Public Sector Employment And Management Amendment (Procurement Of Goods And Services) Bill 2012



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SpeakersSearle The Hon Adam; Mason-Cox The Hon Matthew; MacDonald Mr Scot; Kaye Dr John; Green The Hon Paul; Phelps The Hon Dr Peter; Fazio The Hon Amanda; Veitch The Hon Michael; Nile Reverend the Hon Fred; Pearce The Hon Greg
BusinessBill, 2R



PUBLIC SECTOR EMPLOYMENT AND MANAGEMENT AMENDMENT (PROCUREMENT OF GOODS AND SERVICES) BILL 2012
Page: 12050

Second Reading

Debate resumed from 23 May 2012.

The Hon. ADAM SEARLE (Deputy Leader of the Opposition) [2.58 p.m.]: The Opposition does not oppose the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Bill 2012, which was introduced by the Minister for Finance and Services to abolish the State Contracts Control Board and replace it with another body. Most of the functions of that new body seem to be largely conterminous with the previous entity. The current Government when in opposition made an election commitment to centralise procurement of around 60 per cent of government expenditure by 2015. I think its target is to save about $1 billion through this change. The bill creates the NSW Procurement Board as a new agency to oversee procurement across government. The board will be chaired by the Director General of Finance and Services with six other agency heads to serve on the board. The Minister will retain the power to direct the board to adopt government procurement policies. The board's objectives are:

      (a) to develop and implement a Government-wide strategic approach to procurement,

      (b) to ensure best value for money in the procurement of goods and services by and for government agencies.

DEPUTY-PRESIDENT (The Hon. Natasha Maclaren-Jones): Order! There is too much audible conversation in the Chamber. Members who wish to engage in private conversations should do so outside the Chamber.

The Hon. ADAM SEARLE: The objectives also include:
      (c) to improve competition and facilitate access to Government procurement business by the private sector, especially by small and medium enterprises and regional enterprises,

      (d) to reduce administrative costs for government agencies associated with procurement,

      (e) to simply procurement processes while ensuring probity and fairness.

The board will have the role and responsibility of developing procurement policies and guidelines along with monitoring and enforcing compliance for other government agencies. The bill maintains the policy of competitive neutrality, which ensures that government businesses are not placed at an advantage over the private sector, as well as exemptions for emergency procurement, disability employment organisations and local authorities.

However, the Opposition has some concerns and some observations to make about the legislation, in relation to which it will be moving amendments. Proposed section 141 on page 5 of the bill provides that the board may establish advisory groups, comprising members from the public and private sectors, to advise the board on such matters relating to the procurement of goods and services as are referred by the board to those advisory groups. We do not have any objection to the mechanism but we think limiting membership of advisory groups to members from the public and private sectors may be a little restrictive. We suggest that those two categories could be broadened to include the non-government sector, which of course could comprise industry associations or other representative groups that may well have particular perspectives or expertise to offer and that government could draw on through this potentially useful facility.

Another concern the Opposition has relates to proposed section 142, the delegation of the board's functions. The board may delegate to an authorised person any of its functions other than the power of delegation. Proposed subsection (3) sets out who an authorised person may be. The provisions are largely the same as in section 141 of the Public Sector Employment and Management Act. However, proposed subsection (3) (e) refers to any other person or body, or person or body of a class, prescribed by the regulations. We think that is quite a broad delegation power and conceivably the entirety of the board's functions could in effect be contracted out by government to some other non-government or private sector body. We do not think that is desirable and if the Government wished to have such a facility or the capacity to embark upon such broad-scale contracting out of the functions of the new agency, it should be dealt with by separate legislation.

As I indicated, I understand it is not that dissimilar to the current provision; nevertheless we have some concerns about the breadth of the delegation power particularly if, as we understand it, the policy underpinning the bill effectively is to place a more centralised emphasis on procurement by government on a whole-of-government basis. If there is to be that further centralisation or emphasis on centrality we think those powers of delegation need to be narrowed. Certainly, that category is just a little too broad.

DEPUTY-PRESIDENT (The Hon. Natasha Maclaren-Jones): Order! There is too much noise in the Chamber, which makes it difficult for Hansard to hear the member with the call.

