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?
