Rex Patrick (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

My question is to the Minister for Finance. In 2015-16, the Commonwealth government spent $57 billion purchasing goods and services. Government procurement is recognised around the world as an important means of implementing government policy in respect of industry development, jobs, innovation and maximising economic growth. The unanimous and bipartisan recommendations of the Joint Select Committee on Government Procurement were carefully drafted to be entirely consistent with Australia's international trade treaty obligations. Why is it that the government has failed to accept them in full, therefore putting the creation of thousands of local jobs, the maximising of local investment and local supply chains at considerable risk?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Let me say right up-front that the government does not accept the assertion made by Senator Patrick that we're putting job creation at risk through our approach to government procurement. In fact, if you look at the track record under this government, job creation is actually running very strongly, and the reason it's running very strongly is Australia's success as a trading nation where we have worked very hard to give Australian exporting businesses the best possible opportunity to sell Australian products and services in markets around the world. The global market, of course, is so much bigger than just the domestic Australian market. Whatever we do domestically in Australia, we need to be very mindful of the flow-on implications it could have for the strength of our economy, for investment and for jobs here in Australia if we get these decisions wrong.

The Australian government continues to support Australian business through the ongoing negotiation of free trade agreements in Australia's national interest, opening up new international markets for Australian businesses. We have already opened up major new markets to Australian businesses in China, South Korea and Japan while we continue to work on other agreements, including with Indonesia and the European Union.

In response to the report's 16 recommendations, the government supports in principle or supports in part six of the recommendations. We have noted two recommendations and we do not support the remaining eight recommendations. The key reasons for not supporting these eight recommendations are an inconsistency with Australia's trade obligations and a lack of evidence to suggest the need to introduce proposed additional regulation and red tape. In many cases, the intended outcomes within the recommendations are already addressed within the procurement framework, and adopting the recommendations would undermine the Commonwealth's capacity to achieve value for money and innovation by making procurement processes less competitive and flexible. The response reflects the government's commitment to building a stronger, more prosperous and resilient economy, where Australian businesses have the best possible opportunity to get ahead.

Scott Ryan (President, Special Minister of State) Share this | Link to this | Hansard source

Senator Patrick, with a supplementary question.

Rex Patrick (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

The government appears to have used 'growing red tape' as the reason for not agreeing to many of the recommendations. The South Australian Industry Advocate is on the Hansard record as stating that industry feedback on the South Australian approach, around which the committee's suggested approach was based, provides a consistent model, simplicity and no additional burden to industry. Did the government consult with the South Australian Industry Advocate before coming to this erroneous growing red-tape conclusion, and if not why not?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

The government did not consult with the South Australian Industry Advocate but it did take into account the submissions received and the evidence presented during the Joint Select Committee on Government Procurement's hearing process. The government stands by its response to the committee's report and does not support the introduction of additional requirements for the Commonwealth or business within the Commonwealth procurement framework that would lead to additional costs and red tape.

Recommendations to this effect, including the reintroduction of an environmental-sustainability-procurement-connected policy and supply chain reporting for businesses, would introduce onerous reporting requirements, increase the costs of contracting and reduce the necessary flexibility and procurement processes as covered in recommendations 3, 4, 7 and 10. It is worth noting that Australian suppliers are already well represented in Commonwealth procurement statistics, with businesses with an Australian address winning approximately 94 per cent of contracts, by number, in 2015-16.

Scott Ryan (President, Special Minister of State) Share this | Link to this | Hansard source

Senator Patrick, a final supplementary question.

Rex Patrick (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

Minister, you are the crossbench whisperer: the deal maker. What effect do you think this breach of agreement with NXT will have on all future crossbench negotiations? Does the government think that the departure of Mr Xenophon from this chamber means agreements previously reached between NXT and the government are null and void? Your government's actions certainly seem to indicate that risky and foolish approach.

Scott Ryan (President, Special Minister of State) Share this | Link to this | Hansard source

Senator Patrick, it is your first question. For future questions, I would seek to link it better to the primary question.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

We in this government, when exploring issues and reaching agreements on policy outcomes, always act consistently with the agreements we have reached, as we have on this occasion. We included certain amendments to the Commonwealth procurement framework in the relevant guidelines, as Senator Cash well remembers, because it was done in the course of the debate on re-establishing the Australian Building and Construction Commission. That was done. We also made a commitment to the inquiry taking place, which also happened.

We never made a blanket commitment to accept all of the recommendations coming out of that process. We are totally focused on Australia's national interest. Australia is an open trading economy. We do business with businesses all around the world. We want Australian businesses to have the best possible opportunity to sell Australian products and services around the world, and we need to ensure that we continue to protect the competitiveness of Australian businesses to sell products and services around the world.