The Hon. ADAM SEARLE: The third area where we think the legislation could certainly do more is in relation to part 7.3, the objectives and functions of the board. I mentioned earlier the emphasis on improved competition and facilitating access to government procurement by the private sector, especially by small and medium enterprises and regional enterprises. We think this legislation provides an opportunity for the Government to go a little further and be a little more ambitious. Building into the legislation something more akin to the New South Wales Government Procurement Local Jobs First Plan of the previous Government would be a good thing. That policy recognised that value for money is not just about the lowest price but about a broader economic benefit, not just for the community as a whole but for specific regional communities.

There really needs to be more emphasis in the legislation on promoting access for small business to government procurement throughout New South Wales and in particular in regional New South Wales. Something like the Australian and New Zealand price preference margin that is embodied in the Local Jobs First Plan should be at least a component part of this legislation. That provided for a preference in tender evaluations by giving a discount to Australian and New Zealand small to medium enterprises that tender for procurement in New South Wales.

DEPUTY-PRESIDENT (The Hon. Natasha Maclaren-Jones): Order! I remind Opposition members that their chattering is disruptive. Members who wish to engage in conversation should leave the Chamber and use the members' lounge.

The Hon. ADAM SEARLE: We think emphasis on New South Wales small business, particularly in regional and country areas, would be warranted now. Those matters could usefully be built into the objectives and functions of the new body. With those observations I indicate that we do not oppose the legislation.

The Hon. MATTHEW MASON-COX (Parliamentary Secretary) [3.07 p.m.]: It certainly is a pleasure to support the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Bill 2012. At the outset I congratulate the Minister for introducing such an important bill, which, while it may not amount to many pages, is a very important reform of the way this Government handles procurement in this State. It was very interesting to note some of the comments by Opposition members about areas in which we might improve procurement in New South Wales. I could not help but wonder why they never offered these suggestions or implemented them while they were in government during the past 16 years.

The Hon. Adam Searle: I was not here.

The Hon. Michael Gallacher: You were pulling the strings under the former Government. You were one of the manipulators.

The Hon. MATTHEW MASON-COX: Precisely. It is wonderful to have words of wisdom from the Opposition but why on earth did nothing happen for 16 years in relation to procurement? Let us address some of the problems. I refer members to an excellent discussion paper about the Government's procurement policy and in particular the concerns raised in the paper by the Independent Commission Against Corruption in its report "Corruption risks in NSW government procurement: Recommendations to government". The concerns identified about government procurement at that time included that the New South Wales public sector procurement system, including local government, is complex and difficult to apply to varying procurement scenarios. It also says the accessing of practical information to support practitioners in their procurement activities and decision-making is very difficult under the operating procedures.

The Independent Commission Against Corruption referred to central agencies failing to provide leadership and support to individual organisations, procurement practitioners and suppliers. Under this bill a central agency, under the guise of the Department of Finance and Services, will provide leadership in this neglected area of government operation. The Independent Commission Against Corruption said that the public sector was characterised by varying levels of procurement expertise and lack of compliance, that procurement policy and procedures were widespread and, therefore, there was an absence of effective sanctions within the system.

One has only to remember the number of reports that have been generated by the Independent Commission Against Corruption relating to the procurement activities of CityRail over the past few years to know that corruption has been identified, procedures have not been enforced and the former Government was left with egg on its face which this Government, under the Minister for Finance and Services, is determined to clean up. I note that government procurement is worth $13.7 billion in goods and services every year, which represents a massive injection into the New South Wales economy. It is therefore essential for the procurement exercise to be well focused and accountable and the Government must receive value for money. Under the former Labor Government procurement procedures drifted aimlessly for 16 years and in many instances this State did not receive value for money.

I note that this legislation will replace the State's Contract Control Board with the NSW Procurement Board, which will comprise directors general of principal departments who will be responsible to the Minister. This legislation will take procurement to a higher level and ensure that under this Government it receives priority. The model in this legislation is similar to, and its structure is basically a replication of, the model used in information and communications technology. The board will be chaired by the Director General of Finance and Services and its members will comprise directors general of the principal departments affected by procurement.

The procurement leadership group will be chaired by the Director General of Finance and Services and people in industry with the relevant expertise in procurement will form an industry advisory group, which will ensure best practice, best outcomes and best value for money. A number of working groups will be established comprising members of the advisory and leadership groups to implement policy and to ensure value for money. This long-awaited and worthwhile initiative will restructure the procurement process and complement a range of existing procurement initiatives.

