Michael Forshaw (NSW, Australian Labor Party) Share this | Hansard source

I rise as a member of the Joint Standing Committee on Public Works to make a few comments on the Public Works Committee Amendment Bill 2006. At the outset, I support Senator Parry’s comments on the specific provisions of the bill. Senator Parry is a member of the Public Works Committee. I take this opportunity—it is early in the week—to compliment him and other members of the government parties on their work on the committee. It is a committee that functions exceptionally well. Our task, as the statute requires, is to assess the value for money of public works projects that are undertaken by government departments and agencies. We do that in a very bipartisan and, I believe, professional manner. I also note the comments of Senator Murray, who has a very keen interest in this area. He is a member of the Joint Committee of Public Accounts and Audit, which has an affinity with the Public Works Committee.

The specific provisions of this legislation are supported by the opposition. They arise, dare I say it, out of suggestions coming from the committee itself. I note that the Parliamentary Secretary to the Minister for Finance and Administration, who is in the chamber today and is a former member of the committee, is aware of this. I compliment him on taking up these propositions and bringing forward this legislation. Firstly, there is the issue of the threshold, which has been at $6 million for some time now. All members of the committee realise that was an unrealistically low figure given the cost of major projects in this day and age. The increase reflects a suitable adjustment so that the committee is not overburdened by dealing with projects of a monetary value which would have classed them as major projects many years ago but would not do so today.

Six million dollars does not buy you a lot. However, it is not an insignificant amount, particularly when it comes to fit-outs. As Senator Parry and the government have acknowledged, the committee still has the discretion to look at medium-value projects below that amount where it is advised of those projects and feels it would be worth while to do so. So we support the increase from $6 million to $15 million as a sensible adjustment. In case anyone should think that increasing the amount means fewer public works will be scrutinised by the committee, let me assure them that will not be the case. In fact, the workload of this committee has increased substantially in the last couple of years, as all members can attest.

The second aspect is a change in the definition of ‘public work’ to pick up changes in construction techniques and funding techniques, particularly the use of private-public partnerships. The committee has recently been considering projects which are private-public partnerships in the defence area. I think it is fair to say that, even for those on the committee who have some expertise or long experience in dealing with the building and construction industry—and that does not include me—this is a pretty complex area. The committee has been applying itself diligently in examining private-public partnership projects which are costed over, say, a 30- or 40-year period. Where the committee is required to approve an up-front appropriation, it has been at pains to ensure that all the relevant information is before it so it can ensure that the Commonwealth and taxpayers get value for money.

There are a couple of other things that I also want to add. The committee has from time to time expressed an interest in or views about other issues. One of those is the fact that the committee does not have the statutory power to look at leases—and I am sure, Mr Acting Deputy President Brandis, your interest will be tweaked here. For some time major leasehold arrangements have been entered into by government departments and agencies which are often far in excess of the cost of a public works project. Also, sell and lease-back arrangements have been entered into by various departments and agencies.

There have been times when committee members have been, for instance, examining a construction project or a fit-out project of, say, $5 million or $10 million, but we were aware that a leasehold arrangement was being entered into which amounted to $20 million or $30 million. We can look at the former but we cannot look at the latter because of the statutory limitations. I am not arguing or proposing that we change the legislation at this point in time, but this is one of those interesting issues that arises before the committee. There are other mechanisms of the parliament, such as the estimates process, that are available to senators and the parliament to look at those leasehold arrangements, and they have been used on many occasions in hearings of the Senate Standing Committee on Finance and Public Administration, as you no doubt would be aware, Mr Acting Deputy President.

One other issue that is of relevance, particularly with some of the more recent projects that have been brought before the committee involving construction and fit-out or major fit-outs of buildings that are being leased, is the practice within the industry of the reversionary payment. That is where the developer has a price for the project, which the Commonwealth department has to pay, but at the completion of the project, as part of the overall project costs, there is a discount for the department or the agency entering into a long-term lease. This may take the form of reduced leasehold payments or of rent-free accommodation for a period of time or, indeed, of a lump sum payment back to the department. Without going into specific details, this has attracted the interest of the committee because it goes to the question of, ultimately, how much the actual cost of the project is to the Commonwealth. At the end of the day, that is what the committee is required to approve—that is, we are required to assess and approve or not approve the expenditure of a dollar amount on a public works project.

Other issues, of course, have been identified such as what happened in the case of the proposed Christmas Island detention centre, where there was a huge cost blow-out. It certainly would have come to the point where that project would have been referred to the committee by the parliament, if the government had not taken other action at the time. Another recent example of a blow-out was where the committee gave approval to a project of about $18 million or $19 million for ANSTO to build a new radiopharmaceuticals facility at Lucas Heights. The committee assessed and approved it, and then it came to light sometime later that the board of ANSTO had in fact decided not to go ahead with the project because, after it did some further homework and assessment, it realised that the cost of the project was going to blow out to about double the original amount requested—that is, $40 million. I particularly was concerned about that because, certainly to my understanding, the committee only became aware of that sometime after the actual decision of the board.

Our committee does not have direct power to go back and reconsider projects because our job finishes once we have dealt with the reference. I am concerned about this issue, but we do often enter into arrangements with departments and agencies whereby they will continue to report to us on the progress of the development of a project after its approval so that we do not have situations where there are substantial cost overruns or blow-outs after the original decision has been made.

With those comments, I indicate that we support the legislation. I thank particularly the parliamentary secretary, other members of the committee and members of the government who have worked to get these changes introduced. As I said, members of the committee have been advocating these changes for some time.