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Thursday, 25 June 2009
Page: 4305

Senator HUMPHRIES (12:36 PM) —I present the report of the Senate Education, Employment and Workplace Relations References Committee on the tender process conducted by the Department of Education, Employment and Workplace Relations for employment services contracts, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

Senator HUMPHRIES —by leave—I move:

That the Senate take note of the report.

This inquiry arose out of a considerable amount of dismay and concern in the Australian community, particularly in one sector, that employment services providers with good records of achievement, including the provision of work readiness training, have failed in the recent job tender round to have contracts renewed. In ordinary circumstances, of course, we accept that there will be winners and losers in any tender process. However, we always believe that efficiency, taxpayer value and the principle of competition serve the public interest well. This is a continuing program and in all essentials it is the early product of the previous coalition government’s employment services reform.

The problem that the Employment, Education and Workplace Relations References Committee found with the recent tender round, however, is that it failed to reward sufficiently many organisations which have established their credentials in local communities by winning public confidence across a range of services that underpin successful job seeking. These are, broadly speaking, social services. Many senators were concerned about the erosion of social capital which follows the displacement of well-established providers in some communities with new providers who will need much time and effort to gain the confidence of people in those communities—people often living in difficult circumstances who are in need of specially targeted services. There is much concern about the disruption this will cause and is causing to clients and the expense associated with that. Time will be wasted in establishing new relationships, and the cost to the taxpayer which results from this hiatus in service and to old and new job services providers will be considerable.

Another serious consequence is the potential loss of experienced case workers from the employment services sector, and the unemployment of many others. That this should occur at a time of rising unemployment is quite unfortunate. The government has stated that many displaced case officers from disbanded agencies will be absorbed by the new agencies. That may or may not happen; that is speculation. We will not know until the painful shakedown process is over.

The question asked by the committee was: what went wrong? The committee has had only partial access to information that would provide the answer. It lies partly in a decision made about a key criterion which gave insufficient weight to the record of past performance of job services providers within the system. Catholic Social Services Australia, for example, commented on this criterion:

In retrospect, the 30% weighting allocated to past performance was inadequate, allowing far too many proven performers to be dumped from the services on the basis of their written responses to selection criteria which we have already argued biases the results to larger, richer entities so often unproven in particular local areas.

The conclusion of the committee majority was that this was a wrong decision. We have well-established and successful agencies operating with a very close knowledge of their communities being displaced by new providers without any local knowledge at all, some of them based overseas. To understand this, and to make a proper assessment of a process which, according to its critics, has produced ‘counterintuitive’ results would require accessing documents which are confidential to the department’s selectors.

The probity of the tender process remains something of an open question. With regard to the late notification of a few successful tenderers, where the system failed very badly—and the department admits that—the process undoubtedly failed. Presumably, the rigorous probity arrangements were instituted to balance, as much as to safeguard, a process that was intended to be free of both external influence and external scrutiny or merits review. That was based on an attempt to avoid problems. The minister and the department have been at pains to emphasise the probity test, but that does not necessarily lead to openness and accountability. Nor does it provide any assurance as to the quality of an outcome. Many poor decisions are made in a very proper way, and in this case there was no information provided which gives an insight into the reasons particular selections of job tenderers were made.

Senators asked questions in the committee process. Indeed, they also asked questions in estimates and in question time, and members of the other place also asked questions in the appropriate forums available to them. At the end of this process it is true to say that a number of critical questions remain unanswered, particularly ones relating to the adding of tenderers to the tranche of tenderers who were the preferred tenderers at a stage close to the end of this process.

The committee has made some recommendations which the government should consider. The tender system requires an effective dialogue with tenderers rather than what appeared to be an over-reliance on written tender documents. Of particular concern to the committee was evidence that there appeared to have been limited verification of claims made. Not one witness—successful and unsuccessful tenderers—could tell the committee that their referees had been contacted, and they received no contact from DEEWR. As with a job application, written claims are just one aspect of the process and claims must be verified with referees, in our view. The committee majority considers that the process would benefit from the inclusion of a more tangible demonstration of the ideas and capabilities of tenderers, perhaps also with some different configuration of the tender process.

The committee heard evidence that the tender process seemed to favour larger organisations which have more resources at their disposal, the capacity to inject significant capital and to take on the administrative requirements. The committee heard how smaller organisations felt unable to compete in the tender process and did not tender. In our view, to ensure the diversity of the sector, smaller and specialist organisations must receive more support to ensure they do not feel shut out of future processes.

Importantly, the committee found that the process, perhaps inadvertently, fails to recognise the value of the additional community services provided by not-for-profit organisations. However difficult to quantify, this aspect should be properly addressed. There needs to be a selection process which can identify the best quality providers and which is able to achieve a balance between probity and effectiveness without compromising the interests of taxpayers or the philosophies which underpin care. The majority of the committee has recommended that it is time to review the tender process and investigate how best to address these issues.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.