I note that the Government has developed an agency accreditation scheme for goods and services procurement and has organised the public sector into nine principal departments with their cluster agencies. This rapid restructuring and alignment of procurement functions is complementary to that scheme. It is worth noting also that the Department of Finance and Services has developed and maintained a variety of procurement technology solutions which are available to all government agencies and which include e-tendering, an e-commerce and contract lifestyle management system—which is an e-procurement platform to provide contract management workflow—supplier management, procurement benefits and other features such as open bidding and reverse auctions.

For a long time it has been clear that procurement in New South Wales has not been working. A number of businesses in a wide range of industries have been in contact with this Government and have raised concerns. I commend the Minister for taking such high-level action by introducing this legislation. It is important for the Government to change the culture relating to procurement in the public sector. In changing that culture we will be focusing on interacting with small and medium-size business enterprises which are critical to this State. Small and medium-size businesses, which are key drivers for the New South Wales economy, employ more than 1.8 million people in New South Wales and drive enormous benefits, in particular in regional New South Wales.

Currently, approximately 580 small and medium-size enterprises are engaged in State Contracts Control Board whole-of-government contracts. Under these new arrangements it would be good to see that number increase. The current system is bureaucratic, burdensome, inflexible and not able to be accessed easily by small and medium-size businesses. With the leadership that has now been shown in the new procurement structure it is to be hoped that that will change. The long-awaited provisions in this bill will signal a change in the culture of procurement in New South Wales. I again commend the Minister for introducing this important legislation.

The Hon. SCOT MacDONALD [3.16 p.m.]: I support the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Bill 2012, which highlights one of the key differences between the Liberal-Nationals Government and the previous Labor Government. The Australian Labor Party, by nature, is attracted to centralised, bloated bureaucracy and is disdainful of small business, in particular, those businesses outside metropolitan areas. Under Labor procurement was incrementally directed away from the smaller businesses to a narrow pool of larger enterprises with the capacity to fill out mountains of paperwork, which effectively shut out many of our nimble firms that might not necessarily have had the personnel to complete the blizzard of forms that gave them access to government procurement.

Many aspects of this bill have arisen from the New South Wales Government procurement discussion paper and subsequent consultation which identified the task, challenges and opportunities. I commend the Minister for Finance and Services for acting promptly and for reaching out so effectively to the business community. Based on 2010-11 data, the New South Wales Government spends an estimated $12.7 billion on goods and services each year, with the State contracts of the outgoing State Contracts Control Board accounting for $3.8 billion of that expenditure. The balance is managed directly by government agencies. The discussion paper outlined institutional weaknesses, but I want to focus on some of the opportunities.

The paper highlights that 1.80 million people are employed in small businesses in New South Wales and approximately 580 small and medium-size enterprises are engaged in State Contracts Control Board whole-of-government contracts. The paper states further that this Government is helping small and medium-size enterprises to access government business by simplifying sourcing mechanisms and contract terms and conditions. These include features such as insurances, liabilities and schedule structures. Following the discussion paper and input from stakeholders, this bill delivers on the Liberal-Nationals mission to improve the efficiency of government and restore opportunity to regional New South Wales. Proposed part 7.3, section 144 (c) of schedule 1 to the bill, which outlines the objectives and functions of the NSW Procurement Board, states:

      (c) to improve competition and facilitate access to Government procurement business by the private sector, especially by small and medium enterprises and regional enterprises …
In the time in which I have been a member of Parliament I have heard many speeches by those who have promised to assist disabled persons. However, the promises that have made by the Minister for Finance and Services will now be put into effect. Proposed section 21B states:

      21B Supply of goods and services by approved disability employment organisations

      (1) A government agency may procure goods and services that are supplied by a person or body approved as a disability employment organisation under this clause.
I am aware of many such organisations. If government departments and agencies proactively seek out their goods and services, I can foresee many mutually beneficial arrangements in regional New South Wales. The Liberal-Nationals Government understands that small and medium-size businesses are key economic drivers in this State. This bill will enable the Government to tap into the innovation, drive and enterprise of our State's smaller businesses and make our State that much better. I commend the bill to the House.

Dr JOHN KAYE [3.19 p.m.]: I speak on behalf of The Greens on the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Bill 2012. This bill amends the way in which goods and services will be purchased by public sector agencies by abolishing the State Contracts Control Board, which is the centralised government procurement agency, and replacing it with a separate body that will be called the NSW Procurement Board. The new board will be responsible for developing a scheme and policies for agencies that do their own purchasing. It is not clear from the legislation or the second reading speech exactly what the scheme will be, but we understand that it will evolve. The legislation will enable agencies that are not capable or for whom it would not be efficient to undertake their own procurement still to engage in a centralised procurement activity.

