John Forrest (Mallee, National Party) Share this | Hansard source

I am really pleased to be able to address the amendments in the Public Works Committee Amendment Bill 2006 to the Public Works Committee Act 1969. Those of us who have been on the Public Works Committee have been urging reforms like these for some time. I am pleased because this debate gives us an opportunity to remind the House just how important the Public Works Committee is. Mr Deputy Speaker Hatton, I acknowledge your former role as a participant on the committee. I am speaking in this debate not just as a member of the committee myself but on behalf of our current chair, the member for Pearce, the Hon. Judy Moylan, whilst she is engaged in duties overseas.

Briefly, the Public Works Committee is one of the oldest investigative committees of the parliament, having been established in 1913. It cannot claim to be the oldest public works committee in Australia; that honour goes to New South Wales, whose Public Works Committee was established in 1888. Back in 1913 there was a clear and identifiable need for a public works committee. Joseph Cook, the then Prime Minister, informed the parliament that the methods for conducting public works policy were crude, inefficient and altogether inadequate for the purposes of securing taxpayers against loss and waste.

In those days, £3 million to £4 million was being spent each year on public works, yet there was no full or detailed investigation of the projects to which the expenditure related. Nor did the parliament know very much of the actual details of the expenditure, which in those days would have been significant sums of money.

The act of 1913 and subsequent amendments define the committee’s role. It is, firstly, to consider each public work that is referred to it and to report to both houses on the suitability of the work being undertaken, having particular regard to: the purpose of the work and its suitability for that purpose; the need for or the advisability of carrying out the work; whether the money to be expended on the work is being spent in the most cost-effective manner; the amount of revenue that the work will generate for the Commonwealth—if that is its purpose; and the present and prospective public value of the work. In 1913 that meant that all proposals for expenditure exceeding £10,000 were to be submitted to the committee for inquiry and report to the parliament. We have come a long way since then, when Prime Minister Joseph Cook introduced the act to overcome what was described as the chaotic state of our public works.

Thankfully it is not like that today: it is a great committee to work on. There is a very strong bipartisan will. Credit goes to the member for Gorton, the deputy chair of the committee, who inspires that spirit as we beaver away, in the interests of the generous taxpayers who provide the funding, to ensure it is being spent appropriately. The functions of today’s committee are still reflective of its antecedents. The public works now coming before it are much more sophisticated, more complex and larger in scale than ever before, with different procurement arrangements, which I will discuss shortly. Geographically, the spread of projects ranges right across the breadth of the Australian continent, in the territories and each of the states—Darwin, Central Australia, Western Australia and in the Antarctic and in other countries where we have embassies or high commissions.

The committee has looked at projects with a price tag of over $2 million and projects associated with Australia’s defence capability in excess of $400 million. To give an example of how hardworking the committee is, in overall terms, the committee approved expenditure of $990.8 million on 22 public works projects in 2005. Yesterday the deputy chair presented our 17th report for this year, so we are well on the way to meeting that huge target. This is a huge workload for the committee.

That leads me to the bill that is now before us in the House today. Its purpose is to amend the act to reflect the changes in the Commonwealth public works and procurement environment which have occurred since the act was last amended, in 1989. Over the many years since that early £10,000 was determined to be the threshold for the submission of public works proposals to the committee, there have been a number of adjustments to the threshold that reflect increased prices in materials and ancillary costs associated with the overall costs of construction.

To illustrate this point: in 1969 the threshold was set at $750,000, in 1973 it was raised to $2 million and in 1985 it was raised to $6 million. This bill seeks to increase that threshold to $15 million, which is an adjustment to encompass 20 years of inflation. The bill also provides for this figure to be amended by regulation in the future rather than by an amending act, thereby providing greater flexibility for future updates of the threshold. I note that this has caused some concern and discussion because of the possibility that works below the threshold might not have the supervision of the parliament. I would remind members that the committee still has the right to make inquiry on an informal basis on any projects below that—in fact, even with the current threshold at $6 million, we still exercise some scrutiny of what are described as minor projects.

But, most importantly, in addition to raising the threshold from $6 million to $15 million, the bill changes the definition of a public work by clarifying that works funded through public-private partnerships or similar arrangements must be referred to the committee. This is an issue which has occupied the committee’s activities for some time, as procurement arrangements are changing dramatically in the modern world, with partnerships developing with private enterprise.

Essentially, public-private partnerships involve the use of private sector capital funds and assets and are used more and more frequently in major infrastructure procurement arrangements. PPPs, as they are often referred to, reconfigure the procurement process by placing emphasis on the service or capability that the public sector requires rather than the asset used to provide them. It saves the Commonwealth accumulating a huge amount of assets when really it is the Commonwealth’s purpose to deliver services. It has been an interesting period of inquiry for the committee as we have wrestled with these issues. This bill gives some certainty to us and to the proponents of projects about what everyone’s responsibilities are.

As part of the amendment to the definition of public works, the bill addresses the difficulties which the committee has already experienced in addressing these anomalies. The amendments that are contained in the bill, and which I have spoken to here, reflect feedback from the committee and other sources on the public operation of the act, especially as it related to these procurement arrangements. It is not just about construction costs and adjustment for inflation; it is also about giving certainty to the purpose of a standing committee of the parliament.

Finally, I want to conclude by complimenting my fellow committee members—current and former—particularly the chair and the deputy chair. It is a joy to work on a committee without the partisanship that often occurs on some committees. We are united in our purpose to ensure the effective discharge of the responsibility that is put on us by the citizens of Australia to ensure their money is well spent. The committee as a whole supports this bill and accordingly I commend it to the House.

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