that we do share some of the potential concerns in relation to increased costs of compliance for some of the contracting and tendering arrangements that governments now require.

It probably would be something that a new government ought to have a look at in terms of the interrelationship, I think, between the Office of the Industry Advocate and the State Procurement Board, for example. I seek a response from the government in relation to how they see the ongoing responsibilities of the State Procurement Board and the Office of the Industry Advocate in terms of whether or not there is indeed any overlap in terms of the work they do and in terms of the potential reporting requirements of the success or otherwise of some of these requirements.

It may well be that, if South Australia has a productivity commission at some stage in the future, the whole area of government procurement in terms of meeting requirements of the State Procurement Board, in terms of meeting requirements of the Industry Advocate and in terms of meeting various other requirements of government might be fertile ground for consideration by a body such as the productivity commission to have a look at the costs and benefits of the myriad arrangements that we have in South Australia, to ensure that we are competitive nationally and internationally, that we are not imposing too many additional costs on business and that any additional costs that we are imposing are offset by increased benefits to business generally.

To be fair, I think there are some businesses in South Australia that are outspoken advocates of what they see as the impact of the role of the Industry Advocate and would certainly believe that the benefits to their particular business outweigh the costs imposed by any increased compliance arrangement. But I think the issue is a more general one; that is, whether or not someone should sit back and have a look at the interrelationship, as I said, of the State Procurement Board, the Office of the Industry Advocate and a number of other bodies and agencies involved in this area, and ultimately make a judgement as to whether or not the overall benefits outweigh the overall costs of the current arrangements that we have.

That may or may not be an issue that applies the mind of either a re-elected government or a future government of a different political persuasion. That will be an issue that can be determined at some later stage. At this stage, on behalf of Liberal members, I indicate our support for the second reading of the legislation.

Debate adjourned on motion of Hon. J.E. Hanson.