Submissions made to past inquiries by the PAEC of the 54th Parliament revealed a considerable range of views on the issue of accountability and contracted services.203 There was fundamental disagreement in two earlier inquiries as to whether such contracting lessens or enhances the accountability of government for the provision of public services.204 These inquires noted that the introduction of contracted works and services both extended and blurred the accountability chain, and recommended that principles of transparency and openness guide contracting arrangements in the public interest. These reports noted that accountability was fundamental to good government, and that 'the expectation that government should be accountable is a product of the electorate's grant of power to government'.205 Such accountability was not only seen in terms of delivery of services for works but in the following terms:206
Access to information permits the electorate to assess the government and participate more effectively in the policy and decision making processes of government. Without information, people cannot adequately exercise their rights and responsibilities as citizens and make informed choices.
As well, the former Committee's report on Commercial in Confidence noted that in the 90's accountability could be undermined by a convergence of the vested interest of public officials and contractors, and provided evidence from several witnesses that this interest was a real and significant problem at the time. It also found that the impetus for secrecy had come mainly from government rather than from the public sector. It commented that:207
Members of the public are entitled to know, as an aspect of assessing the economic and social management of the government of the day, what contracts are entered into on their behalf, and on what terms and conditions. They are entitled to know what public moneys are expended, both directly and indirectly, and precisely what is to be delivered under the terms of the contract. They are equally entitled to know how legal and financial risks are allocated between the contracting parties. They are entitled to know what monitoring and enforcement procedures exist in the event of contractual default.
In considering this issue, the Committee agreed with the view put by the (then) Victorian Auditor-General, that:208 'the various checks and balances in the public accountability process may be costly to administer … but they are designed to protect a government's reputation and the interest of the public at large'.
The current policy for providing access to contractual information is an improvement on past practices. Departments must report summaries for contracts more than $100,000 but less than $10 million on the Victorian Government Purchasing Board's Contracts Publishing System web site.209 Contracts more than $10 million in value are required also to be disclosed in full on this system, subject to criteria contained in the Freedom of Information Act 1982, allowing material to be withheld in some circumstances.210
The Committee also heard that there was a need to make the contractual information not only available on the internet in a timely manner but in a format that is accessible and understandable to the public. This was particularly important because the contracts were complex, they often ran to hundreds of pages (for example the contract for the Southern Cross redevelopment is 620 pages) and the financial schedules are difficult to understand. It was suggested to the Committee that a two or three page summary of the contract verified by the Auditor-General should be available including summary financial payment information. While understanding the difficulties in achieving this, the Committee considers that such an accessible, understandable summary is in keeping with the need for this type of documentation to be considered by Cabinet, is in line with the Partnerships Victoria framework, and is a practice that has been adopted in other jurisdictions, such as New South Wales.
A project summary would assist in understanding PPP projects in terms of risk transfer, the level of services to be provided, the responsibilities of each party to the contract, and the particular net price paid by government.
Few submissions from the private sector discussed accountability, governance or monitoring arrangements, and the Committee noted the views of the Institution of Engineers Australia which argued that:211
Public support for private investment will depend on transparency and accountability. If governments keep private investment contracts secret, or use commercial in confidence reasons to black out large chunks of the contracts, then community support for them will quickly turn into rejection. It is therefore in the best long term interest of the private sector to push for government openness. This means making all contracts and variations and negotiated outmodes publicly available except for intellectual property issues. Costs should be disclosed.
The Victorian Auditor-General's submission supported this, making reference to the policy statement Ensuring Openness and Probity in Government Contracts and the government's policy platform whereby the onus on public sector entities has shifted from that of non-disclosure to that of disclosure of contracts.212
The Committee urges the government to ensure that use of confidentiality clauses is kept to an absolute minimum in contracts relating to PPP projects.
The Committee recommends that:
| Recommendation 11: | The Victorian Government: | ||
| (a) improve opportunities for parliamentary oversight of public private partnership financial arrangements and commitments; | |||
| (b) after the contractual arrangements relating to a public private partnership project have been finalised, the responsible Minister and the Department of Treasury and Finance brief the Public Accounts and Estimates Committee on the details; and | |||
| (c) advise Parliament when significant variations are made to a PPP contract, beyond the initial contractual arrangements. | |||
| Recommendation 12: | That: | ||
| (a) prior to tenders being submitted for public private partnership projects, agencies should ensure applicants are aware of the limits of what will and will not be considered as commercial in confidence in relation to PPP contracts; and | |||
| (b) in determining whether a claim for commercial confidentiality is justified, the onus of proof should be with the tenderer, who should be required to substantiate that disclosure would be harmful to their commercial interests. |
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203 Public Accounts and Estimates Commitee, Outsourcing of Government Service in the Victorian Public Sector, March 2000; Public Accounts and Estimates Commitee, Commercial in Confidence Material and the Public Interest, March 2000
204 ibid.
205 Public Accounts and Estimates Commitee, Commercial in Confidence Material and the Interest, March 2000, p.22
206 ibid.
207 ibid., p.xxxiii, p. 102
208 ibid. p.xxxiii, p 86
209 Government of Victoria, Victorian Government Purchasing Board Procurement Policies, 2002, p.42
210 For example, section 34 of the FOI Act provides exemption in respect of third parties' business information acquired from a business, commercial or financial undertaking. Agencies must demonstrate that the disclosure of information would be likely to unreasonably expose the undertaking to disadvantage.
211 The Institution of Engineers Australia - Victorian Division, submission no.29, p.4
212 Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.5