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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2020-07-21 Daily Xml
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Bills

State Procurement Repeal Bill

Second Reading

Adjourned debate on second reading.

(Continued from 2 July 2020.)

The Hon. K.J. MAHER (Leader of the Opposition) (15:28): I rise to speak on the State Procurement Repeal Bill 2020. This bill seeks to repeal the State Procurement Act 2004 and the State Procurement Regulations made in 2005. It also dissolves the State Procurement Board and its associated policies and guidelines.

In late 2018, the government tasked the South Australian Productivity Commission with undertaking an inquiry into public sector procurement. In parallel, the Statutory Authorities Review Committee conducted an inquiry into state procurement. According to the Liberal government, it seeks to replace the State Procurement Board and associated policies with a new central procurement branch within the Department of Treasury and Finance.

However, the issue is that this bill merely rescinds the State Procurement Act. It does not replace it formally with a framework which is designed to achieve the recommendations of the Productivity Commission report or the Statutory Authorities Review Committee. The absence of a future framework and policies from the government is concerning. There can be no comfort for the parliament, if this bill is passed, that there is a robust framework that will replace it.

In only two years, there have been several instances of procurement mismanagement: the uncontested appointment of KordaMentha in the health sector; the delayed and confused management of the schools capital works program; the cancellation of the Port rail spur project, despite a signed contract to deliver it; substantial delays in major projects; the attempted privatisation of Pathology SA; the mishandling of the Darlington road project; the privatisation of the Adelaide Remand Centre; the privatisation of the tram network; the privatisation of road maintenance; the privatisation of facilities management; and the privatisation of field services in DPTI.

Labor wants to support all efforts to increase South Australian content in government procurement contracts. Now more than ever in South Australia we must ensure that local content is given first opportunity in government contracts; however, instead of coming to the parliament with legislative reform of how we can ensure we increase South Australian content in procurement contracts, this government wants to abolish all parliamentary control over government procurement. We are merely meant to trust the Treasurer with government procurement without any oversight. This is a government and a Treasurer addicted to privatisation and outsourcing, as the long list I read before shows.

So we turn to what it is that is being abolished. The State Procurement Board is comprised of four public sector members and four private sector members. It was established under the State Procurement Act 2004 to be a separate oversight body of procurement practices and compliance across government. According to its 2017-18 annual report, the board's purposes included providing comprehensive policies and guidelines to support effective procurement operations across government. These policies were designed to provide a balance between process rigour and efficiency in accordance with the objective of ensuring value for money, the fair treatment of all bidders, and probity and transparency.

The board also provides a range of capability development initiatives to help improve the procurement and contract management capability of the South Australian government workforce. Its objective was for the board to play a proactive role in ensuring the procurement activities of public authorities are directed towards obtaining value in the expenditure of government funds on goods and services, providing for ethical and fair treatment of participants and ensuring probity, accountability and transparency in procurement operations.

The primary functions of the board are to facilitate strategic procurement by public authorities by setting the strategic direction of procurement practices across government to develop, issue and keep under review policies, principles and guidelines relating to the procurement operations of public authorities; to develop, issue and keep under review standards for procurement by public authorities using electronic procurement processes; to investigate and keep under review levels of compliance with the board's policy framework; to issue policies, principles, guidelines, standards and directions; and to assist in the development and delivery of training and development courses.

In 2018-19, these purposes, objectives and strategies were changed to mirror the government's 'more jobs, better services, lower cost' mantra. Unsurprisingly, in all three areas we have seen failure to achieve. Even before the current COVID-19 pandemic, jobs growth was in freefall, services across government were being cut, closed or privatised, and under this Treasurer we have seen costs increase by $750 million over four years. The increase in state government taxes, fees and charges across the board have washed away any relief claimed from ESL and water charges.

Just as poorly, the government has also stalled on a major number of infrastructure projects, including the north-south final corridor being installed, the new Women's and Children's Hospital and The QEH stage 3 development. GlobeLink, the child of the Minister for Trade and Investment, has been abandoned. The tram extensions have been stalled. The O-Bahn extension park-and-ride has been stalled. The South Road duplication, the Seaford to Aldinga stretch has been stalled. The Aboriginal arts and culture gallery on Lot Fourteen has been stalled. The major inner city sporting and entertainment facility has been completely abandoned.

