Brett Mason (Queensland, Liberal Party) Share this | Hansard source

I present the report of the Finance and Public Administration Committee, Departmental and agency contracts: second report on the operation of the Senate order for the production of lists of departmental and agency contracts (2003-06), together with the Hansard record of proceedings.

Ordered that the report be printed.

I seek leave to move a motion in relation to the report.

Leave granted.

I move:

That the Senate take note of the report.

I am pleased to speak to the report by the Senate Standing Committee on Finance and Public Administration on the operation of the order for contracts. This is the committee’s second report on the order’s operation. It provides an update on progress made since the committee’s first report on the order’s operation which was tabled in late 2002. Like the first report, this is a unanimous report of the committee.

The order’s long title is Second report on the operation of the Senate order for the production of lists of departmental and agency contracts, but I prefer its more common title: ‘the Murray motion’—so named in recognition of its chief architect, Senator Andrew Murray. I take this occasion to pay tribute to Senator Murray’s tireless work in raising the bar when it comes to the accountability and transparency of government contracts. He has been a wonderful colleague to work with during this process, across the chamber and elsewhere. I congratulate him.

The order is a measure specifically designed to open up the transparency around government contracting. Madam Acting Deputy President Troeth, you may recall it was created in response to the increased use in outsource arrangements in the late 1990s, to provide what traditionally had been solely government operations, and the parallel growth in confidentiality clauses in contracts. It is now a little over five years since the Senate adopted the order in September 2001. Over that period, the accountability environment around government contracting has changed—generally, I am pleased to report, for the better.

The operation of the order—with regular Australian National Audit Office auditing, as required under the order’s terms—has forced departments and agencies to take very seriously the requirements of the parliament for maximising transparency in contracting. The Department of Finance and Administration has issued three sets of guidance that, among other things, make clear the parliament’s and the government’s expectations about the disclosure of contract information. Department of Finance and Public Administration and Audit Office officers told the committee recently about the large amount of goodwill within agencies to comply with the order and the spirit of accountability and transparency which it represents.

While that is no doubt reassuring to know, compliance with the order does present a rather mixed picture. On the positive side of the ledger, agency lists mostly comply with the reporting requirements of the order. Internal processes for complying with contract listings generally satisfy Audit Office standards, and most agencies have an identifiable path to their internet listings.

But two particular improvements warrant note. Firstly, nearly all agencies now have standard contract templates which provide for disclosure of information if requested by a house of the parliament or by one of its committees. This is an important achievement and represents a marked improvement from just two or three years ago. The second important development since the order started operation is the general decline in the number of contracts containing confidentiality provisions. These have declined from about 24 per cent in 2002 to about 17 per cent for contracts listed in the 2005 calendar year.

Against this progress, a number of concerns remain with agency compliance with the order. Offsetting the decline in the number of contracts containing confidential information is an ongoing problem, with contract information wrongly or inappropriately classified as confidential. While things have improved since the early days of the order, over a quarter of government contracts still contain information inappropriately treated as confidential, and that matter remains a problem.

The other major concern is with the accuracy and the completeness of reporting on contracts. Problems with data integrity are not limited to reporting against the order but extend to reporting of consultancies in annual reports and contract information on AusTender, the government’s online procurement database. The committee has made a number of recommendations to address some of these problems. These largely focus on strengthening internal controls, rules and reporting within agencies and improving training and guidance for staff handling contracts and involved in meeting reporting requirements.

As for addressing data integrity problems in reporting, the Department of Finance and Administration proposed to the committee a single reporting mechanism based on the AusTender system as a solution. This system is intended to rationalise the different reporting requirements which currently exist for the order, annual reports and procurement reporting and which are said to cause much of the data quality problems found under each system. Under DOFA’s proposal, the Senate order would be revoked and the annual reporting requirements for consultancies rescinded.

The committee has concluded that it would be premature to revoke the order at this point, particularly while compliance problems persist. The committee has instead recommended the order be retained while the new AusTender system for reporting procurement contracts is implemented. The committee’s model would allow reporting to be rationalised, with AusTender operating as the central reporting point, while transparency under the order would be maintained and possibly improved with AusTender’s enhanced reporting capacity. This approach would avoid the risks of moving to an unproven new system. ANAO auditing, an essential component in the operation of the order, would continue as currently required and would assist agencies moving to the new system. The Senate would consider amending the order, if this were required, once AusTender was operational.

The committee is confident that its suggested model will enable departments and agencies to meet their reporting obligations better and will improve the quality and coverage of transparency around government contracts. It is, as they say, a win-win solution. The committee has made a number of further suggestions that should assist senators and members with scrutinising contracts, particularly when claims of commercial-in-confidence are encountered. The committee has also reaffirmed recommendations from its first report to extend the coverage of the order to Commonwealth authorities and companies legislation bodies and to the Department of the House of Representatives. The committee also recommends the order be amended slightly to ensure the committee’s ongoing role in monitoring the order and relevant developments. I commend the report to the Senate.