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Wednesday, 9 November 2011
Page: 8681


Senator BIRMINGHAM (South Australia) (13:43): At the outset may I concur with Senator Mason and congratulate Senator Furner on a very wise and appropriate speech on an important subject matter.

But I rise to offer some advice to the Prime Minister. My advice is: never let Senator Conroy near a tender process! Senator Conroy has a track record of wasting the time and money not just of taxpayers but also of a host of companies bidding for tenders that he has been involved with. First we had the National Broadband Network mark 1, the fibre-to-the-node proposal, in which Telstra and a consortia led by Optus and a range of bidders participated. Ultimately, of course, that tender was scrapped. The ANAO found that, between the government and the tender participants, the cost exceeded $30 million in wasted money. NBN mark 2 is off and running, but not running so well. They have had to relaunch tenders in New South Wales, in Queensland and in South Australia to try to get it right, again at great expense to NBN Co. and to the tenderers involved.

Thirdly, and most recently, we have of course the farce of the Australia Network—not one false start but two false starts to the tender involving the Australia Network. Ministerial accountability used to have a 'one strike and you are out' policy. But under the Gillard government Senator Conroy has chalked up three strikes and he is still in the inner sanctum. While the botched tenders relating to broadband may involve larger sums of money, the botched tender relating to the Australia Network is perhaps the most grievous, because at the heart of it lies seemingly blatant political interference in a supposedly fair and open tender process.

The Australia Network is an important asset to Australia, averaging around one million viewers per week from its broadcasting across more than 44 countries in Asia, the Pacific and the Indian subcontinent. I first posed questions on the $223.1 million Australia Network contract in Senate estimates in February this year, which was the first opportunity following the 23 November announcement by the government that it would put this contract out to open tender and the 4 February release of the request for tender.

It is worth noting at the outset that nobody made the government opt for an open tender process. Five years earlier the Howard government had rejected calls for an open tender and simply extended the contract of the ABC to deliver the Australia Network. In fact, it has also been suggested that at the very outset of this process late last year the Department of Foreign Affairs and Trade recommended that the government not undertake an open tender. I challenge the government to release that initial advice of DFAT on how this contract should have been awarded and come clean on whether or not Mr Rudd overrode the advice of DFAT and, if so, whether he did so of his own volition or with cabinet approval.

At the time of my questioning in February it became clear that this tender was being conducted in a very secretive way. ABC Managing Director Mark Scott advised the estimates committee:

… a condition of the tender is that the ABC not discuss the nature of the tender and our work at the moment.

Confidentiality provisions of some sort are not unusual in tender processes, but in this instance it seems a total gag had been put in place. It begs the question: have Mr Rudd or the Gillard government generally had things to hide in the Australia Network tender process from day one?

At the time of the February 2011 estimates the Australia Network was due to expire on 8 August 2011, with the tender documentation stating that tenders closed on 25 March 2011, and indicating 8 June 2011 as the final indicative date for all negotiations to have been completed. The date of 8 June 2011 is when all negotiations for the new Australia Network contract were to have been completed. When we met with Mr Scott again at the budget session of Senate estimates on 26 May 2011, just nine working days remained before the date on which the contract negotiations were to have been concluded. However, Mr Scott advised that he and the ABC were in the dark. He said:

There has been no formal discussion with DFAT since the tender document was submitted. There was a session in April where tenderers could make a presentation. We did that, but there has been no formal communication from that point.

Senator Conroy at that time, in May 2011, stated:

I think the ABC has made a fine bid, but other than my opinion I am not involved in the process.

This statement poses a further interesting question: what knowledge did Senator Conroy have of the ABC's bid? He stated that he thought it was 'a fine bid'. Presumably that means he had at least seen or been briefed on the bid, if he had not been a party to its development. More on that later.

Concerned that it was now impossible for the tender to be resolved and a new contract finalised by the 8 June deadline, I went off to question the Secretary of the Department of Foreign Affairs and Trade, Mr Richardson. By the time of Mr Richardson's appearance at budget estimates it was 2 June 2011, by then just four working days before negotiations were to be completed. In an otherwise evasive performance, Mr Richardson stated:

A decision still has to be made in terms of the preferred tenderer.

But there was no new indicative date on which negotiations might be completed. Mr Richardson did confirm that the tender evaluation board consisted of:

… a number of representatives across different parts of government.

and:

… was chaired by someone from outside government.

He took on notice the question of who comprised the board. In answering that question on notice the secrecy continued, with the government refusing to provide those details. Mr Richardson also indicated that the tender evaluation board submitted a report to DFAT days or weeks prior to his appearance at estimates. Again, he took on notice the precise date and again the answer was never forthcoming. Mr Richardson did however state that Mr Rudd:

… has not yet been advised of the recommendation of the tender board.

Most curiously, Mr Richardson was at the time unable to advise who the final decision maker for this tender was, despite Mr Rudd's office being quoted in the Australian Financial Review of 21 April as indicating that Mr Richardson himself was the approver. Answers to questions on notice confirmed that indeed he was the approver, despite not being able to say so himself.

What happened next is where matters involving the Australia Network get decidedly murky indeed. On 24 June, 16 days after the supposed deadline for a new contract, the Prime Minister announced a variation to the tender and a six-month extension to the existing contract and stated that the decision on the preferred tenderer would now be referred for cabinet consideration. It also leaked out at the time—but it was not volunteered in the Prime Minister's statement—that ministerial responsibility for this tender for a contract to be let by DFAT for budgeted funds administered by DFAT would not longer be handled by the Minister for Foreign Affairs but instead by the Minister for Broadband, Communications and the Digital Economy. No satisfactory explanation has ever been given for any of these changes.