However, those agencies, particularly NSW Health and the Department of Education and Training, that have very large procurement orders will able to develop their own efficient processes. The devolution of procurement is a two-edged sword. On the one hand, procuring goods and services locally means that the process can be more efficient and appropriate. We do not want to replicate bureaucracies across different departments and there is clearly a sweet spot at which that trade-off occurs. Presumably, the new board will be in a position to make an appropriate decision about central economies of scale and scope and economies of efficiency in devolving decisions to individual agencies. The Greens do not oppose the fundamental thrust of this legislation. However, we have longstanding concerns about procurement decisions being made in the education sector.

The concept of principals making procurement decisions up to $5,000 makes sense. That is particularly true in rural and regional New South Wales, where under the existing arrangements principals have been forced to source goods from distant urban providers and as a result have paid more for goods and their transport than they would have had they been able to buy from local providers. Many principals simply want to support local jobs by buying locally; they want to award contracts to the parents of their current and future students. That is a sensible approach, but the existing departmental arrangements work against the best interests of schools and local communities. Given that, this legislation is a step in the right direction. I doubt that the Government will agree with The Greens' concerns about this legislation. Our first concern relates to ethical purchasing. Proposed new section 144 contains the bill's objectives, which in and of themselves are appropriate. They are:
      (a) to develop and implement a Government-wide strategic approach to procurement,

      (b) to ensure best value for money in the procurement of goods and services by and for government agencies,

      (c) to improve competition and facilitate access to Government procurement business by the private sector, especially by small and medium enterprises and regional enterprises,

      (d) to reduce administrative costs for government agencies associated with procurement,

      (e) to simplify procurement processes while ensuring probity and fairness of the development.

There is nothing wrong with those objectives. The Greens' concerns relate to a number of objectives which should have been included but which have not been, including ethical procurement. Many people say that that is a Greens' idea and an inner-city latte set concept.

The Hon. Dr Peter Phelps: I would say that.

Dr JOHN KAYE: Yes, the Government Whip would say that, so I will explain to him what it involves. It is about the 215 million children around the world between the ages of 5 and 14 who work for a living, 115 million of whom work in hazardous industries. This is about areas like Sialkot in Pakistan, where 75 per cent of the world's hand-stitched soccer balls are manufactured by 10 million children under the age of 14. According to the International Labour Organization, about one-third of those children do not go to school. In effect, Australian children playing soccer do so with balls manufactured by children who have never attended school. They cannot do so because incomes in their home countries are suppressed by their low-cost labour and that means adults are not employed. As a result, families need their children to work so that they can survive. It is a vicious cycle. The International Labour Organization, LEAD Pakistan and many international aid organisations have established that the way to break the cycle of poverty and family dependence on child labour is to ban it and increase adult wages. That would involve enforcement of International Labour Organization Conventions 182 and 138.

The Hon. Dr Peter Phelps: Are we going to invade Pakistan to enforce those conventions?

Dr JOHN KAYE: If the Government Whip had one iota of patience and half an iota of courtesy, he would wait until I am finished what I am saying to understand where I am headed with this important issue, which he seeks to politicise and trivialise. The International Labour Organization's document entitled "From Stitching to School" specifically focuses on combating child labour in the soccer ball industry in Pakistan and states that the solution is in the hands of Western governments that have the option to enforce policies to deal with this situation. One of the policy choices that we can make as a State is to say that our education system will not purchase soccer balls manufactured using child labour. If we were to do that we would take this State out of the market for soccer balls manufactured by children who are denied the right to go to school. If that policy were adopted by those purchasing soccer balls they would force better wages to be paid. That would increase costs, but it would also result in adults earning liveable wages and it would break the cycle created by the employment of child labour.

Global progress is being made with regard to child labour, but it is very slow. In 2010 there were 215 million children in the world's workforce, which is only seven million fewer than in 2004. It is time that all of us, including New South Wales, took responsibility for this situation by clearly stating that we will not purchase goods or services from companies that are violating International Labour Organization Convention 182, which deals with the worst forms of child labour, and International Labour Organization Convention 138, which deals with minimum wages for children. One-third of 215 million child labourers in the world—about 72 million children—live in countries that have not ratified the International Labour Organization conventions. Until those conventions are ratified and enforced there is a real risk that procurement of soccer balls by the New South Wales Government will continue to support the exploitation of children.