This is a shame because the board also collaborates with the Office of the Industry Advocate to ensure all policy requirements of the South Australian Industry Participation Policy relevant to the scope of the act are incorporated into the board's policy framework. This includes focusing on employment for residents of South Australia, investment and capital expenditure that builds capacity in the South Australian economy, and the use of businesses and supply chains that employ South Australian residents and invest in the state.

It is clear that there are many projects that need to be started and need to be completed and under the policies of the former Labor government almost certainly would be and provide a huge benefit to the state. For example, the Torrens to Torrens project was one of the first government projects procured with stringent local labour hours targets and requirements for apprentices and trainees to make up a proportion of worker numbers. The Convention Centre stage 2 development prioritised using local steel and steel manufacturers, as well as local workers.

The Northern Connector project expanded on this to also include local materials, including the cement used in the concrete road surface, achieving over 90 per cent of all labour hours being local and 20 per cent of workers being a combination of apprentices and trainees, long-term unemployed workers and Aboriginal workers. The Darlington project saw a traffic management company owned and operated by South Australians given the contract for the traffic management, delivering many jobs for Aboriginal South Australians.

The State Procurement Board's strategic focus is aimed at delivering a system of public procurement that will:

ensure support for the government's policy objectives and deliver value for money;

ensure procurement activities are seen by all stakeholders as fair, equitable and professionally managed;

provide government with an independent party to oversee procurement activities to identify and disseminate opportunities for improved procurement practices; and

establish a culture that allows good ideas to be considered and implemented.

If the act is being repealed and the board being abolished, you would think the government would be presenting, for the benefit of the parliament, an alternative structure to ensure that parliamentary strictures and oversight would apply to the billions of dollars spent each year, but there is none.

The Treasurer vaguely says, 'Trust me.' He wants a senior executive in Treasury reporting to him to conduct all oversight functions of government. We had a chief procurement officer in government who left for a position in the private sector at the end of 2018. That position remains unfilled. This, more than anything else, is a good indication that the government is not serious about an independent officer keeping the Public Service accountable for its procurement practices.

The Productivity Commission's focus in their reviews of government procurement was value for money. There were also issues raised about compliance with procurement policies, cost to business of tendering and complying with government requirements and transparency and accountability.

The opposition does not for a second dispute the need for constant improvement and reform in these areas. I spoke earlier about the $40 million-plus contract that was handed out to interstate corporate liquidators to work with SA Health, and now the Treasurer says, 'Trust me.' I also spoke about the contractual agreement the government had to deliver the Port rail spur extension, and now the government says, 'Trust me.' A new project, the tram stop at Halifax Street, was handed to the same company without due process, and the government says, 'Don't worry. Procurement isn't your concern anymore. Trust me.'

The opposition would be pleased to support procurement reform, and we would be pleased to support a bill that establishes a new framework for procurement, but that is not what we have here. We have a repeal bill with a vague inkling of a promise of putting an administrative stricture in place that is just not good enough. The Treasurer has not, in any fashion whatsoever, set out how his government plans to ensure that all the objectives and strategic focus currently undertaken by the State Procurement Board to ensure government gets value for money and supports local South Australian procurement will be dealt with.

It is disappointing that, only two years into the first term of this government, the Treasurer shows such disrespect for parliament. Every single member in the opposition, and I am sure many on the crossbench in this place, cares about government procurement and ensuring that we put South Australians at the forefront. However, this government is now telling parliament not to concern itself with $11 billion a year in government procurement and to trust the Treasurer to do it.

We on this side recognise that there are recommendations made by the SA Productivity Commission and the Statutory Authorities Review Committee that have merit. However, the removal of any parliamentary oversight into government procurement, without anything taking its place, is quite frankly ludicrous. The Treasurer could easily have come into this place with a new vision and a new procurement policy—a new procurement policy in South Australia with some parliamentary oversight maintained. However, he has merely come to this place with a request to scrap parliamentary oversight, to scrap this board and to scrap the legislation with vague promises of, 'Trust me.' I indicate that the opposition will be opposing this bill.

The Hon. R.I. LUCAS (Treasurer) (15:39): I thank (sort of), in form, the Leader of the Opposition for what must be the most monumental backflip I have ever seen, given the accusations of the Australian Labor Party directed towards the government in relation to backflips. The bill that is before us is the implementation of recommendations signed off and agreed to by members of the Australian Labor Party, members of the crossbench and members of the government after what was a quite lengthy parliamentary inquiry through the Statutory Authorities Review Committee.

