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Wednesday, 11 August 2004
Page: 26130


Senator CARR (1:06 PM) —Today I would like to raise the way in which the Howard government has managed to shift overseas jobs, millions of dollars and great training opportunities with regard to apprenticeships and the way in which it has succeeded in securing a rather questionable tender process which has led to the loss of jobs and training opportunities of workers within the Hunter. The Newcastle engineering company Varley missed out on an $18 million contract for the manufacture of high-tech rescue vehicles for Australian airports. Since that time the region, up in arms at the result of the government's failures with regard to this tender process, has raised serious concerns about the treatment of the local manufacturer Varley.

Today I would like to raise some very serious concerns of my own about the way the Airservices Australia contract was let and the way this government has failed to develop an adequate government purchasing policy. From the information available, legitimate questions are being raised. It is not clear to me at this point whether or not the government is able to answer those questions. I have as a consequence placed on notice a series of questions in a bid to seek answers on the circumstances which have led to the loss of this particular contract.

We can assert this with clarity: Airservices Australia has failed to use the contract process to promote regional development, industry development or jobs growth in the Hunter region. As a result, 60 direct jobs and 180 indirect jobs that otherwise would have gone to the region have been lost. Opportunities have also been lost for high-skilled, high-wage jobs in this particular area of engineering. Equally, 10 to 15 apprenticeship opportunities have been lost. Everyone now understands just how serious the issue of skills shortages in this country has become—everyone, it would appear, except members of this cabinet. Important opportunities are being lost as a result of the government's desperate bid to export jobs and training opportunities. That opportunity has once again been missed, which in my judgment leaves the Howard government indicted for its neglect.

There are a number of questions that I believe ought to be answered. I would like to know why the local company lost its contract when the bids were so close. I would like to know why the tender documentation favoured the overseas company. We all understand the debate in this country about whether or not we should have local preferences, but I do not believe it is acceptable where tender documents appear to favour foreign firms. The government tendering arrangements have led to the security deposit being set at $6 million, or 30 per cent of the project cost, instead of the 10 per cent that is required under normal circumstances—quite clearly a deterrent which would lead to smaller Australian companies not opting to pursue these sorts of contracts.

I would like to know why Airservices Australia's officials failed to visit Varley to inspect their site, capabilities or products. I would like to know why Airservices officials visited Austria, on the other hand, for a four-day tour to look at the Rosenbauer International Aktiengesellschaft site. Why was it that the alternative bidder, the foreign bidder, got such attention when the local manufacturer was not able to attract the attention of the government in this way? I would like to know why the government chose to go for a fully imported product with no opportunity for Australian companies to contribute—they were effectively locked out of the operations of the successful tenderer. I would like to know why the contract for maintenance and afterlife support was also given to the foreign firm rather than looking at the domestic arrangements that could be made. I would like to know what the additional costs associated with making that foreign firm a successful tenderer were. We are entitled to know what processes were set in train to address complaints about the processes undertaken in the awarding of this particular contract. I would like to know what action the government has been taking with regard to the request for the reissuing of this particular tender.

The decision by Airservices Australia to award the contract to the Austrian company has seen the creation of a great many jobs in Austria and demonstrated a complete lack of understanding by the government about the value of government purchasing. It follows a pattern which has only got worse over recent years under this government. The Howard government has a purchasing policy unit, but it is hidden away in the department of finance. Airservices have let a contract to an Austrian company, but they do not seem to have any maintenance facilities for that foreign contractor to perform services on the product they are purchasing that is supposed to service Australian airports. I would like to know how that circumstance could be allowed to develop.

I would like to know whether or not the whole-of-life costs were actually built into the price of this project. I would like to know why the government seems so intent on running down the Industry Capability Network. For instance, the ICN has suffered funding cuts. It has been under enormous pressure to undertake a program of cost recovery for the provision of services to industry, and it has no funding certainty under this government at the moment. The government is doing all that it can to undermine commitments to give preference to Australian manufacturers. It is doing all it can to encourage the shipment of jobs offshore.