The Hon. Dr Peter Phelps: Why not simply ban soccer?

Dr JOHN KAYE: I note that absurd interjection from the Government Whip. Of course he is embarrassed by the fact that an unregulated free market produces such appalling outcomes.

The Hon. Rick Colless: You just don't realise when he is taking the mickey out of you.

Dr JOHN KAYE: His interjection is on the record. It will read very clearly that the Government Whip sought to trivialise child labour. He did so specifically because he is embarrassed by the fact that an unregulated labour market inevitably produces such an abhorrent situation. When I raised this issue in questions on notice with the former Minister for Commerce, John Robertson, he told the House:

      I am advised that the standard conditions in State Contracts Control Board contracts were updated in May 2009 to strengthen clauses prohibiting the use of child labour. New section 12.5.2 states:

      The contractor must ensure that Deliverables have not been produced using the "worst forms of child labour" as defined in the Worst Forms of Child Labour Convention, 1999.

One of the concerns that The Greens have with this bill is that with the abolition of the State Contracts Control Board, and hence its purchasing policies and the clauses contained within the standard contract, New South Wales may be at risk of losing its embargo, at least on products that are produced using the worst forms of child labour, as defined by the International Labour Organization Convention 182. The concern of The Greens is not just limited to child labour, although child labour is one of the most abhorrent forms of exploitation that occurs in the purchasing of goods. One of the most important aspects of ethical purchasing is to divorce the State from the practices of child labour and from purchasing goods that are produced using child labour.

The Victorian Government has a number of policies surrounding the issue of ethical procurement. It has a Procurement and Ethical Employment (Standard) Policy which requires businesses that obtain government purchasing contracts to meet their obligations to their employees under all applicable industrial instruments in legislation. The Victorian Government has an environmental procurement policy which embeds environmental considerations into procurement decisions. It also has an ethical purchasing policy which creates a mandatory safety net for nominated sectors. That policy provides a safety net of fair employment standards for employees in nominated vulnerable sectors who are engaged in the provision of goods and services to the Victorian Government public sector or its entities.

There is no such provision in the legislation before us. In fact, of the triple bottom line issues, the State Contracts Control Board is required to focus on the commercial bottom line, not the social bottom line or the environmental bottom line. There is nothing in this legislation that addresses the issue of the environmental damage that may be caused by the New South Wales Government purchasing certain goods or services. This is 2012 and that issue should be addressed in the legislation. There is also nothing in the proposed legislation about the waste stream and the need to move to extended producer responsibility in goods purchased by the Government. We should ensure that when goods reach the end of their usable life they are disposed of, reused, recycled or rejuvenated in a responsible way. The legislation should address the problem of the damage that is being done to the earth's natural resources by the wilful dumping of goods.

There is nothing in the bill about fair trade standards relating to imported goods and services. There is nothing that requires enterprises that provide goods and services to the New South Wales Government to comply with the International Labour Organization standards. There is nothing in the legislation that talks about child labour or the applicable animal welfare laws and best animal welfare practice. The O'Farrell Government is missing an opportunity to use its massive procurement activities as a lever to drive greater ethical behaviour by suppliers. The Government has missed an opportunity to make a substantial difference to advancing the welfare of the environment, of children and workers around the world and the fair trade arrangements that are so important to us all.

In the Committee stage of this legislation The Greens will be moving amendments to change the functions of the NSW Procurement Board to ensure that it focuses on prioritising the purchase of goods and services that are made in Australia; to ensure fair trade and compliance with International Labour Organization standards; and to ensure that goods are produced without child labour and in compliance with the applicable animal welfare laws and best practice. These are important issues that the people of New South Wales—who provide the money that we use for the procurement of goods and services—want to see addressed in legislation. I doubt there is a parent in New South Wales who would be happy with their child playing in a soccer game with a soccer ball that was produced by child labour. The child who produced that soccer ball may be of the same age as their child but because that child was born in the Sialkot district of Pakistan, rather than attending school they end up working in a soccer ball factory.

The Hon. Dr Peter Phelps: I would not want him playing soccer, that's for sure. I would want him playing rugby.

