Webinar recorded live on 7th July, 2022 AEST.
Director, Commercial Law and Procurement, Department of Regional NSW
Hello everyone and welcome to today’s webinar on navigating the new government changes what this means for procurement leaders.
I’ll introduce myself. I’m Elysha Stevens that head of marketing for Porrt, an advanced Company and it’s my pleasure to be facilitating the webinar today. For those of you, expecting our Vice President, Chris Holmes, I do apologise. Chris has come down sick this morning and can’t join us.
But don’t worry. You won’t have to listen to me for too much longer before I hand the mic.
To our four industry leaders who.
You’ve come along to hear from today.
And I’m sure they’re much more interesting than me.
I know it’s going to be really valuable for everybody.
As we hear and discuss these important topics to get us started, I’d like to do an acknowledgement of country.
I acknowledge that I’m hosting and recording this webinar from the lands of the Awabakal people. I also acknowledge the traditional custodians of the various lands of which you will work today and the Aboriginal and Torres Strait Islander people participating in this webinar.
I pay my respects to elders past, present and emerging and celebrate the diversity of Aboriginal peoples and their ongoing cultures and connections in the lands and waters of New South Wales, Australia.
As it’s also NAIDOC week, I didn’t want it to go by without mentioning that, and I also want to acknowledge the constant work and commitment of the Champions of change. As we all need to continue. To show up and work together to achieve real systemic change.
So I’m just a little bit of housekeeping to make sure everyone experience on the webinar are today is as ideal as possible, so you should see on your screen now a couple of tips.
The first one is that we will have a Q&A session at the end of the webinar, so this is your awesome opportunity to ask the these 4 speakers today any burning questions.
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So it’s my absolute pleasure to have with me today. Our four industry leaders, Lesley Skinner, Paul Hannan, Scott Aldon and Justin Sara, who will be discussing specifically the proposed introduction of a federal Anti Corruption Commission and the 10 point by Australia plan.
Which includes a $15 billion procurement programme.
So hand to our speakers now to introduce themselves. Lesley would you like to start?
Yes, thank you, Elysha.
I’m the director of commercial law at the Department of Regional NSW and I’ve worked as a lawyer in the New South Wales government for over 20 years, advising in both the procurement space and grants.
I’ve recently taken on the role of Chief Procurement officer in the Department of Regional NSW and we’ve been standing up a new our procurement team in that department. Over the last two and a half years.
Thanks Lesley and Paul.
Good morning everyone. I’d also like to pay my respects to the traditional custodians and lands on which we all meet from today.
My name is Paul Hannon. I’m the chief procurement officer. If you will redirect the procurement within the Department of Education, my remit takes in both the construction and the goods and services and I teams.
So a fairly broad portfolio of in the construction and goods and services space. For from, from a human point. View and keen to talk about these particular topics and how they may interest you all and impact us in our roles.
Thanks Paul, should we go to you now, Scott?
Sure, hi Scott Alden, here a partner at HWL Ebsworth I specialise in procurement across all tiers of government, local, state and federal and have been doing that for about 25. Is those procurements? Take it all sorts of projects. Whether it’s construction or ICT or procurement of major supplies or whatever it might. So I followed a lot of procurement changes over the last 25 years.
As I say, and it’s a very interesting time for being procurement right now. With these changes that are coming and more recent ones.
Last but not least, Justin.
Thank you good morning, Justin Sara. I’m currently director and public sector lead with Arc Blue. We’re a specialist procurement and supply chain consulting business. Also part of banning and Co.
I previously worked as a procurement director and Deputy CPO within government South Australia.
Earlier over, over several years, but in moving into consulting three years ago, I’ve had the opportunity to work across a range of different jurisdictions, which gives a fantastic insight to compare and contrast how things are done in various parts of the country. Certainly some similarities, and also some unique aspects.
In some jurisdictions and also involved in delivering prevention of fraud and corruption. In procurement, delivering the training associated with that as well. Thank you.
Thank you, I know as as well as myself, everyone really, really interested to hear the insights you guys bring today. I as by way of a little bit of an introduction overtime. Historically, there’s been broader practical changes across procurements, SMB engagement, First Nation engagement, for example, and departments being caught out, not having sufficient lead time to adjust to these changes and always playing catch up as being some of the challenges.
So in advance of you know these changes being put in place, we wanted to have an earlier conversation to assist people and not being caught out basically.
So we’re going to break this webinar up into two parts, the the cover that endpoint buy Australia plan and some key points in that, and then we’ll look at the anti corruption.
Uh, you can see on your screen. This is what the, you know the 10 points are in the 10 point buy Australia plan.
I won’t sort of read through all of those, but to get us started on head to toe you Paul and Justin, what does buy Australia actually mean?
I might kick things off, so yeah, this certainly can be a challenge from a policy perspective when.
There’s obviously a level of political rhetoric regarding these sorts of policies and then there’s how they actually work in practise, and sometimes they may be two different things.
I guess the first observation in terms of the by Australia plan. There’s like, like all good plans, it’s a 10 point plan. So that’s that’s a good place to start. But I think from government looking to.
Well, through the policy, certainly that desire to lock in, or if you like hard code preferencing for local suppliers, particularly through the Commonwealth procurement rules.