We now are entitled to ask whether the government is producing a policy outcome directly counter to the interests of Australian manufacturers. The Howard government has a long and sorry record in this regard. Through its Supplier Access to Major Projects program it has sought to effectively move away from any commitment to providing basic information to purchasers when it comes to major projects in the country. So it has no real commitment to even provide information, let alone to Australian manufacturers for the provision of services to the Australian government. Ensuring value for money for Australian government projects is fundamental. But the question of price needs to be measured across the life of the project, not just at the beginning of the project. If you do not build in considerations of the cost of maintenance then you are not getting a true reflection of the price of services that are being provided. Programs that have been run by the government in the past have produced major successes with regard to government purchasing. In the past, the Supplier Access to Major Projects program has supported 65 major projects and has provided advice to businesses, which I am told led to the creation of contracts of some $876 million.

It seems to me that it is possible. There is potential to make big improvements in this area and that is why I say a Labor government will support Australian enterprises, will be in the business of creating Australian jobs and will ensure that services are maintained within Australia. I think it is important that the Australian government understands that the $75 billion program of government expenditure across the three levels of government in the country is more effectively mobilised to support industry development in this country, ensure local manufacturers have opportunities to secure government procurement, encourage research and development in Australian manufacturing and ensure there is a commitment to Australian manufacturers and to Australia.

We have a circumstance developing in this country whereby manufacturers are constantly being told, `There is effectively no future for you.' We have a government that seems deadset on encouraging people to look offshore—and I do not mean look offshore in terms of exports, which is something that should be encouraged. The truth remains that you cannot have a serious export program unless you have a strong domestic market. That is the foundation stone. This is a government that seems determined to ensure that we import as much as possible. It is a government that seems determined to see us, essentially, as parasites on the international research and development food chain and our economy as a derivative economy, a branch office economy. It is obviously not committed to making sure that the greatest possible opportunities are available for the growth of the domestic market.

When it comes to government purchasing, it is quite clearly an avenue that is available to government which is not currently being used effectively. The example of the fire trucks provides us with a window to what is occurring more broadly with the government purchasing programs within this country. It would be appropriate for the government to give a full ex-planation for why a contract of this type, which could produce such good outcomes for a region such as the Hunter, has been allowed to go offshore in the way it has. It could be that there is a perfectly reasonable explanation. We are yet to hear what it is.

The advice to me suggests that all of the actions that have been taken have been aimed at assisting the foreign competitor. If that is not right, let the government come down and explain itself. Let it explain it in terms of the position that we have put forward and explain why the contract for that product was awarded offshore when the price was so close. We would like to know why the documentation appeared to be so prejudicial to local manufacturers. We would like to know why government officials had time to travel halfway around the world to examine the foreign competitor's facilities but did not have time to go to Newcastle. I cannot quite follow how that occurred. If it did occur, we are entitled to an explanation.

We are entitled to know what action has been taken to protect the maintenance arrangements. We cannot have a situation where a contract is given to a foreign firm on the basis of its immediate price value without regard to the long-term cost to the Australian budget. I think we are entitled to know why that happened and what process is available for the resolution of people's complaints on these matters. We have not seen any of those answers. The people of the Hunter are entitled to answers from the government on this issue. The opposition will be pressing for answers to these questions and, if there is a change of government at the forthcoming election, what I have argued today is the sort of position that we will put forward.

It is totally inappropriate that government purchasing programs are so ineffectually used to advance the interests of Australian manufacturers and consumers. The approach that is being taken at the moment is not about providing jobs here. It is not about providing training opportunities here. It is not about value for money. We as citizens of this country are entitled to expect the Commonwealth to lead on all those fronts. We are entitled to expect that there will be commitments to research and development. We are entitled to expect that companies that are tendering for government work will have an understanding of the social value of the work they are undertaking, and that can be done on the basis of value for price. It can be done with a commitment to the broader prosperity of this country. Frankly, at the moment, that is not being done.