Statutory Authorities Review Committee: Inquiry into State Procurement Board

Adjourned debate on motion of Hon. T.J. Stephens:

That the report of the committee, on its inquiry into the State Procurement Board, be noted.

(Continued from 26 September 2019.)

The Hon. J.E. HANSON (23:08): I know it is really late, so I will try to be as quick as I can with summing-up a few things here. It is important, I feel, that I do so. A great deal of evidence was heard in regard to what the committee performed here in the investigation into procurement. We heard from a lot of local suppliers. They complained to us generally about the complexity and impost on their own limited time and resources when applying for government procurement supply contracts. This cannot be underestimated.

The committee has previously looked into procurement. The committee believes that, even though improvements were made last time, South Australia, our state, continues to fall short in achieving the right balance between securing value for money and giving local business a fair go tendering for government contracts. The committee found that the State Procurement Board is not in a good position currently to be able to strike a suitable balance of small business successfully tendering for contracts and simultaneously achieving the value for money that marks the best for the South Australian taxpayer.

The committee recommended that agencies be encouraged to foster greater strengthening within the South Australian economy through business participation. A clearer definition of the meaning of 'value for money' is required. This may provide a great opportunity for South Australian suppliers to win contracts and the flow-on effects to be felt by South Australian businesses.

Currently, all the financial benefits are heading interstate to larger firms based outside South Australia because all the resources to navigate the current complex procurement processes are not available to the existing small businesses that we have here. One method of simplifying the procurement process for South Australian small businesses would be, for instance, a very simple measure of applying 15 per cent economic weighting earlier in the evaluation process stage.

There is also the issue of staff training. Due to the nature of procurement processes, staff are choosing to rely too much on limited parameters, such as cost or rebates. The narrow range of boundaries being focused on by procurement staff is shutting out local small suppliers and the opportunity to win government contracts.

Instead, the contracts are being won, as I said, by interstate large suppliers who have the ability to meet the demands and complexity of the procurement process while also being able to deliver a low-cost product. Training staff to assist in being able to see the other wider economic benefits of local providers when choosing South Australian suppliers may assist local suppliers based in South Australia winning more contracts.

There is also a question over the chief procurement officer vacancy. The chief procurement officer position has been vacant for some time. The position was first established in 2016 and has been vacant since November 2018. The uncertainty and lack of leadership, which is fairly obvious in that statement by the department not having a chief officer, needs to be addressed as staff training needs to be implemented and guidance and policy clarification, like those suggestions I have made, need to be implemented, including a better definition of what is value for money.

There could also be a look at exploring solutions surrounding local procurement strategies through our Treasurer. Our procurement evaluation panels should include representatives from the area the service will be provided to. That sounds fairly obvious but is genuinely lacking now. The Treasurer should include a reference to South Australian Industry Participation Policy in the Treasurer's Instructions. This will provide a formal link between value for money involving public expenditure and ensuring that public expenditure benefits everyone in the South Australian economy, instead of just a concept of value for money that I said needs to be adjusted.

As I have mentioned, there needs to be more staff training and upskilling of procurement staff and a campaign focused to educate those staff on the benefits of their purchasing decisions and the effect that will have on the local South Australian economy. I appreciate this speech has been somewhat truncated by the late hour. I apologise for it being quite dot point heavy; however, I think it is important that we get through it quickly. I had a nice one written. I think we will go with this one. What do you think, the Hon. Mr Stephens?

The Hon. T.J. STEPHENS (23:12): I would like to thank the Hon. Justin Hanson for his contribution. I know that he probably has shortened it, but it was punchy and to the point and I loved it. In summing-up, I would like to again thank the Hon. Justin Hanson for his contribution; and the members of the committee, the Hon. Irene Pnevmatikos, the Hon. Dennis Hood and the Hon. Frank Pangallo. I would like to make the point to department heads to make sure that their procurement officers—public servants—are ensuring that the South Australian public gets the best value for money but gets the best possible employment opportunities for our workers. With that, I commend the report.

Motion carried.