Uhm, there’s also and. And yeah again, this is encouraging to see an increased focus on economic opportunities.
For businesses run by First Nations people. Which is it’s also been a focus in some or indeed many state jurisdictions with their policies aimed at supporting local industry note as well that there is some uh focus here on supply chain resilience. Post pandemic. I guess time will tell.
So whether, uh. Whether it will have a material impact on some of those issues given some aspects of supply chain challenges, sit well and truly outside our borders and and and I guess it’s how the policy response to that will will be interesting.
I’m clearly given the government focus on climate change, the alignment with by Australia in terms of addressing climate change and sustainability is is also there, but I guess with a lot of these sort of things that I’ve seen similar announcements before the the devil is always in the detail and and that is something that’s.
Yet to be to be fully fleshed out. Opposing helpful.
Yeah, thanks for that.
I probably have a a similar view to Justin, although that from my perspective some of the challenges in the procurement space are aligning.
This plan, which I’m I’m certainly supportive of, in concept with our obligations under free trade agreements and enforceable purocurement provisions across various different states. I think that proposes a challenge to procurement professionals to make sure that we’re still meeting our obligations.
Uhm, I think that the various different aspects within this, certainly very positive. I think that obviously utilising smaller regions, small and medium enterprises and and regional based businesses for for local projects it’s a very positive step.
I I think it’s same with First Nations businesses. I think that’s something that a lot of government agencies.
We’re already kind of actively championing now, but we need to figure out how we actually get the rubber to the road because it’s all well and good to say it in principle, but we need to figure out how.
We’re actually going to make it work in practise.
This and that can be somewhat challenging from a point of view of often.
One of the challenges within government is removing that bureaucracy in that red tape in the way we do our processes and the and the processes and systems that we use to make it easier to do business.
With government, I don’t think that’s specifically around First Nations, but I think it is definitely for those small and medium enterprise where you really want to inject the the support I I I think across the.
Across the whole 10 point plan, I think there’s a huge benefit in the in the thought.
Processes behind this and I I wonder whether they’re trying to flesh out opportunities to ensure we’re meeting modern slavery type obligations and and the like, because obviously things that are that are done closer to home are easy to observe and far easier to ensure that we’re not. You know, breaching those modern slavery pipe obligations, so it’s it certainly.
Poses a lot of interesting topics to to we could further discuss.
Yeah, they’ve brought up a lot of interesting points. That perhaps we could unpack a little bit. Some of the conflicts that you touched on there.
So let’s discuss the conflicts or you know potential conflicts pertain the proposed policy and law. As you mentioned, full free trade agreements. Enforceable procurement provisions.
Lesley, can we hear from you? On this one.
Yes, I agree with Paul that the main challenge will be ensuring the policies consistent with those free trade agreements between Australia and each of our major trading partners in in New South Wales we have the enforceable procurement provisions direction that we need to follow, which makes sure that each of the agencies comply with the free trade agreements.
But this will require that we engage with open market processes for procurements over certain thresholds, and that limits our ability to buy Australia by Australian in.
In our department, we’re trying to focus on supporting regional suppliers who are often Australian that are not necessarily, but they’re often Australian and and we use this using the the small to medium, enterprise and regional procurement policy.
Which enables us to purchase over 100 underneath $150,000 are from local businesses and they’re often Australian, so it’s one of the approaches we take to supporting regional suppliers. Those sorts of approaches could be taken to buy Australia.
There could be are those sorts of thresholds put in place to support by Australia? But overall we we will have to comply with the free trade agreements.
That’s going to be a challenge, I think.
Justin, did you have any further insight from potential conflicts here?
Yeah, certainly it’s some date jurisdictions have been dealing with this issue.
Uh, for for some time certainly when we had industry participation policy come into being here in South Australia.
The issue around geographic referencing and and and how that would actually work in practise.
Well, certainly I identified as an issue at that. At that time I I’m I’m not legally qualified, so I’ll leave it.
To more for for those that that are there to look at the specifics of it, but I know it has presented some challenges, but perhaps in some respects.
Uhm, it, it won’t ultimately be fully explored or dealt with until a overseas supplier chooses to robustly challenge.
The, uh, a procurement process that potentially resulted in them being excluded on the basis of where their their origins are, where their origins are so in. In some respects I think some in some jurisdictions it’s it’s a.
There’s an awareness of those policies, but it it’s just operating an environment where the hope is that no one decides to significantly challenge them from a legal aspect anyway.
Perfect segue into Scott, our resident lawyer.
Thanks Elysha, and thanks everyone. What what level? That’s good, so I think there’s an interesting sort of just just going back a step to to looking at whether this is about by Australia, which is fairly simple to do.
Yeah, you just buy something there’s either made or produced here, or whether we should think about making Australian stuff more viable by providing support in other ways.
For examples. So that’s something that the policy people are looking at when we go through these ten point plans. A lot of it’s already there and a lot of it is already an exemption in either the government procurement, Judicial Review Acts, and the Commonwealth procurement rules at the Commonwealth level or the public Works Procurement Act, which are brought into play the enforceable procurement provisions in the direction that applies.
There so SM ES indigenous participation and other things and defence procurement is generally exempted.
As well so. We we’ve got exemptions, which is good.
