Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Hansard source

I move:

That this House:

(1) notes that:

(a) the Government spends around $40 billion each year on procuring goods and services;

(b) the Commonwealth Procurement Rules provide considerable flexibility to Government departments when making procurement decisions;

(c) considerable economic, social and environmental benefits arise from the Government buying Australian products and services; and

(d) domestic Government procurement encourages innovation and investment;

(2) expresses concern at the level of goods and services that are being sourced from overseas by the Government; and

(3) calls on the Government to apply a comprehensive value for money test which includes all national benefits which accrue when goods and services are procured locally.

Each year, the federal government spends in excess of $40 billion in the procurement of goods and services for the country. When you combine that with the procurement value of the other two levels of government, state and local government, the best figures would suggest that the figure would be somewhere between eight and 10 per cent of GDP. Even on a very broadbased figure, that amounts to over $100 billion a year spent by governments on procurement of goods and services. It is a very important economic lever, but one that seems to be largely ignored by governments of this country. Indeed, we do not know how much of those procurement dollars ends up overseas and we do not know how much of it goes to local suppliers. All too often I hear of local suppliers who lose out on bids or tenders that they put in, and the work has gone offshore to a company, which, in my view, the justification for is pretty weak. In addition to that, we have the added complexity that not only do we have a disjointed approach when it comes to government procurement around this country—in that federal, state and local government do not seem to work at all together—but also within each level of government the various departments also seem to do their own things. It seems they are driven, inevitably, by their own budget bottom lines, as opposed to what is in the national interest.

It is true that each of them would claim that they have procurement policies in place, but I have read some of those policies and it seems to me that they are written in a way which allows them to make the decision that they want. There is sufficient flexibility within them to give them the freedom to do what they want when it comes to procurement. One of the fundamental differences that I see between government procurement and private enterprise procurement—and quite often government departments try to emulate private enterprise practices when it comes to procurement—is that, unlike private enterprise, governments have a social responsibility. They also have a financial responsibility attached to that social responsibility. So trying to emulate private practice does not work when it comes to government responsibility.

Another excuse I often see—in fact, it is confronting us right now—is the excuse that free trade agreements limit the ability of governments to purchase products from where they want and how they want. We are seeing a firsthand example of that right now, with the Victorian government being challenged in its attempts to use Australian steel in some of the work that it wants to do in its state, it being claimed that the purchasing of Australian steel breaches free trade agreements. I would hope that the Victorian government proceeds with what they want to do and allows those who want to challenge them to do so in the courts. We also saw in South Australia—and I notice my colleague the member for Grey is here—Rossi Boots missed out on a contract to manufacture Defence boots, and the contract went to an Indonesian supplier. When I looked at the reasons for that and the implications of that decision I was left perplexed. Quite frankly, the jobs that could have been gained had Rossi Boots won that contract more than offset the few dollars that might have been saved by going offshore. Again, there was the same issue when it came to the BMW cars that are used by government ministers right now, where previously the contract went to GMH.

The problem is this: when we lose jobs here it is the same government that is spending the money that also loses, because there is a decline in taxation revenue, an increase in unemployment and other health and social costs, which inevitably have to be borne out by the government of the day. I know that other governments around the world are in fact doing differently. The USA has set a framework for how procurement is done in that country for a long time. The UK, Scotland and Europe are also applying what I call 'smart procurement policies', where they are putting their national interest ahead of anything else. We need to do the same. We need to apply a much more broad national interest test than that which I have seen applied in recent times by governments: a national interest test that includes the whole-of-life cost of a product, the cost to society of losing those jobs if the tender does not go to a local supplier, all costs that will otherwise be borne by government as a result of that and the flow-on benefits to local communities if we actually support local industries.

Lastly, by supporting local industries we also create certainty for them, which leads to research and development, innovation and modernisation of those industries, which continues to make them more competitive all the time, and it reduces our overseas net debt. It makes sense to have good, smart government procurement policy, and I urge the government to think about the way our policies are run in this country right now.

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