1. Healthcare

3 February 2015
Budget Policy Division
Department of the Treasury
Langton Crescent
PARKES ACT 2600
[email protected]
2014-15 Pre-Budget Submission
Consult Australia welcomes the opportunity to make this submission to the 2015-16 Commonwealth
Budget. In providing our recommendations, we are mindful of the Government’s commitment to fiscal
responsibility, together with its twin goal of deficit reduction.
Consult Australia is the industry association that represents the business interests of consulting firms
operating in the built and natural environment. Our member firms’ services include, but are not
limited to: design, architecture, technology, engineering, surveying, legal, and management
solutions. We represent an industry comprising some 48,000 firms across Australia, ranging from sole
practitioners through to some of Australia’s top 500 firms. Collectively, our industry is estimated to
employ over 240,000 people, and generate combined revenue exceeding $40 billion a year.
Consult Australia’s recommendations for the 2015-16 Budget, consistent with our submissions to the
Productivity Commission and House of Representatives inquiries into better provision of public
infrastructure, focus on opportunities to deliver better value for money for the taxpayer when
procuring infrastructure, supporting access to skills and driving productivity across the economy.
Around 40 percent of our industry’s work is undertaken for public sector clients, and our member
firms have played vital roles in the creation of some of Australia’s iconic public infrastructure,
including road, rail, hospital, airport, educational facilities, water and energy utilities, justice, aged
care, sports stadia, and urban renewal projects.
Accordingly, we have substantial experience relating to a number of policy issues surrounding the
provision of public infrastructure, including opportunities for government to deliver better value-formoney outcomes for taxpayers. This submission will highlight a number of opportunities for
government to achieve improved outcomes as it provides vital public infrastructure, while also
supporting the needs of industry to play our part in developing those projects.
These vary from best practice procurement policy, which presents an opportunity to achieve “more
for less,” through to funding and financing infrastructure, and overcoming challenges relating to the
provision of skills to the built environment sector.
Many of our suggestions have already been made in the context of the Productivity Commission’s
recent report into Public Infrastructure, and this submission should be read in conjunction with the
recommendations of that report.
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2015-16 Pre-Budget Submission
Part 1. Procurement Reform
Delivering Value-for-Money: Procurement Reform
A number of reports commissioned by both government and industry have highlighted the need for
procurement reform to ensure that each dollar of public spending achieves optimal value. Focusing on
different aspects of procurement, these reports estimate the cost impact of poor procurement as
being significant.
In the first part of this year, Consult Australia will be releasing our own study into the cost and impact
of poor procurement policies and practices.
The report will find that through a small number of improvements to procurement policy and practice,
significant savings can be made, together with a reduction in delays and improvements to the quality
of project outcomes. Combined, these results will lead to a positive impact on the Australian economy
through an increase to GDP and job creation.
Following the report’s release we would be pleased to discuss its findings and recommendations with
any representatives of Treasury. They will be a small number of measures that are achievable and
relatively easy to implement.
Underlying many of the issues in procurement that can be individually addressed are their causes: the
lack of required skills within agencies responsible for procuring goods and services, and cultural
aspects, that lead to relevant officers not fully appreciating how risk can be best managed. These
issues have arisen through no fault of government agencies, following (for example) outsourcing of a
number of functions, but must be addressed to realise optimal outcomes for taxpayers.
To this end, Consult Australia has suggested the creation of a Centre for Procurement Excellence as
one measure that could improve performance across all spheres of government (see Annex A).
Consult Australia would welcome the opportunity to further discuss improvements to procurement
policy and practice, and in particular, would see great value in briefing relevant representatives on
our forthcoming report into public sector procurement and the opportunities for improvement.
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2015-16 Pre-Budget Submission
Part 2. Improved Access to Skills
Reintroducing targeted Industry Outreach Officers (IOOs)
Consult Australia was disappointed to see the Government abandon the Industry Outreach Officer
program in the 2014 Federal Budget. The Industry Outreach Officer programme was a proven
success in informing and communicating with industry on all aspects immigration and visa processing
and policy.
The expert assistance provided through the IOOs supported a clear flow of information between
employers and the Department, ensuring up to date information regarding changes to policy and
leglsation was communicated to firms in a timely easy-to-understand format.
In the case of our industry, the professional relationship built between the IOOs and Consult Australia
was a big factor in the enhanced level of understanding of the industry and government on the needs
of each in the skilled migration and temporary migration arena.