In terms though, where we were when people are sort of, you’ve got to navigate that and and where we don’t navigate that properly.
That will then give rise to potential challenges and the legislation around that in both forms, and we need to understand the local governments are out of this, so it’s just state and its U.S. Federal and not all states are playing build perfectly.
But a lot are, but. There are some clear challenges and those.
Challenges give rise to either a freezing of a procurement when a complaint is made by a tender or.
Other interested parties. So the procurement is suspended and compensation paid to the aggrieved party. If a rule or a direction was breached and it’s really as simple as that. And that that’s that’s the outcome of this. Where those where those where those there’s there’s, uh, there’s an issue, a bit of a problem with some of this, though, is that the procurements are frozen on the making of a complaint, so the complaint doesn’t have to necessarily have a lot of merits. The assessment of the merit of the complaint comes later. So there.
There could be a whole lot of procurement disruption that comes out of this and bodies involved in procuring need to build some time and some risk management processes into their procurement process to inert to enable them to to run the process they need to including.
Putting public interest certificates over the procurement they are undertaking, which then leaves them immune from suspension to the procurement can continue, but compensation would still be paid.
So I think that sort of brings together the in its fairly simply is a lot more to it than that, but fairly simply the legal issues that might come from a complaint.
But if there’s any more detail anybody wants to the questions they welcome to us.
Yeah, exactly right. Keep those questions coming in and we’ll cover them off in the Q&A. At the end. Lesley, how do we make this more than a box ticking exercise?
I think that’s working with suppliers. Is going to be the best way to do that and I agree with Scott Point that we need to make Australia more viable. We need to get our suppliers involved. Need to work with industry groups to better inform them about how they can participate.
Reaching out to them, telling them what we expect, what government expects to them to do, to supply to us what we need.
Uhm, getting them involved. I found that really useful. Having them engage with us in communities of practise talking about what their limitations are, what they’re finding difficult, and then working with them to try and overcome those. So it’s actually going to be a positive move in my view.
Paul, do you have anything to add there?
No, I think they’ve you know, I think that. Both Scott and Lesley covered it off pretty well.
I don’t think that. There’s a. There’s a lot more to be said in that space. I think Justin called out correctly until someone makes a challenge that’ll make it a little bit more. Real at this point in time you know there we do have rules that we need to follow and and and we need to make sure that we’re we’re abiding by those.
But but also engaging with industry and engaging with them with our supply partners to understand how we can work together, I think that’s that’s certainly a path forward.
Yeah, awesome. Let’s talk about how we align the obligations versus the intended outcome. And ensuring that the red tape doesn’t impact suppliers ability to to deliver. I know you guys have a number of great examples to talk about.
Uhm Paul, it might as well will stay with you. Uhm yeah, how do we? Align the obligations versus intended outcomes.
Look, it’s it’s a it it’s a challenging question. I think one of the things that government tends to do is we tend to bundle things up.
And then we bundle things up. We build them into such a size that it does mean that it becomes more on the radar of international players wanting to participate.
We do that sometimes for logical reasons because to to split it out into sections might mean that we there’s a lot more procurement that needs to be done.
But I do think that that gives the ability to try and target more regional players, more small and medium enterprises, because you’re the the pieces of work that you’re doing, especially say in a construction space, or even in in other goods and services areas. You can certainly, if rather than chunking it all like rather than bundling it all up.
If you chunk it down into smaller component parts, yes, there’s additional management in that, but sometimes that gives you greater control anyway out of the outcome, and gives you a more of a a resilience against that type of challenge.
Yeah yeah thanks I, I wanted to just think about this a bit, but more broadly as well. So so I suppose.
First of all, this came from as we’ve all talked about the free trade agreements they’ve been around for a while this, then they just keep growing and different ones come into play and they’re very relevant. We’ve got the Trans Pacific Partnership, which is also relevant to this, which unlocks.
Billions and billions of dollars of global trade between countries.
And also we’ve got the global agreement on government procurement, which we signed up to four years ago, which really triggered the government procurement Judicial Review Act, which then flowed through the states in the enforceable procurement provisions and similar legislation in other places. But I mean the economic part of that is really important, because as soon as we start to.
To to do this then other countries react and do the same thing as well, and I’m not saying that should stop us doing it, but we’ve just got to keep that in mind and maybe and then there are exemptions in that in that legislation.
So there there’s a. There’s a whole other parts of this as well around the sort of policy part of this, and and the implications, the bigger implications that come from.
These kinds of pronouncements and they have their very needs to be very carefully played out.
I think, as I say, we’ve got the other the we’ve got those exemptions and they can just be built on.
The other thing to say. Is you know at what point do we just admit defeat and say we can’t compete with a country that haven’t got appropriate work, health, safety laws, or Fair Work protections in relation to certain procurements and.
So buying Australia or buying in in in in, in, in, in otherwise than from those.
Places is is just unjustifiable, unsustainable and not value for money and those places have the laws that they have and people are reasonably treated.
So I’m not saying modern slavery and not saying we should buy from countries that have that, but countries that aren’t have haven’t got.
There’s sort of legislative protections that we have. They are always going to be cheaper and we need to say to ourselves or we are we happy to pay more to employ Australians and and and to and to get the products that we want where we want them.