Dr JOHN KAYE: It is a matter of grave moral concern—a tricky word for the Government Whip possibly.

The Hon. Dr Peter Phelps: It is always a matter of moral concern for The Greens, isn't it?

Dr JOHN KAYE: I acknowledge the interjection by the Government Whip.

The Hon. Dr Peter Phelps: Note the irony as well.

Dr JOHN KAYE: Another issue of concern to The Greens with respect to this legislation is the way in which the State Contracts Control Board deals with complaints about purchasing in government sectors. Those of us who have been members of Parliament for a while will have received a number of emails over the years from individuals who have complaints or concerns that they wish to raise about a particular government procurement activity or policy. Those complaints within the government sector will be heard by the NSW Procurement Board. A problem arises when a complaint is made against a government department whose head is a member of the board. That departmental head will hear the complaint against his or her department.

The Greens will move an amendment to ensure that the heads of government departments recuse themselves from the deliberations of the board if the board is hearing a complaint against their department. To allow the departmental head to remain during such deliberations of the board would be inappropriate and would defy the standards of probity. It is unfortunate that the opportunity to enshrine ethical purchasing decisions in the legislation, or at least to stop unethical purchasing decisions, has been lost. The Greens will seek to rectify that at the Committee stage.

The Hon. PAUL GREEN [3.37 p.m.]: I speak on behalf of the Christian Democratic Party in support of the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Bill 2012. This bill will establish a new scheme for procuring government goods and services and also clearly define the roles and responsibilities of each party, and it will make it easier for companies to do business with the Government. The Christian Democratic Party notes that the bill is the centrepiece of the Government's procurement reforms. New South Wales government procurement accounts for approximately $13.7 billion of goods and services every year. We also note the comments from members about the old system being inadequate and complex and needing to be fixed.

The New South Wales government procurement discussion paper, which was released some months ago, sets out the proposed new government procurement structure and operating framework. Consultation was undertaken from January to April 2012. Stakeholder feedback was positive for the initiative to develop to a procurement framework which is aligned to contemporary procurement practices. We welcome these reforms. The New South Wales government procurement practices needed to be simplified and made easier for businesses to understand the requests of procurement agencies. Simplifying the government procurement framework should assist in achieving further business opportunities.

The proposed reforms basically replace the State Contracts Control Board with the NSW Procurement Board. The board will have the power, by means of it directions, to manage all government procurement as a single system and to ensure compliance with whole-of-government policies and requirements. Importantly, it will not be the responsibility of the board to contract and purchase goods and services. Under the new scheme a government agency will, subject to accreditation by the board, be able to procure goods and services for its agency and for other agencies.

It also repeals the Public Sector Employment and Management (Goods and Services) Regulation 2010 and makes consequential amendments to the Public Sector Employment and Management Regulation 2009 and other legislation. Players across the State will now have the opportunity to dip their toes in the water, so to speak, and partake of some of this $13.7 billion pie. The new scheme will result in great efficiency and more reliable outcomes for businesses that are hoping to win some contracts. Businesses interested in participating in the scheme need certainty that they can meet the criteria and therefore be in a position to win contracts.

The Hon. Scot MacDonald referred to the amendment to schedule 2 [1] to the bill which relates to the supply of goods and services by approved disability employment organisations. I applaud this section of the bill. For example, in the Shoalhaven and Wollongong the Flagstaff Group, which employs over 360 people with a disability, has been operating for over 46 years. It services corporate giants such as BHP Billiton, Medina, the University of Wollongong, Peoplecare, BlueScope Steel, Amcor and Corporate Express, and provides services such as light engineering, commercial laundry, food and handling packaging, paper recycling, printing, mailing and document scanning, and assembly and packaging. Importantly, whilst those businesses are investing in a good cause, the provision of these services is providing for much-needed opportunities and skills to be developed. The Christian Democratic Party supports the bill.

The Hon. Dr PETER PHELPS [3.42 p.m.]: I had not intended to make a contribution to this debate until I heard the extraordinary contribution of Dr John Kaye who, in his normal moralistic, florid form, went on about child labour laws and restricting procurement on the basis of a series of interests that he will no doubt further elaborate on at the Committee stage. Concerns often have been raised in relation to government procurement and more broadly general buying about the public's moral complicity in purchasing products assembled or otherwise manufactured in developing countries with child labour.

