Gavin Marshall (Victoria, Deputy-President) Share this | Hansard source

'Sole less', says Senator Xenophon. It continues:

Defence officials have told Senate estimates the problems began in 2008 when the tender to make the boots was won by a Chinese company. Defence had sent the boots back to the manufacturer for extra stitching and nails to try and hold them together. But officials say the glue is still failing in hot conditions.

On a number of parades, especially in northern Australia, soldiers were marching and the soles were falling off their boots. That was not a good value contract. It was certainly the lowest cost contract, but it was not a good value contract.

We were in government then, and a lesson was learnt by Defence at that time and a new contract was awarded to R. M. Williams. R. M. Williams were very happy to receive that contract. Back in 2013, Chief of Army, Lieutenant General David Morrison AO, said:

The Army is proud to be partnering with the Australian brand.

With the Australian Army’s 112 year history, it is fitting that we will now also carry over 80 years of Australian tradition in our boots.

That is an example of where the lowest cost was not the best value. We now have the best value, because we look at a long-term quality product and we look at the workers who actually make that product—workers who pay taxes in Australia; workers who do not receive unemployment benefits, because they are employed; workers who have families and buy houses; workers who buy food, put food on the table; workers who have children and send their children to our schools; workers who contribute to every facet of our economy, working because we took a best-value approach to that particular contract.

If we apply that across the board to the $59 billion worth of government procurement every year, we can assist the economy. We can best value-add to our economy by ensuring that Australian manufacturers are best positioned to compete for that work and ensuring a system that allows the full value of the tendering process to be taken into consideration. Other countries do it. We know the United States do it. They have 'buy American' policies and they sometimes have some absolute restrictions on foreign companies tendering for some of those products.

Government procurement certainly has the huge and important purchasing power of the government. It is an immense part of our nation's industry and of our economic policy. We must ensure that this money, this $59 billion, is spent in the best interest of our economy, and not someone else's. We should use that spending to drive a diverse industrial base capable of generating those skilled and well-paid jobs that I talked about earlier, the ones that are so essential to the future of our economy. Decisions such as the recent Australian Defence Force dress uniforms contract revealed that the current government has made a poor choice. Just going back to the example I used earlier: we thought that Defence had learnt their lesson with their parade shoes, but I suspect that they have not. Lessons only seem to be learnt for periods of a government and do not continue past that.

Commonwealth decision-making must take into account all the factors which flow from its procurement. It is not simply a matter of obtaining a product by handing less money to a low-wage manufacturer in another country. Domestic manufacturers are part of the Australian economy, and we want that money to assist there. A product's quality and capability and whether it is fit for purpose are all issues which need to be tested before the value-for-money test is applied. Time and time again we have seen examples of state, territory and Commonwealth purchases putting the price tag before the purpose. For instance, I am aware of an example in Victoria where one of the fire authorities bought some cheap firetrucks from Eastern Europe. When the ladders were extended there were huge gaps in the ladders. They were really cheap, but they were not fit for purpose. We have seen firetrucks purchased that did not fit into the fire stations. They were not fit for purpose—they simply went for the lowest cost without making sure that the purchases were fit for what we were spending the money on.

The wrong product can be picked if the proper requirements are not set. Everything in Commonwealth purchases must have met the exacting Australian standards for what we needed to do. We also know that there are many examples where substandard material and product is coming in, and much of that is purchased by the Commonwealth government. We have examples where asbestos—something that took years and years of campaigning to get out of this country—is now being imported into this country, sometimes with 'asbestos free' labelled on it. We ought not just rely on low standards from some overseas countries with a stamp saying there is no asbestos when there is no ability for us to ensure that. We have seen bridges made with the wrong gauge steel, and the hollow parts of the bridges, from overseas, were filled with water to ensure that they weighed more. They would trick the receiver of the goods into thinking that the right gauge steel had been used, because they had secretly added weight. Again, we find that many of those things are not fit for purpose.

In this country we need a consistent, straightforward and thorough approach to procurement. Commonwealth agencies should not be required to choose the cheapest supplier, whether at home or abroad, and they should be able to consider any detrimental environmental and social effects when making their purchasing decisions. Any government which was committed to providing for a growing and thriving Australian industry would commit itself to responsible domestic procurement and not simply look only at the purchase price in competitive tenders.

I want to spend a bit of time drilling down into what value for money actually is. The question of value for money goes to the very heart of this motion. It was examined in great detail in the 2014 report of the Senate Finance and Public Administration References Committee inquiry into Commonwealth procurement procedures. The committee went to considerable length to explain what value for money really means. This is what the committee came up with, and it is a very clear definition:

At a basic level, obtaining value for money for each procurement action requires a comparative analysis of all the relevant costs and benefits of each supplier's proposal throughout the procurement cycle, and is not determined by price alone. It should also consider the whole-of-life costs of the procurement and include consideration of quality and overall fitness for purpose.

If we apply that test we will have many, many different outcomes. We will see that the value of the taxpayer's dollar for government procurement is invested back into our economy, supporting Australian jobs, Australian industry and the Australian economy. I think it is time that we had a very hard look at these arrangements. We need to have a very hard look at how free trade agreements work their way into some of these decisions. We need to ensure that Australian industry and jobs in this country are supported. Given that we are getting close to time and Senator Xenophon has indicated that he would like to speak to conclude this debate or take it through to 6 o'clock plus, I will now allow him to do that.