Or not, and there’s obviously a budget that has to go along with that, so I think that sort of needs to be also considered.
I I, I think those are the points I really wanted to make delicious for the moment on that.
Perfect Lesley, did you have anything to add?
No, I think there are really good points. I yeah, I think the main thing we have to do is work with our own suppliers to make sure that they’re in a position to be supplying what Australia needs and building up our own industry. It’s really the solution. That’s my only point. Thanks Elysha.
Thank you Justin. Are we using the right levers to drive these outcomes? How do we take a balanced? Approach to it all.
Yeah look, I think getting the balance right and these policies is challenging for some of the picking up on some of the points already made.
Whatever we can do from a policy perspective, other jurisdictions, or indeed other countries can can replicate or or had their own down their own path in. In that regard, I think some of the challenges.
Have arisen in the past is the there has been some dissonance between the language of government?
And the practicalities of the policy. So when we talk about by Australian that has different meanings for for people, certainly those in business. So when we when we, some people, interpret Australian as iconic Australian family owned business, you know RM Williams boots or as as an example of that and, and of course the the end of these policies, really.
Is more about local economic contribution. Rather than sort of neatly supporting a a small cohort of businesses that might fit into that iconic Australian status, but so sort of delineating between the two there I think is really important. The other aspect to it is you know the risks associated with perhaps going too far and and and preferencing local industry.
Potentially, you know, ending up being a a subsidy exercise in disguise, and that may present some values for money challenges for.
Public sector procurement entities and bodies.
I’m thinking what Lesley touched on before as well around the importance around engaging with industry. Certainly I’m guided by some of the outcomes of a review that was undertaken by this Australian Productivity Commission.
A couple of years ago and the the key items of feedback that they received through their engagement with business, particularly around the issue around.
Industry participation policy or or policies to support local industry. So the so the key headings that were raised or that might that businesses raised, which I think would be you’d see consistent results in other jurisdictions as well is around. So they they like the policy, but it’s not the policies.
Not the be all and end all. There are other levers that. Governments can can pull, so reducing the cost of tendering. So looking at the way in which.
Packages are taken to market the tent. The procurement processes that are are used, making sure they’re proportionate with the level of risk and reducing red tape, which is that perennial aim more and better engagement. So business is really crying out for the opportunity to engage better with government, and I think.
In some cases this has been stymied by an excessive concern regarding probing. You know to consider the average life of a government contractor is probably somewhere around the three-year mark and a tendering process might take six months out of that three years.
Outside of the tender process that leads 2 1/2 years where where engagement can be or should be occurring with suppliers in the market, and I quite like the idea for public sector procurement organisations to spend as much time dealing with their non contracted suppliers as their contracted suppliers.
So engagement being really important value for money considerations. So business are interested about how public sector organisations go about determining that and and in its broadest definition, including social and environmental and economic benefits, not just lowest price. Given the issue of price competitiveness.
Uh may be challenged in some sectors for Australian businesses.
Access to government procurement, particularly for small and medium enterprises, new businesses, so demystifying the weird and wonderful world that is public sector procurement.
So agents are so sorry, small and new, and emerging businesses can actually participate in our processes. Better allocation of risk.
Love to allocate a lot of risk to suppliers, which is fine except you have to pay for it somewhere along the way, but also for some suppliers that can be bridged too far. Contract management is also another area.
Uhm of interest to supplies interestingly and and how how they’re dealt with by government agencies and so on. So there’s there are a range of leaders not just within the policies themselves, but more broadly than that.
Fantastic in your experience. What are there might be some unexpected impacts of these policy changes? I know you know we’ve discussed before around visibility of modern slavery, for example.
Yeah, certainly come, uh.
Though it’s become more prominent, modern slavery is an issue not just in the public sector, but more broadly across industry and and there have been some organisations that have found themselves in pretty pretty difficult circumstances where it turns out there are significant issues in their supply chain, so that’s certainly something to be mindful of.
I think also too is that you know that that adage around targets driving behaviour is certainly true when it comes to these sorts of policies.
I’m not sure if we’ve got anyone joining us today from the NT, but NT has quite strong.
Michael, referencing in its procurement framework including a 30% waiting for.
Uh, for you know, the local supplier aspects, which means if you’re a supply outside the territory, you know you, you’re you’re starting starting the test with 30% already taken, taken from you in terms of your total marks, which really is driving you know interesting.
Obviously a lot of businesses or some businesses have chosen to establish a physical preference in the in the NT, even. Uh, it partially I suspect in response to those sorts of policies as well. Also took on that theme of targets driving behaviour.
Uhm, there was an example I’m aware of where a a public sector entity would purchase Aboriginal artwork in June in order to meet its Aboriginal business, spend targets and then sell that artwork in July, August and then repeat in the following year.
Which probably wasn’t the intent of what that policy was there to do.
Yeah, interesting Scott. Did you have anything to add about some unexpected impacts here?
Uhm, look I I guess So what what’s been said around? You know the targets, the behaviours. And sometimes people focus on things like that is a good.
Point people also gain the situation as well, and So what was meant to encourage? I’m Indigenous owned business for example.