Others have raised concerns that boycotting products manufactured through child labour may force these children to turn to more dangerous or strenuous professions, such as prostitution or agriculture. Do The Greens really want children who at this stage are manufacturing soccer balls to move into prostitution or agriculture? Presumably they do, because in this instance The Greens are seeking to ban the purchasing of products produced by child labour. State government entities do not normally procure prostitutes—normally it is left to the executive of the Health Services Union to do that sort of thing.

A UNICEF study found, for example, that after the Child Labor Deterrence Act was introduced in the United States an estimated 50,000 children were dismissed from their garment industry jobs in Bangladesh, leaving many to resort to jobs such as "stone-crushing, street hustling and prostitution""—underage prostitution—jobs that are "more hazardous and exploitative than garment production". Once again good intentions have unintended consequences; the road to perdition lies with The Greens' good intentions. That study suggested that boycotts are "blunt instruments with long-term consequences that can actually harm rather than help the children involved." This is not a free enterprise institute; this is not the Cato Institute. I repeat:UNICEF said that boycotts are "blunt instruments with long-term consequences that can actually harm rather than help the children involved".

I am not usually one to quote from United Nations agencies, so I will move on to what Milton Friedman had to say about this. He said that before the Industrial Revolution virtually all children worked in agriculture. Members will recall, given the recent debate on same-sex marriage, that up until 1753 the legal age to be married in England and Scotland was 14 for boys and 12 for females. One talks about how old is too old. In this instance, how old is too young? During the Industrial Revolution many children moved from farm work to factory work. Over time as real wages rose parents became able to afford to send their children to school instead of to work and, as a result, child labour declined both before and after legislation. If we accept The Greens mantra that we must legislate everything and prohibit everything, why was there a decline in child labour in England in the nineteenth century?

Dr John Kaye: Factory laws, you fool.

The Hon. Dr PETER PHELPS: No, because increasing levels of prosperity made it more affordable for people not to have their children work for them. But this presents another problem, which The Greens tend to fail to recognise: What are the consequences of banning the purchase of Pakistani soccer balls? The answer is that the Pakistani soccer ball industry will go out of business, but what will these children do then? They cannot nip on down to McDonald's and get a job there. The result will be that family incomes in Pakistan will be reduced, people will starve and families will be driven into poverty and driven out of their homes.

The net consequence for the children will be that they will suffer far more than they ever did under an exploitative—and I do recognise that—labour regime. In conclusion, while The Greens are very quick to jump on their high moral horse, they always forget that actions have consequences and, very often, when governments start sticking their nose into social policy areas the consequences are far worse than and far different from the expected outcomes at the time of the intervention.

The Hon. AMANDA FAZIO [3.49 p.m.]: I indicate—as did my colleague the Hon. Adam Searle, who led for the Opposition on this bill—that I do not oppose the bill. I acknowledge the comments of the Hon. Scot MacDonald in relation to the continuation in this bill of the provision for charitable and not-for-profit organisations to purchase equipment and goods under State contract. As a member of the board of management of a major disability organisation, I can indicate that over the years that concession has been of great benefit to many of these organisations. They know that they can get goods at a competitive rate and they can save money doing so. Many of them operate on a small amount of funds raised through fundraising measures; the majority of the funding they receive is either from the Commonwealth or the State government. So the continuation of that provision is worthwhile.

Dr John Kaye, in his contribution, made a case study of child exploitation and used the sole example of children manufacturing soccer balls in Pakistan. It would have been a much more beneficial contribution if he had given a little more overview of areas in which child exploitation exists. If one were to read this debate in Hansard one would believe that Pakistan is the hub of child labour and child exploitation. That is simply not the case. Child labour is a problem in many developing countries. Western countries must balance the need to support changes to those regimes so that child labour is abolished against the impact of any boycotts on the production and sale of those products that they may put in place. Although I am loath to agree with the Hon. Dr Peter Phelps, it is true that if we were to boycott products from a particular region that were produced through child labour that would leave a vacuum in terms of income in that area.

The Hon. Catherine Cusack: Tim Costello is very good on this.

The Hon. AMANDA FAZIO: I acknowledge the interjection of the Hon. Catherine Cusack. While this issue should be of concern to all of us, to single out Pakistan in this debate is unfair. We need to be aware that if we want to take action to stop child labour, particularly in any government procurement regime in New South Wales, we need to be mindful of what alternatives can be put in place to ensure that people involved in the production of these products are not left worse off as a result of such boycotts. In general I support the bill, particularly the provisions that enable disability and not-for-profit organisations to continue to procure goods at discounted rates on government contract.

