Industry Advocate Bill

Second Reading

Adjourned debate on second reading.

(Continued from 26 September 2017.)

The Hon. J.A. DARLEY (15:52): I rise in support of this bill. I understand the Industry Advocate, Mr Ian Nightingale, has been performing very well so far and has support from the vast majority of stakeholders. By enshrining the functions and role of the Industry Advocate into legislation, this parliament will be sending a clear message to say that this is an important role which should continue into the future.

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (15:53): I believe there are no further second reading contributions so I would like to thank honourable members who have contributed to the debate on this bill. The introduction of the Industry Advocate Bill and the changes in the South Australian participation policy signal the government's strong commitment to stimulating economic growth in South Australia.

This bill gives the Industry Advocate stronger powers to ensure that commitments made to South Australian businesses and workers in industry participation plans are being met all the way through the supply chain. One of the main statutory mechanisms in this bill, to assist the Industry Advocate to perform his functions, is the power to require information. The opposition has filed amendments that would prevent the Industry Advocate from being able to effectively do this.

The Civil Contractors Federation sums up industry sentiment about these amendments when it says, 'What is being proposed will seriously hamper the efforts of the Industry Advocate, and in some cases make the role almost unworkable.' The proposal to delete the partial freedom of information exemption proposed in the bill is simply astounding. This partial exemption is exactly the same as the exemption afforded to businesses to protect confidential information provided to the Small Business Commissioner. It does not protect the Industry Advocate from FOI requests about administrative, financial and statistical information. Businesses and industry associations, including the state's peak industry body Business SA, strongly support the retention of the partial exemption.

On Tuesday, the opposition adjourned off debate, and they referred to responses they received from the Ai Group and the Master Builders Association as the reason for doing so. However, I am advised that it is fair to say that the Ai Group is supportive of the bill, with the head of the SA division, Steve Myatt, having written to the Treasurer as follows:

Feedback from our members is that the work of the Advocate has been instrumental in providing opportunities for members to showcase their capabilities. The Ai Group's preference is that the role and the work of the Advocate have bipartisan political support.

Also, Business SA continue to push for the advocate to have more teeth and more resources, and I am pleased that the state government has taken these steps. The Civil Contractors Federation CEO Phil Sutherland has advised, as part of the consultation, that:

The establishment of a statutory authority to ensure compliance will provide the teeth necessary for the local participation policy to achieve true social and economic benefits for South Australia including regional areas of the State.

As recently as yesterday, the general manager of Sarah Construction, Adrian Esplin, wrote in support:

I understand the Industry Advocate Bill is before Parliament at the moment and there is a provision to make the Industry Advocate's role a Statutory Authority. Any suggestion that the Industry Advocate role should not be established as a Statutory Authority misses the whole point of the legislation which gives power to require information when there are doubts over whether the Industry Participation Plan commitments are not being met.

It is also worth noting that a joint select committee of the federal parliament, which was formed to investigate the implementation of the new commonwealth procurement rules, recently recommended a national industry advocate, cast on the highly successful South Australian model. The committee also recommended that the Australian government legislate as a statutory authority under the responsibility of the Minister for Industry, Innovation and Science the role of Australian industry advocate.

The Hon. Rob Lucas has asked a number of questions during his second-reading contribution, which I will now provide the chamber with answers to. Question 1: why a five-year term instead of three? The answer is that the bill provides for the industry advocate to be appointed for a period not exceeding five years. This is consistent with the Small Business Commissioner and other senior government executive appointments. It is a matter for the minister and cabinet to determine the appropriate duration of the appointment up to the maximum of five years.

Question 2: why is the bill and a statutory position required if the existing work of the advocate is a success? The bill makes a long-term commitment to maintaining the South Australian Industry Participation Policy. This provides business with certainty that the policy will operate, and this can support their investment decisions in this state. It also ensures the important role of the Industry Advocate becomes a statutory position.

While the advocate role and the South Australian Industry Participation Policy have been extremely effective to date, there is currently no statutory or contractual role for the Industry Advocate in enforcing the commitments made by contractors under the industry participation plans. At present, there are only contractual enforcement measures that are exercised by agencies but not the advocate.

The statutory role of the Industry Advocate has greater capacity to monitor and enforce commitments made on industry participation as part of a tender. The bill proposes specific powers to enable the Industry Advocate to investigate noncompliance with industry participation commitments, issue directions to participants to comply with their obligations and make recommendations to the minister about further action should the participant unreasonably refuse to comply.

Question 3: does the advocate make a report to parliament that is tabled by the minister? The Industry Advocate will be required under the Public Sector Act 2009 to produce an annual report which will be tabled in parliament.

Another question: why is there no power for the Industry Advocate to report directly to the parliament outside of annual reporting? The Industry Advocate investigates matters that are the subject of a contract between the South Australian government via the responsible minister and a contractor. Accordingly, the decision to take action based on a recommendation of the Industry Advocate will ultimately lie with the responsible minister and cabinet. Also, there are parliamentary committees which can call the Industry Advocate to be a witness.

Question 4: how is the role of the advocate changing with regard to government contracts? Does the advocate have a role in commercial arrangements of contractors and subcontractors? The Industry Advocate has a monitoring and compliance role of commercial arrangements between the South Australian government and its contractors and their subcontractors, but this is limited to only his or her functions, duties and powers which are focused on industry participation.

A contractor may make commitments on industry participation, and this is the scope of the monitoring and compliance. Where a business is fundamentally altering these commitments, especially in a negative manner for the state economy, the advocate will have a legitimate role of seeking information, potentially issuing directions or making recommendations to an agency chief executive or minister over action.

Question 5: does the advocate and Industry Participation Policy add complexity to procurement? Does it add cost? How is this cost monitored? The bill intends to establish in the legislation the requirements that currently exist under the South Australian Industry Participation Policy, and there will be no additional cost to businesses or industry sectors. In fact, the South Australian Industry Participation Policy is being revised into a more user-friendly document that contains all the strategic procurement policies that relate to industry participation.

In addition to this, the Industry Participation Plan and economic contribution test templates have been simplified and can be completed online from 1 October 2017. Under the bill, the role of policymaking will sit with the minister, which allows the Public Service to provide advice to the minister and to monitor the effectiveness and impact of the policy. The minister can issue a revised South Australian Industry Participation Policy as required.

Question 6: what is the interaction between the advocate functions of the South Australian Industry Participation Policy and those functions of the State Procurement Board? The bill and the South Australian Industry Participation Policy do not alter the role and functions of the State Procurement Board. The Industry Advocate does not have a reporting relationship to the State Procurement Board. The board has collaboratively worked with the Industry Advocate and the Department of State Development's Public Projects and Participation Division. The South Australian Industry Participation Policy Framework is incorporated into the board's policy framework.

In summary, I highlight the strong support of industry for the creation of a statutory post incorporating the proposed functions and powers. As Andrew Marshall, the managing director of Marshall and Brougham, advised yesterday:

From the point of view of my Company and situation I think the current Bill should now be fully supported for the sake of all industry - which has demonstrated its wide support.

Again, I thank all honourable members for their contributions and support. I look forward to dealing with this through the committee stage.

Bill read a second time.