It it doesn’t always say. You might find that is. That’s just basically a shop front behind, which is a is a global organisation which wasn’t supposed to be preferenced by by, by these policies, and I’ve seen that in both the legal, the accounting and the construction sectors taking advantage improperly of small to medium enterprise policies.
And indigenous policies. And it’s all a sham. And it’s an obvious sham to me. But it takes the box and people who need to tick boxes and find it hard sometimes. Don’t look too hard as to whether or not there are. Things are indeed a sham so.
You sort of get that as well in terms of you know how we go about this preferencing though. Interesting comments from Dustin around NT, Queensland, particularly local level, has the same thing.
You know they go very extreme, so you go from in Queensland local sector. They say if a local person can do it. They and they comply. Then they must be given the contract only where they can’t. Do we look outside of local now that that’s about as extreme as you can get.
Yet and obviously wouldn’t fly on anything on the value for money test anywhere, but nonetheless. And that that’s crazy. 20 or 30% weightings make it hard, but you can. Obviously you get up against non local, but that does make it more difficult.
We’ve got anecdotally and from the past some some some some impacts, or some policies around this, like the Australian New Zealand.
Preference scheme, which applied a 0.8 index to the value of products and services supply from Australia to any supplier supplying to Australia so that there’s there’s a lot of history that was back.
In the 90s, late 90s.
The country industry preference scheme did the same thing, 5% waiting to to entities that were set-up regionally, so that’s some supporting social procurement and regional demand.
You don’t just have to do artificial preferences, though. We can as we talked about before, grow capacity and will come to that in. A minute I think.
But we can also go through a grant process or all go through the exemptions they mentioned before grants, or exempted so that that can help so we can support businesses to do.
Better and in their production, and then compete competitively without having to be referenced in the final procurement. So that sort of one way to go.
All sorts of things that can be done differently, but I I think at the moment there’s this sort of multi grab for everything that can be done and throwing it all in the bucket and see what works. And that’s not really a very considered.
Approach, but I can. I can I see that app log?
Yeah, great while we’ve got. You have any comments on sovereign capability and how that factors into procurement?
Yeah, I mean and that’s all about the lead behind I think. And so.
If we say acknowledge that as a as a as a country, we’ve sort of left manufacturing and production behind. And because we’ve relied on overseas and covid told us that we can’t do that so much and we need to make sure we can get stuff here.
Then we’ve gotta go back a bit and rethink our sovereign capability or manufacturing capability. We do one way to do that.
There’s many ways is grants, and all those other things. Another way to do it is to make the person that we choose who isn’t from Australia. Leave something behind, so build up capability. Train some people, whatever it might be, whatever it is that they can bring to the table to upskill, improve, or or create resources around manufacturing, and so if you force, rather than preferring the Australian proponent.
Choose competitively, but force everybody to tell you what they’re going to leave behind, and then make that part of the selection, and then make sure the leave behind is done.
Coming back to Justin’s point, we so often procure something where there’s lots of lots of promises that are made, but no one contract managing properly to make sure those promises are delivered.
I’ve seen that a lot as well with this kind of thing, and so we’ve got to get serious about auditing, contract management and procurement outcomes at the end to say, did we get what we paid for? Did they do what they? Promise and if they don’t then all of this stuff is just pointless.
Yeah, and I I think you make a good point around and I think Justin made it before as well. Contract management is a key consideration. There, but you’ve got to consider things. All the way from upstream to downstream pretty on that with this as well on effects there. I’m I’m conscious of time. I think we need to jump to the next topic around the Anti Corruption Commission.
Can I jump back to you Justin as you’ve got an interesting perspective from. Both sides of the coin, so to speak. And and also, having been through the introduction of icac a few years ago. Can you tell us about the impact here?
Yeah, sure, so and I note that we had a look at some of the attendees before so we do have some. Some people joining us from the the Commonwealth government so you.
Well, you’ll be heading on this on your own journey soon enough as the as the new federal government gets to work in putting a a federal Commission in place, I think based on observations in this jurisdiction and also having had conversations with similar. People in similar roles in in other other states as well.
It is a significant change. Whilst the models may vary from state to state and there are certain similarities between the different ICACs and Triple C’s and the light or integrity commissions, but it’s a change that most probably underestimate at the start.
Uhm, we deliver a lot of fraud and corruption prevention training in procurement and and my view is that some of the hardest training to deliver the reason is because.
Everyone thinks they don’t need to be there because they know right from wrong and and they they don’t need to.
They don’t need to be taught that, of course, the focus of the training is that we would hope that most people would know right from wrong, and it’s the the role that people can play in preventing and detecting and identifying fraud and corruption should that.
Unfortunately, be occurring in their in their organisation, so it is an area where people think that they will have.
They’ll their bias will be that they’ll have very little risk exposure because they don’t engage in that sort of conduct, but but the reach of these organisations is far broader.
On that one of the things he observes is a shift of accountability within agencies. So historically this might be something these sorts of issues that they would manage themselves.
But once ICAC was in existence, even very senior individuals like Secretary and chief executive level would would defer to to the can take anybody in managing these sorts of issues rather than through their normal internal processes.
These sorts of of commissions and bodies really have highlighted the need for a really good record, keeping both at an agency level and at an individual level, particularly if there are matters raised the ability to recollect what happened in a tender evaluation process 18 months ago.