The Hon. MICK VEITCH [3.52 p.m.]: In contributing to debate on the Public Sector Employment and Management Amendment (Procurement of Goods and Services) Bill 2012, I concur with the comments eloquently put by the Deputy Leader of the Opposition. I want to discuss two matters in particular. I spent a number of years as the chief executive officer of a not-for-profit organisation in New South Wales. Extending the provisions to the not-for-profit sector is essential; I am heartened to see that they have been continued in this legislation. I am certain that people in the sector will be put at ease to know that the provisions are continued in this bill.

The Hon. Duncan Gay: You haven't been out scaring them yet.

The Hon. MICK VEITCH: I am not here to scare anyone this time. The provisions are good. I do not think any member in the Chamber would not support extending the provisions. Most not-for-profit organisations receive significant funds from the State or Federal governments, and in some cases local government organisations, and it is essential for them to be able to purchase goods and services under the provisions of this legislation. I have a couple of questions for the Minister for Finance and Services, and he may or may not be able to address them immediately. My questions relate to the disability employment organisations provisions in the bill. New section 21B states:
      (6) An approval may be limited to specified goods and services supplied by a person or body. In that case, the person or body is approved as a disability employment organisation only in relation to those specified goods and services.
      (7) A register of disability employment organisations is to be kept for the purposes of this clause and is to include particulars of approvals given under this clause.

Can the Minister indicate the types of approvals or restrictions on the approvals that may be canvassed or caught by this provision? What details of the disability employment organisations will be kept on the register? For example, will the register include the name of the organisation, the Australian Business Number and the board of directors? I am trying to work out what details will be maintained on the register. The bill further provides that the Minister for Disability Services will maintain the register and that information contained in the register will be made available to the public in such a manner as the Minister directs. How will that information be made public? Will it be available via the internet? Will documentation be tabled in the Parliament? When will information on the register be updated and how regularly will the information be updated? Those questions are important to the sector, particularly when it is considering submitting tenders to be involved in the procurement process. It would be good if the Minister could address those questions.

Reverend the Hon. FRED NILE [3.55 p.m.]: My colleague the Hon. Paul Green has already stated our party position. The Christian Democratic Party supports the bill. My concern is that recently we have had reports of corruption involving government departments and their purchases, particularly RailCorp. In that case RailCorp staff let contracts to companies in which relatives of the staff were involved, so they received some financial benefit from those contracts. I ask the Minister to indicate how the new board—I know we already have the Independent Commission Against Corruption—will ensure that there is no corruption involving government purchases. I note that the disclosure of pecuniary interests provisions in item [4] in schedule 1 will apply only to members of the board, who must make it clear if they have a conflict. I do not believe that is strong enough. I believe the bill should provide the board with the power to ensure that there is no corruption in any contracts that are let by government agencies.

The Hon. GREG PEARCE (Minister for Finance and Services, and Minister for the Illawarra) [3.57 p.m.], in reply: I thank members who participated in the debate, in particular those who referred to specific aspects of the bill. Dr John Kaye raised a couple of issues, and we will deal with his foreshadowed amendments in due course. I can assure Dr John Kaye that the Government does not support the purchase of goods or services produced using child labour. I hope that on reading the debate there is no suggestion that the Government would support that. I note the comments of a couple of speakers about the disability sector. The Hon. Mick Veitch asked several questions. Obviously the provisions he mentioned are enabling provisions to ensure that we maximise the opportunities for not-for-profit organisations in particular to supply goods and services to the Government. As for the register, the intention is to ensure that there is maximum capacity to use those opportunities.

As usual, Reverend the Hon. Fred Nile made a good point about corruption. One key aspect of this restructuring legislation is that we are elevating procurement to the top of management of the Government. The directors general will have direct responsibility not only to ensure that both the policies in place are appropriate and there is sufficient attention to ensure there is no corruption but also to ensure that the level of oversight is at the top of government. That is the way we are trying to improve corruption management. Obviously, corruption management policies will be delivered from the very top of government. I commend the bill to the House.

Question—That this bill be now read a second time—put and resolved in the affirmative.

Motion agreed to.

Bill read a second time.
    Consideration in Committee set down as an order of the day for a later hour.

    Pursuant to sessional orders business interrupted at 4.00 p.m. for questions.