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Tuesday, 18 June 1996
Page: 1736

Senator MARGETTS(6.56 p.m.) —I move:

That the Senate take note of the document.

I am speaking today to the Industry Commission's report entitled Competitive tendering and contracting by public sector agencies . On my brief scanning of a very large document, it seems that there are some issues of concern, and some of these involve the concerns that the Greens have mentioned on a number of occasions; that is, the impact of competition policy and how it actually impacts across the board. I am afraid that the end approach—whatever you do and however you try to write your tendering document—tends to be reductionist. Some of the real costs of the outcomes of lowest cost tender-type approaches are never met by the people who put out the tender, and they are certainly not met by the people who are offered the tender.

We know that during the competition policy legislation debate there was resistance from both sides of the chamber to placing any connection between policy goals from other areas into the competition policy legislation. So, if we are not careful, by 1998 we will basically fall into a situation where competition policy rules are okay but the other areas that may figure into the real costs of many of these decisions will not be taken into consideration. Other people, often the community, will be required to pick up the pieces. For instance, a recommendation in the report states:

If local governments in rural or remote areas give preferences to local suppliers or require contractors to use local resources, that should be set down fully in the tender documentation; all tenders, including in-house bids, should identify separately the additional price for being required to use local resources; and when the contract is awarded, any additional cost due to a requirement to use local resources should be announced.

That is interesting but, basically, some of the costs are not dollar costs; they could be environmental costs. For instance, I often use the example of frozen meals for hospitals which are transported from the city to the regions. It may well be that they are cheaper, but what is the real cost? It is not necessarily a dollar cost. What is the real cost to the person at the other end—the patient—who cannot order their meal a week in advance so that it gets there by road in a refrigerated truck? What is the real cost in employment opportunities to the local area? How do you actually build that into your tendering process? If you say that the onus is on the local regional council to make sure that they have calculated the cost, how do you then provide them with the resources to do that? What do you mean by the real costs there? They are some of the examples.

I have also noticed that in this document there is some information in box No. 2 `The impact of CTC on quality'. A lot of the issues actually talk about price. Quite frankly, I could find you at least as many where the impact of implementing competitive tendering has actually indicated a decrease in quality. All you have to do is look at where these kinds of policies have been implemented in other parts of the world to come up with as many or more examples of serious shortfalls in quality and a lack of public control over what used to be publicly provided services.

There are a great many pitfalls I believe we can fall into by accepting this kind of document. I believe it is time that we start looking at the real implications of what we have signed up to under the competition policy legislation of July last year and start looking at the wide implications, instead of this reductionist approach that somehow or other saving the dollars tender by tender actually means that you have saved money for society. I do not think that is the case. I have yet to see a situation where the real costs of many of these decisions can actually be figured in. Quite frankly, our efforts to include those to be considered in what is public interest, and so on, were not adequately dealt with when this legislation was dealt with.

We have to go back to the legislation and look at more bodies, other than just the Industry Commission, and start looking at the real impacts of competitive tendering. How, for instance, do you make sure that the real hours required on a job are included in a tender? How do you do that adequately and then make sure that somebody else is not left with a price when the tender has been underquoted? Many people end up paying for that. I seek leave to continue my remarks later.

Leave granted; debate adjourned.