Is actually very important, so having your own wreck.
Boards is very. It’s a very important thing to put in place or a discipline if you like that individuals need to think about, I think there’s been some change in the dynamic between leaders and team members, particularly around mandatory, where mandatory reporting obligations exist that can create some.
Let’s say interesting dynamics, and I’d refer people to a survey recently done by the South Australian icon on the South Australian state government.
If you read the feedback in in that from individuals about their perceived risk around corruption and so on, the vast majority of it is the team.
Members having concerns about their leaders and the way in which they behave. So if you are a public sector leader, you probably already know that your team members watch you very closely.
I think if you read the results of the survey in South Australia, which is available publicly online, it will highlight to you that. In, when you become a leader in an environment where and ICAC exists that your team members are going to watch you and and observe your behaviour even more closely than perhaps they. Have in the past.
The last thing. I I’d say on this as well as really the need for effective and practical training. What I mean by that is it’s very easy to put a training programme together on people obligations that focuses on the different segments.
Uh, different aspects of the legislation or regulations or policies. I think training works best when it’s done in a very practical way that people can apply day-to-day in their practise.
You had some interesting stats around. Underestimation about the big impact here. I’m just gonna pop that slide. Up for you can you can you talk? Us through some of that.
Yeah, sure I can. I can cover this very quickly so one of the issues again in trying to deliver this.
These sorts of training sessions for for government agencies. Firstly on that as well, I’d make the observation that we get engaged more to deliver training after the fraud and corruption has occurred, not before.
Maybe that’s an opportunity last, but certainly these far more prevalent prevalent than people believe, and so people tend to assume that fraud and corruption is actually quite rare.
But the number of based on the investigations and reports to to attack here in South Australia and the trip.
CWI UM in some way, shape or form. Half of those could easily relate to the procurement function around conflicts of interest or or, or the way in which confidential information is handled.
And the other aspect to it is that people underestimate the value of frauds and so on. And just highlight to you there is the case recently or in the last couple of years of a gentleman by the name of Paul Wight and WA Department communities where the forward in excess of $25 million.
And that on average, once they’re presented in court, frauds tend to be of the value in the millions rather than hundreds or thousands of dollars.
So the lessons here is it’s probably happening more often than you think, and the impact of it in terms of dollar.
A dollar aspect is far greater than you. You might think, so don’t. The lesson here is to to not underestimate.
The frequency or the impact of of fraud and corruption in procurement, hence the need for these integrity bodies.
Thanks Justin, Lesley and Paul. I think it’s important to go to to you at this point as you’ve been operating with. Yeah, with the state established corruption commissions in place, how do you prepare for a federal corruption Commission?
I think Justin raised a really good point, which is that corruption is all about people doing the wrong thing.
And that’s really where you’ve got to keep looking. You’ve got to keep track of what people are doing. I think keeping tracking systems are where you’re recording decisions. You’re making sure that those who’ve been involved in a decision or their thoughts are recorded.
In either a system or on templates or through your record management system, that’s all gotta be traced.
Uh, and you’ve also got to be. Make sure that you’ve got systems that are tracing what people are doing so people do the wrong thing when they think they’re gonna get away with it.
And if you’re if they’re aware that you’re constantly tracking people, you’ve got systems in place. You’ve got audits in place to cheque.
For things it’s less likely, but because it is so prevalent, you’re likely to find something.
Uhm, so you’ve just got to keep those processes going to make sure you’re tracking for those.
Paul, do you have anything to add to that?
Yeah, I wouldn’t disagree. I think Lesley hits his head. Note there, I mean essentially at the end of the day, we’ve got to be vigilant about this.
I think that there’s some. There’s there’s a number of different aspects that come into play. I think first and foremost.
If someone hell bent on on doing something wrong, we’re going to struggle to stop it from happening.
However, if we’ve got good system separation of duties, we’ve got good systems to monitor the current processes and ensure that there’s kind of due diligence work being done to ensure that everybody is kind of doing their thing.
We can, we’re we’re more likely to pick it up. I think the other thing is to try and not end up.
People in the same space all the time. I think that’s you know. Moving people around makes it harder. If someone been working on the same contract doing the same thing for for five years, that’s where those things I think become a little bit more able to to be happening because there’s that ability for them that they generate.
Two closer relationship, I think with the supply market, especially if that supply market doesn’t, doesn’t change regularly. So moving your people around gives you that ability.
As I said, separation of duty, so you’ve got more than one set of eyes looking at things. So you’ve got a difference between a procurement delegation, for instance, and a financial delegation, and making sure that the same person can’t exercise.
And and your record keeping, so there’s a lot of things that we can do. And we’ve also got to understand the difference between corruption and maladministration, because there is a number of people that naively do the wrong thing because that’s what they were able to do in the private sector because they had the ability they had a budget, they could just go and spend it, and they could just pick.
Whoever they wanted because they thought that was the the the appropriate organisation to deliver. That may not be anything nefarious going on.
They could genuinely be the best organisation and they could be genuinely trying to achieve outcomes that they require from their job.
But they have not followed a process, so it it there is a difference between that whole corruption side of things and that maladministration or naivet E.
Lesley, have you seen anything there? Around misconduct and maladministration as Paul mentions.
