Each year the New Zealand public sector spends around $42 billion on goods, services and works from third party suppliers, to build infrastructure and provide public services.
Never in New Zealand’s history has it been more important to channel government spending inwardly to ensure it is delivering sustainable outcomes for New Zealanders.
The 4th edition of the Government Procurement Rules, which came into effect over a year ago (1 October 2019) for all public service departments and 'state services 1 agencies' (refer Rule 5), set out the Government’s expectations for how procurement will be leveraged to achieve sustainable outcomes.
While there were several good additions to these rules, one salient rule is Rule 16 ‘Broader outcomes’.
The four broader outcomes are:
- Increasing New Zealand business access to government contract opportunities
- Agencies must consider how they can create opportunities for New Zealand businesses, including Māori, Pasifika, and regional businesses, as well as social enterprises.
- Construction skills and training
- Government must find ways to partner more effectively with the construction sector to grow the size and skills of New Zealand’s construction workforce.
- Improving conditions for New Zealand workers
- Improving conditions for workers in higher risk industries, including those that are susceptible to exploitation. Agencies must ensure suppliers and their sub-contractors comply with employment standards, and health and safety requirements. This outcome also ensures a more level playing field by providing a focus on ensuring those suppliers who meet their responsibilities cannot be undercut by those who use unsafe and unfair practices or exploitation. An initial focus is on cleaning services, security services, and forestry.
- Reducing emissions and waste
- Generating positive environmental outcomes through procuring low emissions and low waste goods, services and works.
While all these outcomes are important for New Zealand, improved conditions for New Zealand workers is a rule that is of specific interest to Transparency International New Zealand (TINZ). In our view, there needs to be more focus by agencies to ensure that in their quest for the ‘best bang for their buck’ they are not inadvertently driving exploitative and unsafe behaviours from industries.
Cleaning services, security services and forestry are all industries that have traditionally been subject to low wages and more vulnerable to poor labour practices. For these industries in particular, agencies will be required to:
- ensure suppliers are meeting employment standards
- require suppliers to undertake due diligence of any sub-contractors to ensure they too are meeting employment standards
- monitor both suppliers and their domestic supply chain to make sure they continue to comply with employment standards for the duration of the contract.
Transparency is critical
Regardless of the outcome, transparency is critical. It will be important that agencies are capturing and reporting against these outcomes in a consistent and meaningful way, backed up by evidence. Equally important is that suppliers provide the necessary data to these agencies.
TINZ continues to promote ways to hold agencies to account for these outcomes and ensure:
- the values of transparency and accountability are being met
- that behaviours leading to workers exploitation and other corrupt behaviours are never associated with public spending.