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

You'll look after your preselection chances! I have worked incredibly constructively with Senator Carr on issues of manufacturing, on the car industry and on shipbuilding. It has been a pleasure to work with him and, at the risk of making him blush, I thought he was an outstanding industry minister. Back in July 2014 the Finance and Public Administration References Committee published the report of an inquiry into Commonwealth procurement procedures. I pay tribute to my former colleague, former Senator John Madigan, who was a great advocate for local procurement. The amendment that I moved previously, that Senator Carr has so graciously copied, plagiarised, was based on the work of that report. I again pay tribute to former Senator Madigan for his work.

So why am I not supporting this amendment? Because what has been achieved, what Senator Cormann, the finance minister, has announced tonight—I want to go through it again—are the biggest changes to the Commonwealth Procurement Rules we have seen in many years. These are changes that have involved a lot of negotiation with Senator Cormann, in absolute good faith. I know we have had our shouting matches at Senate estimates, where we have argued about procurement issues, but I am so pleased to say that these changes are very significant and will make a difference—a real difference—because it is an instrument that is not disallowable; in other words, once it is tabled, that is it, these are the rules that are in place.

If we go to the issue of Australian standards, at 10.10 under the new procurement rules that will apply from 1 March 2017, where an Australian standard is applicable for goods or services being procured tender responses must demonstrate the capability to meet the Australian standard and contracts must contain evidence of the applicable standards. That is a sea change in what we have in terms of procurement rules in this country, ensuring that Australian standards are met. Senator Carr, in his contribution, made reference to Australian steel. This will make a real difference in ensuring that Australian steel is used not just in the context of the building and construction sector but across the board. These changes are across the board changes in respect of the $59 billion that the Commonwealth spends on procurement each year.

Clause 10.10 needs to be read in conjunction with 10.37, where it actually says where applying a standard—Australian or, in its absence, international—for a good service relevant entities must make reasonable inquiries to determine compliance with the standard. This includes gathering of relevant certifications and periodic auditing of compliance by an independent assessor. That reflects the approach of the South Australian government in terms of its Industry Participation Advocate, Ian Nightingale, who does outstanding work in that state. That will mean that it will have teeth, which will mean that it will be effective. It goes far beyond the amendment that I thought of and that I moved a couple of years ago.

In the terms of 10.18, officials must make reasonable inquiries that the procurement is carried out considering relevant regulations and/or regulatory frameworks including but not limited to tenderer's practices regarding: (a) labour regulations, including ethical employment practices; (b) occupational health and safety; and (c) environmental impacts. So if there is one company that has child labourers overseas or is pouring toxins into a river, these are the sorts of things that must be considered.

In terms of 10.30 and 10.31 about value for money and broader benefits to the Australian economy, for the first time ever, in addition to the considerations at paragraph 4.4 for procurements above $4 million, Commonwealth officials are required to consider the economic benefit of procurement to the Australian economy. That is a first. I want to congratulate the Minister for Finance, Senator Cormann, for taking a fair and pragmatic approach. One of the issues here is that we need to comply with our free trade obligations.

I have been a critic of our free trade obligations, but I am not a mug; I also understand that if we put something up that breaches the WTO obligations it will be struck down. That leaves another issue about whether we should have entered into those obligations in the first place, but we have and we are required to comply with the rules. These new procurement rules are WTO compliant, which is very important. They will be effective, and I give credit to Senator Cormann for the reasoned, measured approach that he took. We negotiated this in good faith and we now have something that will be unambiguously good for Australian industry in this country. We have made significant dramatic reforms in respect of procurement in this country.

So I commend these changes. They are not an amendment as such. They have been tabled. They are relevant to this amendment and to another amendment of Senator Hinch, which I will be cosponsoring. I want to make this very clear: this is a big deal. This is a massive change in procurement rules in this country, and I absolutely commend the government for going down this path. I want to thank my colleagues, Senators Kakoschke-Moore and Griff and Ms Sharkie in the lower house. This is something we have been absolutely committed to and passionate about. What we have done now is very significant. It has come about because of good will and good faith negotiations. I commend what Minister Cormann has tabled in the chamber.