That was not an inquiry that I was a member of, although I was previously a member of the Statutory Authorities Review Committee, but its first recommendation was:

The Committee recommends that the State Procurement Board be abolished, along with all associated Guidelines, Policies and legislation.

You cannot have a more comprehensive recommendation than that, and that was signed off by the Hon. Mr Maher's own party colleagues in this chamber. It was a representation of the Labor Party's view in relation to the State Procurement Board. Mr President, you and other current government members and members of the crossbench were members of that committee of inquiry for a long period of time and that was the recommendation from the committee, agreed to by the members of the Labor Party.

All this bill is seeking to do is to implement the recommendations made by a cross-party, unanimous view, parliamentary committee. It also implements the recommendations of the independent Productivity Commission, and I can understand how members of the Labor Party may or may not on occasions agree or disagree with the views being expressed by the independent Productivity Commission; that is their prerogative.

However, in a short space of time to actually recommend to the government to take a particular course of action and, when the government does exactly that, to then say, 'Well, we think this is unconscionable and an attempt by the government to take over procurement policy,' when its own members and its party actually signed off and recommended it, is an extraordinary position for the Leader of the Opposition in this chamber to take.

The Leader of the Opposition says that this is just a blatant grab for power by myself as Treasurer. Recommendation 2 of the committee states:

The Committee recommends—

this was in lieu of obviously the State Procurement Board—

that an Office of the Chief Procurement Officer be established—

that is an office established within government, within one of the departments, and it is intended to be within the Department of Treasury and Finance—

which:

strengthens the current across-Government Chief Procurement Officer role;

consolidates the current administrative staff servicing the State Procurement Board;

provides a stronger link to, and consultation with, the Industry Advocate;

ensures a consistent approach to procurement operations of public authorities; and

provides assistance with, and support to, managing across-Government panels.

The government's response, which was outlined to the committee was:

The government supports the establishment an enhanced central procurement group within DTF, however intends to move away from using the Chief Procurement Officer terminology. The Department of Treasury and Finance Procurement Branch will be led by a highly experienced senior executive who will report to the Treasurer via the Chief Executive. The Executive Director, Procurement role will have clear objectives and deliverables, with an initial focus on driving implementation of an improved procurement framework across the public sector.

The key functions of the DTF Procurement Branch will include:

Setting the strategic direction for procurement across government;

Developing and maintaining a framework for the procurement operations of agencies, including policies and guidelines;

Providing advice to the Treasurer and Chief Executive on any matters relevant to the procurement operations of agencies;

Investigating and reviewing the procurement performance of agencies and their compliance with policies and guidelines;

Supporting the development and delivery of training and professional development activities for public sector procurement practitioners;

Providing procurement advice and support to agencies with limited internal procurement capability;

Engaging with industry, in conjunction with the Office of the Industry Advocate, to reduce the complexity and costs to business of tendering for government work and maximising the opportunity for local business participation; and

Undertaking data analytics to measure and benchmark agency procurement performance and identify opportunities for additional value to be obtained.

Recommendation 3 of this tripartisan committee, supported by members of the Labor Party, states:

The Committee recommends for the across-Government Chief Procurement Officer—

that is the chief bureaucrat for procurement—

to report directly to the Treasurer, to advise and support the South Australian procurement function and improving oversight of, and connection with, public authority Chief Procurement Officers to ensure a consistent and compliant approach to State Government procurement, and confirm a stronger link to, and consultation with, the Industry Advocate.

The recommendation of this tripartisan committee was that the new chief bureaucrat, or senior bureaucrat, on procurement would report directly to the Treasurer. Now the Leader of the Opposition in this chamber is disagreeing with his own members' recommendation by saying this is an outrageous grab for power by the Treasurer of the state in seeking to have the procurement function reporting directly to the position of the Treasurer. In recommendation 4, the committee recommended:

…a simplification of existing procurement policies, by establishing a procurement framework/strategy (such as the Queensland model) that aligns with the Government's Growth Agenda and with the South Australian Industry Participation Policy. In determining a new model, the Committee recommends the Treasurer explore a solution that ensures the Government's procurement policies are best reflected and focuses on local procurement strategies for the public service to follow when spending public monies.

In many of the remaining recommendations of this committee, signed off and supported by the Labor Party, there are a number of references to the role and responsibility of the Treasurer in the new procurement arrangements. I will not go through all of them. Recommendation 10 recommends the Treasurer undertake certain functions. Recommendation 12 recommends the Treasurer consider including a reference to the South Australian Industry Participation Policy and procedural guidelines in the relevant Treasurer's Instruction, and so on.

