David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to speak in favour of the Government Procurement (Judicial Review) Bill 2017. After I elaborate on the details of this very sensible bill, I want to make some broader comments about Commonwealth procurement policy. The bill establishes jurisdiction for the Federal Circuit Court of Australia, rather than just the Federal Court of Australia, in regard to matters of dispute within the Commonwealth Procurement Rules. It will vest power with the Federal Circuit Court to grant injunctions and to order payment of financial compensation when the procurement rules are contravened. It comes out of a response to the 2014 Senate Finance and Public Administration References Committee's assessment and recommendations to create an independent and effective complaints mechanism for people supplying to the Commonwealth government and various entities. It also arises out of the need for us to comply with our obligations under World Trade Organization agreements and our free trade agreements.

Australia is also making sure that small and medium enterprises in regional, rural and metropolitan Australia have an avenue through the Federal Circuit Court, which is the only court which has a continuous presence in regional Australia where many of these businesses reside and produce goods which are procured by Commonwealth entities. As I mentioned, the Federal Circuit Court will be able to receive complaints from both local and international suppliers who feel that the Commonwealth Procurement Rules have been breached. And it is that which triggers the ability for them to issue an injunction, correct things or order financial compensation.

In introducing this bill, the government doesn't want to generate a so-called lawyerfest. There are many sensible requirements under the bill for the supplier to engage directly with the Commonwealth entity in the first instance in relation to their complaint and to do it in a timely fashion—within 10 days and in writing. The compensation is limited to reasonable costs for the preparation of the tender and/or the costs related to the challenge. The Federal Circuit Court, as I mentioned, will be much more accessible than the higher court because it does sit regularly around regional Australia, and, as I said, many of the people supplying to Commonwealth entities are based in regional Australia. Their raw products and their production are in regional Australia—not exclusively, of course, but it will be a much better fit. It will make it more accessible and more timely, and it will allow much more transparency because of the time constraints that one has to comply with. Evidence of the breach and evidence of the attempts to resolve the matter with the Commonwealth entity must be provided in these disputes. There is facility and a requirement to do this so that the supplier can continue to supply during this dispute resolution. And the remedies and compensations are going to be the solution, rather than just leaving matters in a continual state of litigation.

I have to state that, to qualify to go before this dispute resolution mechanism through the Federal Circuit Court, contracts have to be eligible. For the procurement contract to be covered by this legislation, both the first and second divisions of the Commonwealth Procurement Rules must apply. There are many exemptions under the Commonwealth Procurement Rules, including on the basis that the procurement is essential for maintaining international peace and security, for human health, or for protecting essential security facilities or national artistic, historical or archaeological treasures. There are exceptions for specific defence procurements and specific free trade agreement conditions. The accountable authority may issue a public interest certificate where the public interest or safety would be compromised by ceasing the procurement—that is, if something is a really important facility or product, say a bit of equipment that is essential, you don't want to have loss of delivery of that just because you're entering into a dispute resolution. In this case, if a public interest certificate is issued, it will allow for the delivery of the goods to continue whilst the issue in dispute is sorted out.

The Commonwealth Procurement Rules set aside 10 per cent of Commonwealth procurement across all entities that must go to small and medium-sized enterprises. I would like to comment on some of these Commonwealth Procurement Rules, because it's hard to separate the rules from this dispute resolution process and the bill that we're discussing today. I think the 10 per cent should be an absolute minimum. I think all Commonwealth entities, whether they're corporate government entities, non-corporate government entities or Commonwealth government departments, should be looking at the value that small and medium-sized enterprises deliver when you look at the holistic value-for-money principle, which is mentioned in the Commonwealth Procurement Rules. I also note that there is a propensity among Commonwealth government departments, corporate and non-corporate government entities to take the easy way out and go straight to a prime contractor. The reality, though, is that in many instances the prime contractor isn't the actual builder or supplier of the goods; they just act as a giant middleman. They can organise plenty of other tier 2 suppliers of equipment, goods or services—but really, if we're going to try to deliver on the provisions in the Commonwealth Procurement Rules regarding value for money, I put it to the House that it's much better value to go to the direct supplier of the good or service, rather than doing everything through a prime. There are, obviously, some things that are too big for a small or medium-sized enterprise, or a large mid-level enterprise but, really, if you look below the tier 1 contractors, for all these procurements you will see a lot more capability used than if it is all done through a prime.

The other comment I would like to make is that nowhere in the value-for-money principles is there a mention of assessing the value to other Commonwealth, state or local government entities that benefit when a Commonwealth entity makes a decision about value for money. The feature that I want to highlight is that, if Commonwealth entities are procuring goods from local Australian businesses, there will be a return benefit, not necessarily in that particular department but in Treasury, or in Finance. If we procure from Australian providers, we get a GST payment or PAYE tax receipts. State governments receive payroll tax receipts. Local governments—if it's a local provider of services—will have many more businesses paying rates. We who have the responsibility for unemployment services and retraining will have reduced unemployment costs if we consider the value of procuring goods from local Australian companies rather than international suppliers. Think of all the retraining and stimulus packages in various parts of the country—these replace companies that used to rely on government contracts but now have people out of a job and are no longer viable, because they haven't got their base, large, long-term government supply contracts.

We also miss out on the multiplier effect. If we purchase goods and services from local or domestically-based companies, we get a local economic multiplier effect. This is particularly the case if the local supplier is in a regional community. Receiving a long-term government contract is, essentially, much more valuable to a local company—whether it's in paper goods, uniforms, boots or high-tech IT services—than giving grants and other stimulus payments. Rather than going to the big primes, we have a burgeoning IT industry with a lot of capability here. I talk about other IT services like cloud computing. We could have that all based here with Australian based companies that pay their taxes here, rather than with multinationals. As we know, we've had a whole tranche of legislation proposed to avoid all the issues of cost shifting—that is, instead of paying tax here in Australia, paying tax in low-taxing jurisdictions.

We also need to make allowance for the fact that a lot of the people who are supplying goods and services, including built and processed products, to the Commonwealth are hamstrung in Australia by high energy costs which overseas people and suppliers aren't necessarily subject to. We also have very high environmental standards in this country. When you're producing goods in Australia, in many cases, costs are higher because we do look after the environment. These added costs come from—mainly—federal and state legislation, particularly some of our energy market rules, and our environmental policies that have put up the costs of electricity and energy. If we're putting these extra burdens onto Australian producers and suppliers to the Commonwealth, it seems only fair and reasonable to account for that in the value-for-money equation.

Getting back to this bill, the Government Procurement (Judicial Review) Bill 2017, it will make it a lot easier for suppliers—local, regional and metropolitan suppliers—to make a complaint. It will allow the supply of critical goods and services to continue while the complaint is sorted out. There are exemptions, as I mentioned, with free trade agreements and defence contracts that must be supplied. But, overall, this is a very good piece of legislation. Legislation that makes things easier is what we're all about in the coalition. Our coalition government is trying to make it easier for all companies to do business with the Commonwealth, and this initiative will go a long way towards making that happen.

I commend this bill to the House. As I said, Commonwealth procurement in the value-for-money decision matrix must take account of value outside the department or entity that is actually doing the procurement. Entities should look at a whole-of-government return benefit, and at the benefit to the whole of the local, regional and national economy from procuring goods and services from local providers. I commend this bill to the House.

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