Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Hansard source

I seek leave to take note of the return to order regarding the Australian Defence Force boots order.

Leave granted.

On 18 July 2014 the Minister for Defence table a letter in response to an order for the production of documents from Senator Madigan on behalf of Senator Xenophon. Senator Xenophon had asked the government to explain why an Australian manufacturer had not been successful in tendering for a contract worth approximately $15 million to make 100,000 pairs of boots for the Army. That manufacture is Rossi Boots. It is an iconic firm which has been making boots in South Australia since the early 1900s. The minister's letter states that the successful tenderer was also an Australian firm, Amare Safety, which will deliver the boots via an Australian firm operating in Indonesia, and herein lies the problem. I am not critical of Amare Safety but I am critical of the government for failing to recognise the role that Australian government procurement decisions play in maintaining Australian industrial capability and Australian jobs. The minister's letter states that:

Under the Commonwealth's procurement rules Defence is not able to discriminate against a bid based on its country of origin.

This statement is, at best, misleading. The minister must know that governments should always seek to obtain value for money in procurement decisions. That does not mean mandating government procurement for Australian firms but it does mean that governments should apply the right balance in applying rules. Most important of all, obtaining value for money does not simply mean buying at the lowest price. It means assessing the whole of life costs, whether the goods are fit for purpose and whether a potential supplier has the right experience and understanding of local conditions.

That understanding of 'obtaining value for money' was reinforced by the recent report of the Senate Finance and Public Administration References Committee on Commonwealth procurement. So I ask the minister: what whole-of-life considerations were taken into account in awarding the contract to a firm that will make the boots in Indonesia? Will the department regularly send officers to Indonesia to inspect the process and the various facilities? How does the decision to award this contract offshore provide economic benefit to Australia? And did the department make any effort to reach an agreement with an Australian firm on price, delivery, compliance or quality?

I ask a further question: was any attempt made to apply the same process that led to the purchase of the slouch hat from an Australian manufacturer under the same procurement guidelines, which this government now claims preclude the use of Australian firms in this manner?

Let me assure the minister that I will be pursuing these matters further and we are looking forward to the next estimates committee hearings on these questions.