Senate debates

Tuesday, 27 February 2007


Finance and Public Administration Committee; Report

4:26 pm

Photo of Brett MasonBrett 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.

4:34 pm

Photo of Andrew MurrayAndrew Murray (WA, Australian Democrats) Share this | | Hansard source

I also wish to speak to the Finance and Public Administration Committee’s report on the operation of the order for contracts. In commencing my remarks, I want to record my gratitude for both the tenor and the nature of the kind remarks made by the chair concerning my work in this area. I do appreciate it and I will value those remarks. The chair’s remarks, though, and in his expression of satisfaction with the unanimous report, with the way in which that report was developed and with the way in which committee members from all political parties interacted productively to achieve this outcome, are a reminder for others—not for parliamentarians—as to how the Senate and the parliament work.

I think it is important for the media and the public to remember that there are two different roles. One is the role of parliamentarian, which is not always but most commonly practised outside of this chamber in the corridors, in the committee rooms, in private meetings and in interactions across all parties between parliamentarians who respect each other according to their abilities and skills and according to the contributions they can make. A politician, on the other hand, will emerge in this chamber and be combative, robust and sometimes aggressive in the pursuit of their political roles. They are two different functions, and some able and skilled persons can combine both. Some are more purely politician than parliamentarian and some are more the other way around. But I think that understanding of the two roles is often lost.

I am pleased that Senator Chapman is in the chamber, because I saw a treatment of him the other week which illustrated this very problem. I thought it was very unfair and unkind. I happen to know Senator Chapman very well through his work as Chairman of the Joint Standing Committee on Corporations and Financial Services. I saw one of those beauty contest types of articles in the Adelaide Advertiser. It rated Senator Chapman very poorly and very lowly. I thought, ‘What an ignorant person.’ Whilst the impression of him may not be as one who is loud and politically in the news, if you like, as a parliamentarian, which is my common experience with Senator Chapman, he does sterling work with great attention to his task on a regular basis. It is not flash-in-the-pan stuff; it happens over time. I appreciate that as a parliamentarian and I appreciate his work as a parliamentarian. That sort of respect between the parties, between senators and across issues comes to the fore with this kind of dry topic.

It may be difficult for anyone to realise that we get interested and involved in a topic like this, but we are referring to an order, a system and a process which covers hundreds of billions of dollars—I say billions and hundreds deliberately—of contracts which are let by government and need to be monitored and made accountable to both the parliament and the government. My view is that this order is not just a great aid to the parliament and to those who wish to keep the government accountable but, of course, a great aid to the government itself because there is no way otherwise that a minister or any other person could know the detail of what goes on.

Having made those broad remarks, I wish to elaborate on and not repeat some of the key points Senator Mason, the chair of the committee, touched upon in his tabling speech. It was comprehensive and I do not need to go into any further detail. The first point I would make relates to progress with compliance with the order. As Senator Mason observed, the results have been mixed. While compliance with the order’s listing and timing requirements is satisfactory, there still remains an unacceptably high proportion—about 25 per cent—of contracts containing information wrongly classified as confidential.

This is a problem that the government and the parliament face with respect to many processes and orders. DOFA, the Department of Finance and Administration, produces many fine guidelines and guidance documents, but there is no process for enforcing those in the agencies. If chief executive and chief financial officers do not ensure that the philosophies and the guidance that is provided are internalised and become a natural part of their process, you will find compliance low, and this is again a symptom of that problem. The direction of all parties and of the parliament is very clear and yet the principles that are established and supported by government are not internalised into the practices of agencies, and that is a problem.

Of equal if not greater concern is ANAO’s detection of significant data errors in the information that is reported. ANAO’s auditing has cast doubt on the accuracy and completeness of departmental and agency reporting against not only the order but also the consultancies listed in annual reports and procurement information reported in AusTender. This revelation should be of concern to all senators interested in the spending of public money on procurement and other government contracts. ANAO told the committee that the level of integrity of the data reported is very low for a system that has been in place for a long period of time and subject to regular audit activity—and that is of concern. In this regard, the promised improvement in data integrity with the proposed new AusTender system is to be welcomed, assuming it eventuates.

This brings me to my second point, namely the finance department’s proposal to rationalise procurement reporting into a single reporting system. As Senator Mason indicated, the committee has given qualified support for the implementation of an enhanced AusTender reporting system—I say qualified because we know from experience not to take on faith promises that new IT systems will provide a miracle cure to problems with current arrangements.

New systems have to prove themselves first, a point the committee recognised in recommending a modified version to the DOFA proposal to allow time for the AusTender system to become operational and tested. There are other reasons for taking a cautious approach. While the multiple reporting regimes involving the order, annual reports and current AusTender requirements are partly to blame for the low quality of reporting, they are not the only reason for low levels of compliance. Inadequate training of staff continues to be an issue. Internal business processes need strengthening to improve not only external reporting on contracting but also internal reporting within agencies for purposes of oversight and governance. Better guidance is needed on what can legitimately be covered as confidential in contracts and what should remain open to parliamentary and public scrutiny.

There are reasons the committee did not accept DOFA’s proposal in full and, as Senator Mason has reported, the committee has made a number of sound, practical, unanimous recommendations to address these issues. They are also some of the reasons that the committee wisely decided against revoking the order at this stage. We are not married to the order for eternity, but at this stage it should remain.

With continuing compliance problems with the inappropriate use of confidentiality provisions in contracts and data integrity concerns with reporting, this is not the time to be dismantling the order with the safeguards it provides for the proper scrutiny of government contracts. The fact that the Senate has put the order in place signals for those concerned that the Senate has an ongoing interest in this area—an interest in how much is spent and for what purpose and who is receiving the money. In short, it signals that the Senate is watching closely and will not be put off by unwarranted claims of confidentiality.

Finally, I should reinforce Senator Mason’s point that this is the second unanimous report of the committee on the operation of the order. The Clerk of the Senate told the committee that, if you say the Senate is watching, that does add to the authority of a safeguard like this order, and I believe it. The fact that this is a unanimous committee report adds to the authority of the order and signals the Senate’s continuing interest in its retention and ongoing operation. In my view, this report exhibits again the very best of our parliamentarians’ work. I commend the report to the Senate. I seek leave to continue my remarks later.

Leave granted; debate adjourned.