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

Procurement is of course a matter that comes under my area of responsibility as the Minister for Finance, and I would indicate right up front that the government will not be supporting Senator Carr's amendment, even though we are sympathetic to what he is arguing. That is because a much better amendment has been put forward by crossbench senators, namely Senators Hinch, Culleton, Lambie and Xenophon. The government will be supporting that amendment.

Let me make some general points in relation to the issue. The amendments that the government will be supporting do change the code making power in clause 34 to require the minister to issue a document relating to procurement that will have the effect of requiring the preferred tenderer for building work to provide information about: the extent to which domestically sourced and manufactured building materials will be used to undertake the building work; whether the building materials to be used to undertake the building work comply with relevant Australian standards published by or on behalf of Standards Australia; the preferred tenderer's assessment of the whole-of-life costs of the project to which the building work relates; the impact on jobs of the project to which the building work relates; and whether the project to which the building work relates will contribute to skills growth. The issued document must also have the effect of requiring a funding entity to require building industry participants to use only products that comply with Australian standards.

The government understands, of course, that the building and construction industry is a key driver of growth and is vital to the competitiveness and prosperity of the Australian economy. The amendment that the government will be supporting, which has been circulated by crossbench senators, would ensure that the preferred tenderer for Commonwealth funded building work will notify the funding entity of the expected economic and social impacts of the project on the local economy. This includes the extent to which domestically sourced and manufactured building materials will be used to undertake building work. The proposed amendment which we will be supporting supports a fair, safe and productive building and construction industry, which of course is crucial to the Turnbull government's economic plan for jobs and growth.

In relation to paragraph 2(b) of the amendment put forward by Senators Hinch, Culleton, Lambie and Xenophon, Australian standards of course comply with international standards so do not cause any problems with trade agreements or other international undertakings but the Australian government is supportive, of course, of promoting the use of building products that comply with Australian standards.

I would also like to inform the chamber that I have had extensive discussions with Senator Xenophon, for a period in Senate estimates but more recently one-on-one in my office, in relation to the government's Commonwealth procurement guidelines. I am pleased to inform the Senate that the government has agreed on some improvements to the Commonwealth Procurement Rules, and indeed coming into effect on 1 March 2017 will be a slightly revised set of Commonwealth Procurement Rules, which I table now. As I am on my feet, I will take the chamber through the relevant improvements that we have made.

The chamber will note that there are new rules 10.10 and 10.37. Where standards are applied it is important for integrity and probity that suppliers to government are capable of meeting standards. As much as anything this is important for ensuring that value for money has been achieved, that is, by ensuring goods or services are fit for purpose, and 10.37 sets the expectation for the level of verification for officials checking verification or seeking other forms of independent assurance that would satisfy a test of making reasonable inquiries. There is also a new rule, 10.18, which says that suppliers to government need to comply with regulations that are applicable to them, including Australian rules and any regulatory frameworks applying in other jurisdictions where relevant. Three of the most significant examples are specified in the rules covering labour, OH&S and environmental regulations. Where one of these areas of regulation is not applicable or alternatively other forms of significant regulation apply, then officials would use their judgement to make the appropriate inquiries. Inquiries by officials must amount to a reasonable effort. The rule does not require comprehensive compliance auditing that would add materially to the cost for taxpayers. The purpose is to ensure that there is sufficient evidence to give officials sufficient confidence in the veracity of any representations made.

There are also new rules 10.30 and 10.31. We will be requiring officials to take into account the economic benefit of a procurement for Australia as part of their decision making process. Our free trade agreements require that Australia does not engage in prejudicial decision making, but this does not preclude us from appropriately gathering information and looking at the full economic effects of a procurement as part of the decision making process. This is a reasonable addition to the process for larger procurements and one that allows us to balance our accountabilities to taxpayers and our undertakings to other countries.

As I have indicated, I have tabled the revised Commonwealth Procurement Rules, which come into effect on 1 March 2017. I thank Senator Xenophon and the Nick Xenophon Team for their constructive engagement with the government in relation to these rules.