Yes, I think it’s very common. It’s very common and for the reasons that Paul said people don’t really know what they’re doing or.
Otherwise, they’re kind. Always in a hurry, and I think that’s you know you can skip a few steps, it won’t matter. Doesn’t really matter in this particular instance.
It’s not so important, so it doesn’t really matter that I follow the procedures. It’s that kind of not laziness, but you know lack of interest in really following every step, thinking that it’s.
Over the top that it’s part of a road block and they just want to get around it, so they’re not deliberately seeking to be corrupt in the sense that they might be paying money to themselves.
So you know there are there are instances of that, but more often I think it’s just that interest in speeding up the process by skipping steps. And and quite often.
That’s it is quite common.
And quite often I think it’s a. It’s a scenario where they OK if they don’t deliver a particular outcome.
They might not have a job, however, if they don’t follow a particular set of steps, they might get a slap across the wrist. So it’s all about making sure that that we have the appropriate.
Monitoring in place so that we can then go back and talk to them and say, you know you didn’t.
You don’t realise that you may. You may not realise that you learn from its outer line. We need to tell you what those things are and then if necessary bring in that whole performance management. Should they continue down that path so they’re you know. But I won’t. Go down that path.
There’s some, but there’s certainly aspects to.
It we need to take into account.
Thanks Justin, Scott. Did you have anything else to add on on this particular one before we go to Q&A?
Tool just sorry. I’m sorry you guys.
Thanks mate, I was just going to say we’ve done quite a bit of work with. I cached both on the sort of four ECAC and acting for parties.
That have been brought into the iconic come.
System somehow as witnesses and or just antagonists or people have done the wrong thing. Interesting to hear what Paul and Lesley said.
I agree that, uh, corruption. Yes, sometimes it’s someone who wants to be a criminal. More likely as someone who doesn’t know what they’re doing because they haven’t been trained properly or they don’t want to do the right thing. ’cause they’re lazy and wanted to speed things up so.
Yeah, those those sort of three reasons that we fight.
Right breaches, which I can’t become interested in in terms of sort of preparedness. I also pause points about to.
But two 2.2 checkpoints is all very important, and the other one about having people sort of moving around and changing functions.
You know, be be be. Wary of the person that never takes leave and is very reluctant to let someone sort of act.
In their position, that that’s a.
Very obvious one, so there’s.
Also, sorts of red flags.
ICAC has very long fingers and has very very strong powers in investigatory terms, not so much in punitive terms. That is left to the to the, to the criminal prosecution, but in terms of the investigation.
If you’re a public servant or a private sector person who is engaging in corrupt conduct, order appears to be corrupt conduct then that they have got enormous.
Powers sad of investigation and finding information from phones and and warrants and other things. So be frankly, in terms of preparedness, I’d say understand what those powers are in the Commonwealth.
Sector and and be ready and then to to a large degree. You know you’re gonna be not do the wrong thing ever.
Then you don’t need to be particularly afraid, but they they they need to be understood and well respected. If it’s gonna look like the ECAC or other state bodies.
The only thing I’d add to that and just pick up on what Lesley said earlier, so fraud and corruption is a human activity.
It’s not. We haven’t got some cyborgs or AI that’s capable of committing fraud and corruption on its own, and that is a human activity.
Just also highlight that the impact of and taking on board what we’re just hearing in terms of our cats.
You know, reach an investigation powers. There are humans at the element of this at the end of these processes, and there have been some significant.
Uhm, adverse impacts on individuals as a result of our cat.
Some activities there was a parliamentary committee here in South Australia last year that looked into that.
So obviously, fraud and corruption is something we seek to prevent and and detect if it’s unfortunately occurring, but also to highlight the impact of some of these investigation powers, which in some cases have led to quite significant mental health issues and people taking their mine lives, regrettably.
Unfortunately, it’s actually time to go to our Q&A now, so thanks for everyone for submitting some questions. There’s a couple ones there. Is there a preference between? Umm, where is it? Their presence between federal and state regulation requirements. Scott, can we go to you first on that one?
Yeah, sure, I mean it’s a good question and and I think it’s something that people I suppose think about quite a bit.
Generally speaking, under the Constitution, federal law takes precedence over state law, so that’s just a matter of law and constitution of Australia. So that’s how that.
Is this question can be a bit more?
Simply answered though.
Which is if you’re doing a federal procurement, then it’s the federal law.
If you’re a State department doing state procurement, it’s the state law and the state law as it happens with the Trans Pacific Partnership, global government procurement agreements, and all the other things that.
We’ve signed up to the. Federal government made commitments on behalf of Australia.
And they passed the law 1st and then leaning on the states to pass mirror laws. And they are mirror laws and so they don’t need to be challenged in relation to which one takes precedence because they are entirely consistent with the other so far.
The only exception to that is Queensland who are digging in and trying to do different things and that’s.
Just the beauty of a A federal and state based sort of system of laws around the country and how those things can play out.
So, but fundamentally, as I said, federal law Trump’s state law, and it can that that question can be answered. You just got to comply with the policies and the laws that apply.
You in the in the in the jurisdiction that you’re.
In simple as that.
In terms of the procurement you’re running, you know it can become interesting, though I should say when you’re running a procurement, which is a state government procurement funded by Commonwealth, because then you gotta comply with both so that that happens.