It was claimed the variation was sparked by events such as the uprisings associated with the Arab Spring. Why that required such a dramatic change to a tender process, where a recommendation had already been made, has never been explained. The reasons given appear to be little more than a mask to cover up the fact that the government just did not like, and was unwilling to accept, the result of the first tender as recommended by the independent evaluation board, which by 24 June someone within government had been sitting on for at least a month.

Labor still has plenty of explaining to do over this first delay and this failure to accept the result, up until that point, of a seemingly fair and prudent tender process. This conclusion was given added impetus when Mark Day wrote in the Australian on 4 July that the panel, which he revealed comprised public servants from Treasury, Finance, DFAT and the communications department, had decided three to one for the Sky News bid, with only the communications department being against it. Mr Day has subsequently indicated that he understands the finding in favour of Sky News was in fact unanimous. With Senator Conroy now charged with oversight of the tender, it kicked off for a second attempt. The ABC contract to deliver the Australia Network was extended by six months until 8 February 2012. The bids under the second tender were to close on 27 July 2011 and, according to the Prime Minister in her statement on 24 June, 'a decision on preferred tenderer is expected to be taken by September 2011'.

Not only have the reasons for this change never been explained, but the probity of this tender process has been in doubt ever since Senator Conroy was put in charge of it. Senator Conroy is, after all, the minister with ultimate oversight for one of the bidding parties, namely the ABC. The millions of dollars the ABC receives from this contract help it to maintain its international presence and no doubt provide other efficiencies of scale to the ABC. There is little doubt that without the Australia Network contract the ABC would be asking Senator Conroy for additional funds in their next triennial funding agreement.

And then there is the matter of Senator Conroy's own words in Senate budget estimates on 26 May this year:

I think the ABC has made a fine bid ...   

It is clear that Senator Conroy had knowledge of the ABC bid and supported the ABC bid before he was given responsibility for the Australia Network contract. Whether there was a good reason or not for Mr Rudd to be stripped of responsibility for this contract—and I very much doubt there was—there was clearly a very good reason for Senator Conroy to decline the Prime Minister's request that he assume responsibility for it. Senator Conroy has been conflicted on this from day one. His oversight of this tender has added greatly to the stench of political interference plaguing it and his willingness to accept oversight of it demonstrates a serious lack of judgment and a serious misunderstanding of the importance of prudency in tender processes. The Prime Minister's decision to give Senator Conroy this responsibility ensures she equally stands condemned for an equally serious lack of judgment.

On 16 September, the deadline set by the Prime Minister for a decision for the second attempt at getting a successful tenderer, the date came and went without public comment from the government. By 18 October, in the supplementary budget estimates, Mr Scott from the ABC confirmed:

... our staff would be keen for the resolution of the tender process, and we await news.

He confirmed that the ABC had received no information on any findings by the tender evaluation board. Senator Conroy, now the 'approver' and allegedly responsible minister, refused to be drawn on whether or not he had received a recommendation from the tender evaluation board, claiming yet more confidentiality and secrecy. What needs to be secret in this tender process, it seems, is subjective, made to suit the circumstances on a given day. In the May-June budget estimates Mr Richardson and DFAT claimed it was inappropriate to reveal who was on the tender evaluation board but did reveal that Mr Richardson was in receipt of a recommendation from that board. By the October estimates, Senator Conroy and the communications department revealed the membership of the tender evaluation board but refused to say whether the board had made a recommendation. Allow me to give some free advice to this government: if you are going to hide behind confidentiality provisions and dodge questions under cloak of secrecy, you should at least get your story straight on what is secret and what is confidential; otherwise you get caught out for lying.

All the confidentiality was, of course, pointless. The day before these estimates, 17 October, Mark Day and Denis Shanahan wrote in the Australian that a recommendation had been made to Senator Conroy. Again, the decision was, allegedly, 4-nil in favour of Sky.    It seems the panel may have met the 16 September deadline and Senator Conroy may have been sitting on the decision for up to a month, trying to find a way to get around a second tender assessĀ­ment where he again disapproved of the outcome. It was revealed on Monday of this week that on 27 October the matter of these leaks was referred to the Australian Federal Police. In explaining why these leaks warranted referral when the earlier ones did not, Senator Conroy stated in the Senate yesterday:

... the first reports concerning the details of the tender process contained significant inaccuracies, which did not justify a referral to the AFP for investigation.

The corollary of this statement is that presumably the 17 October story was accurate, because it did warrant referral.

While these leaks are a serious matter, Senator Conroy has failed to outline how they actually compromise the integrity of this process any more than the series of questionable decisions made by the government brought the probity and integrity of this tender into question. Many are forgiven for thinking that these leaks presented a neat excuse for the government to cancel this tender, which for the second time had delivered a winner who government ministers—all bar Mr Rudd, it seems—were unwilling to accept. There appear to be two factors at play here. The first is prejudice, the prejudice Mr Rudd has for an open tender, presumably because he sees it as a way to drop the ABC, and the equal prejudice Senator Conroy and the Prime Minister have against any organisation with any remote connection to News Corporation. The second factor is leadership. Mr Rudd is to be stymied at all costs and Ms Gillard is to have the final say, via Senator Conroy, over this international program of soft diplomacy, instead of her foreign minister.

The ABC, Sky, DFAT and the department of communications all appear to have become pawns in the political power plays that plague the heart of this Labor government. True to form, Mr Rudd appears to have ignored departmental advice. True to form, Senator Conroy appears to have been dissatisfied with the outcome of a tender and therefore sought to start all over again—to hell with the costs to the parties involved. True to form, Ms Gillard could not trust Mr Rudd and stripped him of responsibility. True to form, Ms Gillard misled the Australian people about the reasons for these changes. In the process, the rule book for tenders appears to have been overthrown and any semblance of proper probity in the conduct of this tender appears to have been utterly shredded. (Time expired)