All capital works programs which cost more than $2 million
dollars have to be reported to the Public Works Committee and if they are more
than $15 million in scope then they must be referred to the committee. But just
what is the Public Works Committee and how does it work?
Defence at the present time does not have any projects
before the committee, but with major works programs such as the Moorebank Units
Relocation or Single Living and Environment Precinct 2 already approved and
well underway, and others on the horizon, it is important to understand how the
system works and what it does to protect taxpayer’s investments in Defence
infrastructure.
What is the Public Works Committee?
The Public Works Committee, or to give it its full title,
the Parliamentary Standing Committee on Public Works, is one of the oldest
investigative committees of the federal parliament, having been first
established in 1913, and currently established under the Public Works Committee
Act of 1969.
It examines capital works proposed by Commonwealth
Departments (including Defence) and statutory authorities which are directly
funded from the federal budget, and for the works of non-competitive statutory
authorities and calls to account planning decisions and capital expenditure.
The Committee reports to both the House of Representatives
and the Senate on whether any public works to it are deemed to be expedient and
whether, in its opinion, the work should proceed. Work cannot proceed until
parliamentary approval has been granted, including any clearing, demolition
work or preliminary earthworks prior to any proposed construction activities.
These proposed public works can be anywhere in Australia or
its external territories, including foreign countries if this work is linked to
an Australian diplomatic mission. Two exceptions to this are any works funded
by the Norfolk Island Administration, or works which are declared by the
Governor General to be exempt.The Public Works Committee is a joint committee
consisting of nine members, which includes six members of the House of
Representatives and three members of the Senate. By convention, the elected
Chairman is a Government Member of the House of Representatives and the Deputy
Chair is a non-Government Senator.
Terms of reference
When a capital works project is referred to the Public Works
Committee it is scrutinised to ensure that meets a pre-determined set of
criteria, which includes the need, scope, cost, purpose and value for money.
The Committee will determine the stated purpose of the
proposed work and whether it is suitable for its intended purpose. It then looks
to determine if it is a cost-effective solution and if the resultant work is
intended to raise revenue, whether it will fit the purpose. The current and
prospective public value of any work is also determined.
During the course of its enquiry, the Committee will seek
public comment on the proposed work and hold a public hearing with the agency
proposing such work and any other relevant body and will also receive a
confidential briefing from the proposing agency with regard to the projects
costs and may also undertake a site inspection.
The Committee has the powers under the act to recommend any
alterations to the original proposal it sees fit before it reports to both
Houses of Parliament on whether it considers the work should proceed.
When does a works program have to be reported or referred?
Under the Act, all proposed public works undertaken by, on
or behalf of the Commonwealth must be referred to the Public Works Committee if
the estimated cost exceeds the threshold amount, which is currently set at $15
million. Any project below the threshold may also be referred to the Committee
under the provisions of the Act, but in practice this provision is rarely
exercised.
In addition, if the proposed work is between $2-15 million,
the Committee must be notified prior to the commencement of any work. This is
termed ‘medium work’ and is reported to the Committee as a matter of course. It
does not go through the rigorous referral process.
In addition to projects directly funded by the Commonwealth,
the Committee scrutinises works financed through lease initiatives if he
Commonwealth or one of its agencies is to become the user or owner, for example
if the Commonwealth is leasing accommodation which is being upgraded or fitted
out.
The definition of what constitutes Public Works also extends
to Public Private Partnerships (PPP), even if the Commonwealth will not
ultimately take ownership. However the considerations of works carried out
under a PPP requires a two-stage process, whereby the referral occurs after an
Expression of Interest has been issued but before a Request For Tender has been
released. Once a preferred tenderer is selected but before any contracts are
entered into a report is issued to the committee to confirm that the workscope
has not significantly changed.
What is the process?
Basically there are six steps in the referral process:
Referral of the proposed works to the Committee in the first instance; Public
Consultation; Site Inspection (where necessary); Public Hearing; The
presentation and tabling of the draft report to both Houses of Parliament; and
finally, the granting of approval by the House of Representatives and the
Senate.
No work may be undertaken prior to approval being granted by
both Houses. This is via a resolution that ‘It is expedient to carry out the
work’, and known as the ‘expediency motion.’
Referrals can be made through either House, or through the
Executive Council and are co-ordinated by Finance. Works may also be referred
by order of the Governor General when both Houses are adjourned for any long
than a month but, in practice, this is rarely done.
The Act also bestows the Public Works Committee with the
powers to review its reports is there have been considerable scope or cost
changes to a particular project.
For Defence Capital works, the referral is normally made by
the Special Minister of State during the Parliamentary sitting period and
co-ordinated by the Department of Finance and Deregulation. The Director
General Capital Facilities Infrastructure is the principal point of contact for
all infrastructure-related PWC matters and is the Defence lead witness at
infrastructure-related PWC enquiries.