For our member firms, who have increased reliance on specialist engineers and other technical
professions, a detailed understanding by the Department of the particular issues they face, helped
ensure that their skilled migration needs were efficiently met.
Consult Australia recommends the reintroduction of IOOs focusing on specific industries, such as
ours, that contribute substantially to broader productivity, but where this economic contribution is
impeded through ongoing systemic skills shortages in particular areas. This more tailored approach
to the reintroduction of the IOO program recognises the need to apply fiscal discipline, but also the
benefits of the program in supporting access to skills in those areas of the economy driving growth.
Removing Barriers to Accessing Skills: Labour Market Testing
The temporary skilled migration program, centred on the subclass 457 visa, is market-driven. It helps
employers fill labour needs when suitable local options are unavailable. Compared with using locallybased people, the 457 visa is an expensive option for employers due to the additional lead time to fill
positions, the cost of bringing workers to Australia, and program requirements such as responsibility
for the cost of travel to their home country at the end of their contract. This is in addition to wages
which must be as good or better than what would be provided to an Australian worker performing the
same or similar role.
Employers therefore test the labour market for every hiring decision. The recent introduction of
regulation for that process—Labour Market Testing (LMT)—imposes unnecessary costs on employers
and government alike and it is inappropriate for the government to be involved in that market-driven
process.
Government resources would be better spent on enforcement of existing rules on the use of the
subclass 457 visa. Targeted, risk based, enforcement would be particularly powerful for ensuring that
abuse of the system and workers does not occur, or is quickly detected and eliminated.
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2015-16 Pre-Budget Submission
Other Measures to Improve the Skilled Migration Process
A number of other measures that are currently part of the skilled migration process create
unnecessary red tape for business, and a costly administrative burden on the Department of
Immigration. These were canvassed in our submission to the Department’s Review of Skilled
Migration and the 400 Series Visa Programs1. Some of those measures include:
- Health insurance requirements, which could be improved through a more pragmatic
approach;
- Caps on sponsorship numbers, which create an additional red tape burden, while achieving
the same outcome;
- Streamlining accreditation status;
- Enhance compliance monitoring by conducting more risk-based and targeted enforcement
checks rather than creating new regulatory processes.
More Flexible Childcare
Critical to industry productivity is maximising workforce participation, diversity and inclusion. Consult
Australia works closely with our member firms to share best practice in relation to flexible working
that helps to attract and retain employees who are balancing work and family commitments. In
parallel, it is critical that the Government complements industry best practice through a more flexible
approach to child care policy and incentives.
Consult Australia looks forward to the Government’s imminent consultation on a new families package
to deliver more affordable, available childcare. Consult Australia will be pleased to participate in this
consultation. In our recommendations to the Productivity Commission Inquiry into Childcare we have
already recommended that:
1. Changes to child care to make it more accessible to parents who do not work standard hours
should be extended beyond shift working patterns and include the variable work patterns of
professionals in modern and global companies.
2. Regulation to ensure that child care centres are safe should remain strong, but consideration
should be given to allowing centres to provide varying levels of quality in terms of educational
provision to meet the varying needs of parents and their children.
3. Remove restrictions on the use of in home care as approved care.
4. Nanny and au pair services should be reclassified as approved care
5. The cost of child care should continue to be shared between parents and the government on
behalf of the general public.
If these recommendations are followed, and restrictions on the flexible use of childcare are removed,
more parents will be encouraged to utilise nannies and other types of in home care and return to
work. For a limited Government budget allocation, more parents will ‘do the sums’ and realise that
they will be better off if they return to work and select from a wider suite of care options for their
children.
1
See https://consultaustralia.com.au/docs/default-source/policy/consult-australia-submission---review-ofskilled-migration-and-400-series-visas---20141024.pdf
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2015-16 Pre-Budget Submission
Part 3. Investing in Infrastructure
Delivering Productivity Improvements: Investing in Infrastructure
Infrastructure provision has lagged population growth in Australia for three decades. If we are to
seize an advantage in what is the fastest growing region of the world’s economy, obstacles to the
development and delivery of infrastructure must be overcome.
Since 2004, Australia’s strong economy, supported by the mining boom and AusLink investments,
together with an increase in private financing has seen some improvements in the delivery of
infrastructure projects that have helped to manage congestion costs and supply constraints. The
benefits of this investment to our productivity are clear with estimates suggesting economic benefits
of approximately $2.85 for every $1 invested in highways, rail and urban public transport alone.
However, while positive, these improvements are against a growing infrastructure deficit that puts at
risk our ability to maintain economic prosperity in the longer term.