Quite a bit too.
Thanks Scott, our next question. What is the definition of semi the ATO, excuse me, definition or the ABF definition?
Yeah, and that’s another great question, and one that’s often sort of answered into specific policy. Unfortunately, ’cause there is any, it’s neither of them, but it’s not.
The Ato definition or the APS definition. It’ll be a definition that comes out of a policy which is written in in relation to procurement.
We’ve got this all over the place, so we’ve got the small business unfair contract terms rules, for example, that their Commonwealth government laws that define small businesses under 20. That’s gonna move to under 100. We’ve got small medium enterprises in state government.
Policy definers under 200 people we’ve got sometimes a dual approach to this where it’s not adding headcounts but also revenue and it’s one or the other. So $10 million or less than 100.
And we’ve also got the the the the Payment Times Reporting Act at recent times, which has just come in and that defines a small to medium enterprise by a business that’s listed on an Excel spreadsheet which is run by the Commonwealth government, which you find the link.
So the answer is sort of multifaceted. Unfortunately, there is no one definition to anything. These things are deliberately.
Complicated sometimes, but the plan will define its own definition and it’ll be one of those or go somewhere in the middle.
Awesome, thanks another question here around what role will the industry capability network play in this new 10 point plan?
Does somebody want? to take that one? Go for it, Scott.
I can, I guess I’ve been. I don’t know that much about it. I I think it’s something that’s being run out of investment. NSW The the the Industry Capability Network and it’s all about all the things that Lesley being taught.
Talking about at the state level and the sorts of things that the Commonwealth government doing, but the Australian industry capability and development through the procurement function, so I think it’ll play a big role in SAIT based procurements.
What was the question again? Because of the question was about the 10 point plan. Then the answer is probably gonna be. Yeah, probably one player roll ’cause I think.
The ICM is state NSW and the 10 point plan is federal.
So, but anyway, the I suppose I then actually in a nutshell. Well, there is. There’s this stuff playing out in in both regimes, so that that that that that in concept in building capability is is a big part of wherever we are.
Lesley I wanted to touch on this one you mentioned early earlier around working with suppliers. I think people on the call today. Would find it really valuable to hear from you and potentially pull on how TOS like what are your tips on actually enabling your suppliers.
And to do with the 9:50 point. I think, but yes. Buy Australian them.
I think the first thing that we need to do is to talk to industry leaders in particular industries, and UM.
Then you can get your contacts. You need to get contacts to be able to talk to them about what their limits are.
What are they finding difficulties with our? Are they, for example, at the moment, finding supply difficulties, working with them to be able to build up their capacity.
So working with their difficulties trying to come see where government can help. Can government give grants for example to build up certain areas?
Their supply that they can benefit from and improve the industry so it’s really working with that industry. If it’s a key industry for Australia, if it’s a key industry that government needs, then I’m focusing on that capability over time and working strategically to build that capability rather than.
Just thinking that the occasional procurement is actually going to build the capability.
So I think it’s gotta be a directed deliberate approach to working out what we need within Australia and how we’re going to build that capability.
Paul, did you?
I think that’s I think that’s good.
Have anything else to add?
Yeah, I was just going to say I think the the need to be thinking about is is. What we’re going to market for and the frequency and the pipeline involved because.
You know business is not going to invest unless they see that there’s a return on that investment. So you know in the construction space, for instance, and this is where education perhaps is, is well placed that there’s construction going to be happening for years going forward. We’ve seen some some additional money come in the preschool space.
We’ve seen we’ve got a lot of money coming in into the building. Bigger schools, more schools to be. Able to meet the demand.
That then ideally places you in the position where you have a pipeline of work where we can start to then impact on on manufacturing because.
It’s it’s you need to have some sort of pipeline, some sort of level of certainty, some sort of ability for or to provide a willingness for for businesses to want to invest, they’ve got to know that they’re, you know.
If they’re going. To invest on on in some sort of manufacturing that they’re going to have something to sell in five.
Years, time or 10 years time, they’re not gonna just do it if there’s only visibility for a year, so I think that’s when we look at the opportunities around.
Programmes and pipelines of work and how we can best.
Set ourselves up to at least give those organisations a chance rather than necessarily going down a particular path where I hope that’s a bit clearer.
I think you get the idea of what I mean. It’s for us. For instance, it’s it’s about, you know, it might be that we do a kit of parts model for Building Schools instead of instead of going and building a bespoke. Tool we might build more of a specific.
Uhm, set of componentry that we require a manufacturing arm, but you would need to have 10 years worth of work to make it interesting or to make industry interested in being able to want to invest, so I think that’s got they’ve got to be able to see.
That they’re gonna. Be able to amortise their cost and make a return on that investment. So we need to think of this.
Programmatically, rather than just individually.
Yeah, thanks Paul. We have run out of time now and come to the end of our webinars so wanted.
Thanks everyone for joining, but big thanks to our for presenters Paul, Justin, Lesley, and Scott. Thank you for providing your time to all of us today on this chat. Those couple of questions we didn’t get to.
We will consider and e-mail some answers out to you guys. But everybody enjoy your afternoon and thanks. Again, for joining us today.
Yeah, thank you all.
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