Gary Nairn (Eden-Monaro, Liberal Party, Special Minister of State) Share this | Hansard source

I present the explanatory memorandum to this bill and move:

That this bill be now read a second time.

This bill is to amend the Public Works Committee Act 1969 to alter the value and definition of a public work that requires referral to the Parliamentary Standing Committee on Public Works.

The amendments in the bill reflect the changes in the Commonwealth public works environment since the act was last amended in 1989. This was based on feedback from the committee and other sources on the practical operation of the act.

The amendments particularly take into account new methods of procurement and the increase in construction prices since the threshold was last amended in 1985. It has been a significant period of time since that threshold was changed.

The bill updates the threshold value at which projects must be referred to the committee from $6 million to $15 million. This reflects the increase in the cost of construction since the value was last amended in 1985.

The proposed legislation also allows for the value to be otherwise set by regulation. This provides for greater flexibility for future updates of the threshold value to accommodate future changes in the value. A regulatory regime will help avoid freezing the threshold at inappropriate levels, allowing for more regular adjustment.

The change to the definition of a ‘public work’ firstly clarifies that works funded by way of public private partnerships, or PPPs, must be referred to the committee. This reflects the current understanding that works funded through PPPs are implicitly covered by the act.

The amended definition of a ‘public work’ specifically includes those public works funded through leasing or other similar arrangements. These are often fit-outs of leased accommodation, which are included in the act. However, their funding arrangements caused them to fall outside the definition of a ‘public work’.

The revised definition does not refer to the specific funding methods. Instead, the characteristics of a public work have been amended so as to include these works. Two amendments have been made to achieve this end.

The first allows for indirect funding of the work. This covers, but is not limited to, deferred payment, payment through a PPP vehicle, or payment through leasing or similar arrangements.

The second removes the requirement that the Commonwealth or Commonwealth authority is proposed to become the owner of the work. Under either funding method, the Commonwealth or Commonwealth authority may not necessarily become the owner of the work.

The revised definition does not extend to cover works that are not ‘for the Commonwealth’, or ‘for a Commonwealth authority’. An example of this is a pre-commitment lease, where the private sector constructs a building that is subsequently occupied by a Commonwealth (or a Commonwealth authority) tenant.

No other changes are made to the definition of a ‘public work’.

The amendment to the definition of a public work removes the requirement that the Commonwealth must become the owner of the work. However, in order for it to be a public work, the reason for undertaking the work must be that it is for the Commonwealth or a Commonwealth authority.

For example, a PPP will be undertaken for a Commonwealth purpose and simply represents an alternative procurement method. A pre-commitment lease on the other hand, implies that the Commonwealth, or a Commonwealth authority, will be the first tenant in a facility that is not custom designed for it. Pre-commitment leases differ from PPPs in that the construction of the facility is not predicated on the Commonwealth or a Commonwealth authority being a party to the contract.

Any works currently under scrutiny by the committee still require a report to the parliament, even if the amendments to the act would otherwise cause that work to no longer be covered by the act.

Finally, the language of the act is updated to reflect the modern approach of using non-gender specific terminology. References to the Minister for Housing and Construction have also been updated.

I commend this bill to the parliament. The changes that have been made are necessary. A good example of the need for the change to PPPs is the new Defence Headquarters, which is being constructed in my electorate, between Queanbeyan and Bungendore. This is the first PPP of the Commonwealth where construction is being done specifically for the use of the Commonwealth as opposed to not specifically for the Commonwealth. While it went through the Public Works Committee, it was necessary to make these changes for the future to include those various options. I commend the bill to the House.

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