Nick Xenophon (SA, Independent) Share this | Hansard source

Senator O'Neill points out more and more people are working part-time. You cannot buy a home on a part-time income. You cannot plan your future on a casual wage. That is why these procurement rules are so important. Why is it that the Australian government recklessly continues to pursue a procurement policy that does not take into account the social and economic benefits of ensuring that any purchases with our money are focused on social and economic benefit. There are huge benefits for the economy in respect of that.

Senator Marshall referred to the 'sole-destroying' boots—literally—made in another country, which fell apart on parade because the glue did not stick. It happened on Labor's watch, and Senator Marshall readily and graciously acknowledged that, but what happened in 2014? I am wearing my Rossi boots. I will not incur your ire, Mr Acting Deputy President, by taking my boots off and slapping them on the table Khrushchev-style. But I will say this: Rossi boots have been around since 1910. They have been making boots for our troops since World War I—and year after year after that. In 2014 they missed out on a contract, a tender, to make up to 100,000 pairs of workboots over five years for the ADF. They missed out to another country because they were supposed to give so-called value for money.

After asking the former Minister for Defence, Senator Johnston, it was established that the price differential was only 10 to 15 per cent. I do not think Senator Johnston was too happy about it either, to be fair to him. I do not think he actually knew what had occurred and I think he was privately quite furious about it. By applying these asinine Commonwealth procurement rules of so-called best value for money, all that work, that multi-million dollar contract, went off to another country—Indonesia, in this case. I have nothing against Indonesia. In fact, it happens to be—and Senator Hanson is in the chamber—not only the world's biggest Muslim country but also one of the most robust democracies in our region, with a strong free press. But that contract went to Indonesia for a lousy 10 to 15 per cent price differential.

Imagine, as Senator Marshall has alluded to, what the difference would have been if Rossi Boots had been able to employ more people and to give them more overtime, if those workers had been able to spend their money in the local economy in South Australia and if Rossi Boots been able to pay more corporate tax at 30 cents in the dollar—all with huge multiplier effects. The butcher, the baker, the candlestick maker—all of those people would have had the benefit of that extra money being pumped into the economy. Instead, what did we do? We exported those jobs overseas and we did so with a degree of recklessness.

We can fix our Commonwealth procurement rules and we must fix our Commonwealth procurement rules. But it seems that the whole debate, from the point of view of the coalition, is tied up in the free trade mantra. In some way, if we have stronger Commonwealth procurement rules, if we stood up for our national interest in the way the Americans do, the Canadians do, the Europeans do and the Brits do we would be much better off. I need to refute some of the matters that Senator Macdonald raised. I am grateful for his thoughtful contribution but he is wrong. We need to take into account these free trade deals. I mention them because it seems that the Commonwealth government, this government and indeed previous governments, have taken the view that we cannot have Commonwealth procurement rules that are about buying Australian made because that might offend the WTO and all these trade agreements we enter into. It might throw a spanner in the works when we are negotiating these free trade deals.

I know I have been criticised in the Australian Financial Review by Alan Oxley, who gave a perfect exposition on 8 June this year of the fundamentals of free trade orthodoxy. I know that I have been criticised by Paul Kelly in The Australian as the most dangerous protectionist politician in the parliament for decades. I take that as a compliment, I think, even though I am not a protectionist and, Mr Acting Deputy President Whish-Wilson, you are a little bit jealous that you have not been attacked in the same way.

Let's look at the outcomes of some of these deals. The Australian National University studies of the outcomes of the Australia-US Free Trade Agreement after 10 years shows that the preferential agreement diverted trade away from other countries. Australia and United States have reduced their trade by US$53 billion or A$71 billion with the rest of the world and are worse off than they would have been without the agreement. The coalition says that Australia's FTAs with Japan, South Korea and China will lead to tens of thousands of additional jobs yet the government's own economic modelling by the Canberra based Centre for International Economics estimates that, by 2035, those three FTAs will have produced a total of the only 5,400 additional jobs. Guess what? We are going to be losing tens of thousand of jobs because of this free trade orthodoxy by the end of next year. How do we counteract that? We need to have viable, strong, clear Commonwealth procurement rules to take into account the social and economic effects—'smart procurement', as Professor John Spoehr from South Australia says.

We need to have these Commonwealth procurement rules as a matter of urgency. I can foreshadow that I, along with Senator Griff and Senator Kakoschke-Moore, will be introducing legislation to amend the current Commonwealth procurement rules framework to take the rules out of where they are, where they are not in legislation and put them firmly in legislation where these factors are taken into account. I look forward to working with all my colleagues. I acknowledge Senator Carr—and I hope this is not the kiss of death politically to say nice things about Senator Carr. We have a good working relationship in respect of industry policy because he gets it; he knows what needs to be done.

Let's put these procurement rules in context We have a situation now where Arrium, the steelworks in Whyalla, are on the brink. They are on the brink in part because of Commonwealth procurement rules, because state and federal governments have not been buying enough of Australian made steel. Arrium falling over is not something that we can contemplate although I do have a lot of confidence in Mark Mentha, the administrator of Arrium. If Arrium falls over, we will lose structural steel making in this country. It will put enormous pressure on BlueScope, the rolling steel maker in Wollongong, and it will mean the end or the compromising of thousands of steel fabrication businesses in this country. That is the domino effect you get if you do not have a clear policy framework for Commonwealth procurement rules.

The Commonwealth government can turbocharge our manufacturing sector, can save many of those jobs that will be lost when auto making shuts down it has have a clearheaded, far-sighted policy of procurement in this country. We need to change these Commonwealth procurement rules sooner rather than later because the effect on the economies of Victoria, South Australia and indeed the rest of the country will be enormous. When those workers at GMH, Ford and Toyota run out of their redundancy packages, you will not want to see what that will do to unemployment figures in this country. It might be after the next election but the impact will be enormous.

We need to reform these rules because so many sectors of our economy are suffering. Let me give you one emblematic example of how sick these rules are—and I know young people say 'sick' in the positive sense but I mean it in the old fashioned sense. At the last election, when we cast our ballots on 2 July, many Australians would not realise that probably up to a couple of million ballot papers were produced or came from paper that came from other countries—from China, from Indonesia and from Thailand—even though Australian paper manufacturers were ready, willing and able to supply that paper here from forests that comply with forestry standards—quite different from the standards that may apply in other countries. It is extraordinary that the very paper that we decide who will govern our nation on may have come from another country because of our broken procurement rules. The irony is not lost on me nor on a number of my colleagues here. That is the absurdity of these rules.

I know Senator Macdonald tried to defend what was happening with the Australian Defence Force uniforms. I would have thought that when the men and women of the Australian Defence Force are on parade or at official functions representing our country as part of the Australian Defence Force that they would be displaying uniforms that made in Australia. We need to drill down and find out whether or not those assertions of triple the cost are actually true and what the economic benefits would have been otherwise.

This is an issue that will not go away. There must be amendments to the Public Governance, Performance and Accountability Act to ensure that we do achieve real value for money in procurement. And achieving real value for money in procurement means buying Australian by taking into account the social and economic benefits of local procurement.

Debate interrupted.