Increased infrastructure investment that improves economic capacity and productivity must be the
first policy response to the challenges arising from increasing congestion and declining quality of life
in Australian cities, and will have the added benefit of easing pressure on migration policy and
achieving a more sustainable future.
Recent public inquiries into the provision of infrastructure in Australia have highlighted the importance
of this issue, and the demand of the Australian public for increased investment in the development
and delivery of infrastructure. Their discussion and recommendations provide a roadmap for
government to set about rectifying the backlog of infrastructure.
The Productivity Commission made a number of important findings and recommendations to improve
infrastructure delivery in Australia, ranging from governance arrangements to finance and risk
management. The report is an important statement of the challenges and opportunities to develop
more and better quality public infrastructure in Australia. Many of the Productivity Commission’s
recommendations addressing project governance and risk management have been adopted by the
Government, by way of an update to the National Guidelines for Project Delivery. This update should
be supported as a matter of priority.
Similarly, the recent House of Representatives Inquiry into Planning, Procurement and Funding for
Australia’s Future Infrastructure made a number of important recommendations. These include:
•
recommending that the Australian Government continue to facilitate the development of a
pipeline of public infrastructure projects, with consideration given to the adequacy of the
fifteen year projection currently used;
•
that innovative financing and funding models (including user charging, inverted bidding, asset
recycling and promotion of infrastructure bonds) be considered and further developed;
•
that tender processes be made more efficient, cost effective and flexible; that Infrastructure
Australia’s role is enhanced to incorporate wider procurement functions; and
•
that through COAG, better risk management strategies in infrastructure procurement are
developed.
Each of these recommendations are supported by Consult Australia, and offer the potential for the
benefits of public infrastructure to be enjoyed by Australians, with cost savings realised through the
development phase of each project.
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2015-16 Pre-Budget Submission
We would be pleased to discuss further the issues raised in this submission. To do so, please contact
Robin Schuck, Senior Advisor, Policy & Government Relations, on [email protected] or
phone 02 9922 4711.
Yours sincerely,
Megan Motto
Chief Executive
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Annex A:
A Procurement Centre of Excellence
Establishing an independent Procurement Centre of Excellence to develop and
implement best practice procurement and deliver value for money.
With large amounts of public funds being spent on infrastructure, it is incumbent on
governments to ensure they get maximum value for money through the procurement process.
To buy wisely you need wise buyers: there are substantial opportunities for governments and
business to share expertise, and identify and deliver solutions that improve productivity and
value for money across the procurement process.
The Australian Government spent nearly $42 billion across some 82,000 contracts valued over
$10,000 in 2011-12. A one per cent efficiency dividend would equate to nearly half a billion
dollars in savings. Including the value of procurement across 6 states, 2 territories and 562
local governments: the opportunities to translate these savings into new infrastructure, hospital
beds, police and other essential government services are substantial.
In the construction sector alone, a 2009 report estimated the cost of disputation at $7 billion
per year, a figure that is likely to have grown. Similarly, a 2008 survey of pressure points in the
Australian construction industry found that poor procurement practices had led to 26 percent of
projects worth over $1 billion in Australia running over budget by $200 million or more, while a
2006 study found that only 56 percent of projects were completed on time. Better procurement
practices could have prevented, or limited this waste.
To overcome persistent deficiencies in procurement skills and practices, we recommend a
whole of government approach supporting the establishment of an Australian Centre for
Procurement Excellence, building on the work of the Australasian Procurement and
Construction Council (APCC):
We recommend:
The Procurement Centre of Excellence expand the APCC’s role and remit, broadening
government engagement and building on work across jurisdictions considering efficiencies in
procurement. The Centre would be tasked with building a stronger relationship between
government and business and supporting best practice procurement in Australia at all levels of
government. The Centre should:
•
•
•
•
be established as independent of government;
build stronger linkages between government and with industry sectors;
provide transparent expert advice to all levels of government; and
develop guidelines, build capability and improve standards.
The Board of the Centre for Procurement Excellence should include equal levels of
representation from industry and government.
The Council of Australian Governments (COAG) in collaboration with the Business Advisory
Forum should lead a Government & Business Procurement Summit in 2015 to build the
mandate supporting the establishment of the Procurement Centre of Excellence. The Summit
should:
•
•
Highlight opportunities across all sectors to share expertise, increase
productivity and deliver savings and efficiencies through better procurement;
Identify key stakeholders, determine the terms of reference and appropriate
governance supporting the Procurement Centre of Excellence.
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