One of the stranger parts of the excellent Commonwealth Joint Committee on Public Accounts and Audit report on procurement is how bashful and retiring the Department of Finance seems to have become.
Once the scourge of the public service, the agency that made line departments account for every dollar, that demanded savings to offset any new spending and then rejected the spending but took the savings, the pains in the arse who wouldn’t let a cabinet submission go forward unless they’d checked every single cent, finance now appears to have a decidedly live-and-let-live attitude — at least when it comes to procurement by other agencies.
Despite claiming to be the “active stewards” of the Commonwealth Procurement Rules (CPRs), finance told the committee that it never bothered checking how agencies went about procurement, even after damning auditor-general reports, and didn’t press for too much information from them — because it might “damage relationships”, and it didn’t want to put too much of a “burden” on other agencies.
Those of us who’ve had near-shouting matches with finance officials over a few thousand dollars in costings are left to wonder who are these people, and what have they done with finance?
All this should be rough music to the ears of Finance Minister Katy Gallagher, who has been front and centre in Labor’s efforts to portray itself as the party that has brought an end to 15 years of deficits. With the budget expected to return to deficit beyond this year when a one-off revenue boost from commodity prices fades, Gallagher’s work of instilling fiscal discipline in the government is only just beginning.
That her own officials are missing in action when it comes to checking how $80 billion a year is spent on procurement across the Commonwealth is thus bad news indeed. As committee chair Julian Hill notes in his (exclamation mark-laden) preface to the report, “Finance needs to lead! Finance is the system steward and regulator — so own it! To be effective, finance needs to have more clue what’s actually happening in the system.”
He’s right. Finance’s all-care-and-no-responsibility approach to procurement has given us a system that is fundamentally at odds with the requirement for public servants to achieve value for money. And that system is costing us a fortune: if procurement was achieved with an average 5% improvement in value for money, that would deliver $4 billion in savings a year.
Eleven of the committee’s 19 recommendations are about finance, from facilitating greater professionalism of procurement practitioners in the public service to improving Austender, expanding the CPRs, forcing greater reporting by agencies and cracking down on procurement panels, the most abused part of the current system.
But there’s another way that finance could incentivise better procurement. It comes from the utter disaster of the Digital Transformation Agency (DTA) procurement of ICT services under its then-head Randall Brugeaud, which the audit office (ANAO) revealed in a classic “scathing” report last year. Among the staggering failure to observe good process were incidents where the DTA’s procurement staff explicitly told executives they were doing the wrong thing — including telling them “the proposal is inconsistent with effective and ethical stewardship of public resources”. They were ignored.
DTA told the committee there was no “malice” in any of this, but it is now taking a wide range of steps to completely overhaul its procurement processes and culture to ensure it never happens again etc etc.
What would have been far better is if DTA’s procurement personnel, desperately trying to do the right thing, could have approached finance and blown the whistle on their own executive, triggering an investigation by finance that would have grounded the cowboys in DTA and saved who knows how much money.
If agencies knew that staff could contact finance and report dodgy procurement processes, grinding them to a halt while their adherence to CPRs was checked, you can bet there’d be a lot more enthusiasm for ensuring compliance, rather than waiting for the scathing ANAO report. Procurement staff would have a secret weapon against line areas and their litany of excuses — “it’s urgent”, “it’s national security”, “the minister wants it”, “they’re doing a good job”, “we know they’re the best people to do it”, blah blah.
Of course, it would require finance to forget about maintaining good relations with agencies and return to being the snarling, infuriating watchdog of the public purse it used to be.
The committee report throws down the gauntlet to Gallagher and to finance secretary Jenny Wilkinson to get serious on what is a huge running sore in the Commonwealth — but also presents an opportunity to secure billions of dollars in value for taxpayers. What will they do?
Maybe step one is a cruise missile aimed at Russell Hill. Defence is the biggest waste of our resources there is, but is has become untouchable. Can anyone recall a recent major procurement that was not a debacle? Our Navy is a shambles, our RAAF is shackled by a front line fighter that is still not fit for purpose and has serious engine issues never mind having a piddling range. This department and Home Affairs are a black hole for money and much as I actually admire Sen Gallagher, it will take the whole cabinet and most of the parliament to get this fixed and the LNP won’t touch it.
we can’t touch “Defence” unless our Imperial Yankee Overlords allow it … and they can’t even gain control over their own “Defence” establishment
The military industrial complex now runs governments and we have no control over it. Eisenhower warned us and we ignored him.
The problem is well-known: the 2 year rotation.
All Defence personnel rotate to another position, often across the country, every 2 years.
It is supposed to make Australia resilient and avoid nepotism, which perhaps it does, but it is not the way to run major billion-dollar contracts extending over a decade or longer.
I never forgave Keating for getting rid of the Department of Administrative services, Which encompassed the Government’s skills base.
Working at DSS in the early nineties I was involved in organising projects obtaining, leasing and fitting out offices. At the time it was obligatory to get at least 3 quotes for the portions of the work that were tendered out, but I always got 5, this meant that all of my projects came in under budget. The assistance of DAS with organising the lease and the public tender openings made my life a lot easier, and when I needed assistance in purchasing I could always go to AUSBUY to get the best result. At that time all persons holding a position in project management were well versed in purchasing procedures and contract law.
I, for example was a member of the Australian Institute of Project Management and the Australian Institute of Purchasing and Materials management. Having had 25 years experience in the construction and mining industries prior to this I was struck by the general, efficiency of the DSS. Because it was performance driven IE every client had to be paid every fortnight, the DSS operatives excelled at their work.
Another interesting thing was the predominance of women in supervisory roles. It was my first time working in a predominantly female workplace and I was suitably impressed by their skill and empathy for the clients.
However this all changed when Howard got elected, the DSS became Centrelink and became a punitive rather than helpful organisation, they got rid of the sister organisation the Comonwealth Employment Service, another great example of efficiency, and began the process of replacing skilled public servants with unskilled contractors, which has led to our current mess.
Remember the good old days, when Frank and Fearless Advice worked in the PS?
Nowadays ‘politically correct’ seems to mean ‘doing whatever the minister/government wants’.
The removal of permanent heads is part of this, as is the slew of advisers. I’d have to say klewso that I am not as young as I once was and the memory is struggling to recall such times.
yep just this morning we had 2 news items juxtaposed – teacher being denied their promised reasonable pay rise while war games wasting millions are being conducted with som partners we seem to have . . ..
What’s the latest with Rundle? Any updates there?