Mr BROUGH (4:50 PM) —This afternoon I speak to the report of the Australian government purchasing policy and practice inquiry conducted by the Joint Committee of Public Accounts and Audit which was tabled in this parliament on the last sitting day in the last session. I did not get a chance to speak to it then. A number of issues concerned me greatly as a result of that inquiry and my participation with it, things which should be of grave concern to the wider Australian public.

All state and federal governments and local governments combined spend in excess of $45 billion a year on goods and services—$45,000 million a year. Therefore, the decision to purchase from Australian suppliers some of those goods and services or, where possible, all those goods and services can impact on the Australian economy by influencing employment, taxation, technology development and ultimately Australia's balance of trade, which of course we should all be aware of.

No government research is currently available as to the impact of buying Australian made per se. However, ISONET—the Industrial Supplies Office Network set up by the previous Labor government to assist both business and government alike to purchase Australian and New Zealand made products—has done some of its own research and has come up with the following figures. It states that every $1 million worth of export replacement—in other words, Australian made product that is sourced—raises $328,105 worth of tax, generates $1,216,267 worth of value adding with $210,082 worth of welfare benefits being saved and 22 full-time jobs being created. The mind boggles when you look at $45,000 million and 22 full-time jobs for every $1 million worth of export replacements that are actually purchased.

The challenge for the Australian government and for all governments of all persuasions is to make sure that the Australian taxpayers' dollar is optimised not only in the value for money that we utilise in our purchases but also in ensuring that we purchase Australian and New Zealand products wherever possible. In the summary of the report that was brought down, we stated in recommendation 3 that the chief executive officers within the federal Public Service have a major role to play:

The Committee suspects that some CEOs are not involved and do not place a lot of importance on their role in managing their agencies' purchasing. This is because CEOs obviously will focus on their core objectives that may relate, for example, to service delivery or policy development.

That is all well and good but, if we take away the importance of the purchasing of Australian and New Zealand made products to the wider community and the welfare of us all, I think we do ourselves a great disservice.

This is in contrast to the US system, where the US Government Performance and Results Act 1993 provides for agency heads to report performance against their objectives to the President of America and the Congress for each financial year. The committee has cited this example for the purpose of showing the need to assign accountability and measure the performance of agency heads and departments in delivering agreed performance objectives. In the US, they have legislated these requirements. We currently have guidelines which say that they must be followed, but the reality is that they are simply not being followed effectively by far too many departments.

Some agencies were able to give some information to the committee as to their actual purchasing. In fact, the Department of the Environment and Heritage stated that they reported 97 per cent of their suppliers were from Australian or Australian based companies, but they had no information to determine from where these suppliers were sourced and where these sources of goods came from.

We dug a little bit deeper into that. I would like to quote from a transcript. Mr Allen, who is the Acting Assistant Director of Corporate Services, Australian Antarctic Division of the Department of Environment and Heritage, was representing the department. I asked:

You just said `Australian based companies'. Do you mean Australian owned companies purchasing Australian made or just somebody that is based in Australia and we do not know where they are sourcing the information from? Can you clarify that for us?

Mr McKinlay from the department said:

The data that we have provided relates to Australian suppliers—suppliers located within Australia operating within Australia.

I thought I should further clarify that. I asked:

Suppliers located in Australia does not indicate whether they are Australian owned or whether the product that they are supplying is Australian made . . . So it simply means . . . that it is a multinational which is based in Australia or which has a base within Australia . . . Is it possible that you have line items which are being purchased via a computer system into an Australian company which simply is a code number which then goes straight offshore and is produced and they supply it? Do you know that?

Mr McKinlay's answer was:

No, we do not know that . . . The more likely scenario is our buying equipment from a supplier down the street and that equipment being sourced from overseas.

I asked:

Does that, in your opinion, follow the Commonwealth procurement guidelines?

He said:

We believe it does. We certainly source Australian sourced suppliers.

The problem we have is government officials saying that they believe they are following the guidelines when they are not following the spirit of the guidelines, which is to maximise the purchasing from Australian based companies. We should all be doing our best to do just that so that our balance of trade is enhanced and not put in a more difficult position. The fact that someone would stand up and tell us that 97 per cent of all of their purchases were from Australian based companies when the reality was that they were simply based on companies which have a base in Australia is somewhat contradictory to the guidelines and what the guidelines seek to achieve. The recommendation of this particular report went on to say:

. . . where Australian-New Zealand products are equal to overseas items in terms of value for money and other principles in the Commonwealth Procurement Guidelines, then the ANZ products should be purchased.

This is not a case of an option. The committee were of the very strong opinion that this is something that they have no say over and that they must do this because it is for the benefit of Australia. I remind you that it creates 22 full-time jobs for every $1 million of Australian product purchased as opposed to that from overseas and, of course, it raises $328,000 worth of additional taxation which can be spent on Australian personnel.

ISONET is an organisation which was tasked by the previous Labor government and funded by them to assist both the private sector and the public sector to fulfil this role and identify for departments where they could purchase Australian made goods. It is a very worthwhile organisation, and it is widely used by Defence. But, in ISONET's own admission in its evidence to this committee, it stated that Defence was the only department of the federal government that was using it very often. We interviewed most of the departments' representatives and they told us that they did have MOUs, memoranda of understanding, with ISONET. Unfortunately, they very rarely use them. I put it to you, Mr Deputy Speaker, that a piece of paper is hardly worth while when we look at what the ramifications are of the decisions that have been made.

We should not take this issue lightly. We all know that `Australian made' campaigns—as we have recently seen with that of Dick Smith—do strike a chord with the Australian population, but this will take a leadership role from the federal government. I believe the role of the chief executive officers, in particular, who are well paid, is to meet specific criteria. I think that it is dependent upon this government to ensure that the chief executive officers have added to their assessment of fulfilling their role, used their resources to the best of their capability, have purchased from small and medium enterprises from Australia and New Zealand and have done it at every opportunity.

This is not a case of what may be done. This is what must be done to ensure that the jobs that should rightfully be coming to Australia can do so, that the $210,000 worth of welfare benefits which can be saved for every $1 million worth of purchases are saved and that the value add of $1.2 million is also secured for Australia. Every chief executive officer and secretary of every department of the federal government has a role to play that is as important as any other as part of their position within the major departments of this government. (Time expired)