I think there were some 17 recommendations from the committee, many of which are recommending that the Treasurer undertake various functions in this new oversight process for procurement in government. They are all subservient to the principal recommendation from the committee, supported by members of the Labor Party and members of this particular chamber from the Leader of the Opposition's own party, which recommends—and again I repeat—that the State Procurement Board be abolished, along with all associated guidelines, policies and legislation.

It cannot be any clearer than that, so to have a situation now where the Leader of the Opposition, in an extraordinary fashion, says this is just a blatant grab for power by the Treasurer of the state and completely opposed to everything the Australian Labor Party is supporting, is nonsense and is clearly significantly disconnected from the views of his own members of the committee.

Again, the inference that in no way has the government been clear in terms of what the alternative procurement framework is going to be is untrue. The committee was provided with, and this parliament was provided with, the government's comprehensive response to the 17 recommendations of the Statutory Authorities Review Committee on this particular issue. The parliament is also aware of what I think is a 24 or 25-page document, the South Australian government's response to the South Australian Productivity Commission inquiry into government procurement, stage 2.

The government's detailed and considered response to how procurement was to be managed under the proposed new arrangements in the absence of a procurement board is publicly available to everybody, including the Leader of the Opposition and anyone else who has been actively engaged or involved in procurement in South Australia.

The only logical extension of the Labor Party's position now is that, should they successfully have the numbers in this particular chamber, the State Procurement Board will not be abolished, contrary to the views of their own members, the committee and the many people in industry who have lobbied furiously members of not only the Statutory Authorities Review Committee but members of the Liberal Party, the Labor Party and the crossbench, and who have been extraordinarily critical of the performance of the State Procurement Board under the operations mainly of the former Labor government for 16 years. People in industry and procurement were evidently sick and tired of the way the operations of the State Procurement Board had been carried out for many years under the existing arrangements.

So there are two major inquiries, supported by all and sundry, including the Labor Party. They recommend a consistent course of action, that is, to abolish the State Procurement Board, and now, at the potential end of the process, the Leader of the Opposition gets up and says, 'Well, no, we think you should keep the State Procurement Board, and we are going to vote to defeat this particular bill.' Should that be the view of the chamber, it will be an extraordinary waste of a lot of taxpayers' money.

I can assure the Leader of the Opposition, if that is the end result, that we will calculate the extraordinary amount of taxpayers' money that has gone into implementing the recommendations of the Statutory Authorities Review Committee, the new arrangements in relation to procurement, the employment of senior staff, the countless thousands of hours of work that bureaucrats and others have entered into in the prospect of implementing what had been a unanimous view of a parliamentary committee of inquiry, and the Productivity Commission as well, in terms of how the existing procurement functions had not worked to the advantage of business and industry in South Australia. They needed to be improved and there was an agreement in relation to how that process could be improved, along the lines of the recommendations of the Statutory Authorities Review Committee and the Productivity Commission.

I make clear that the considerable sum of taxpayers' money that might have been wasted in this whole process—if the Australian Labor Party, having had its own members vote for this particular proposal, upon the change of leadership or something had decided to change its position and had indicated that, then we would understand that, again, a key participant in this whole process, being the Labor Party, had withdrawn its support for the proposals its own members had entered into, but there has been no indication of that up until this extraordinary contribution from the Leader of the Opposition in this particular chamber this evening.

Without going through all the detail, I understand that representatives of the Labor Party were asked—in terms of the briefings, that is, the current legislative functions of the State Procurement Board—what the new control functions and the new procurement framework would be. I seek leave to table a copy of a note that, as I understand it, was given to members of the Labor Party, and possibly the crossbenchers—I am not sure. I am happy to make this available. Given the board was going to be abolished, it demonstrates how the current legislative functions of the procurement board under the new procurement framework—the equivalent control functions—will be maintained.

Leave granted.

The Hon. R.I. LUCAS: With that, I would urge members of the crossbench to support this reform, particularly some members who participated in the committee inquiry and have been passionate advocates for the abolition of the State Procurement Board for a period of time. I would urge those members either during the committee stage or in the final vote for this particular bill, the third reading, to support what up until now has been agreed by everyone as an appropriate course to improve procurement policy in South Australia.

Bill read a second time.

Committee Stage

Bill taken through committee without amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (15:57): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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