Departmental response to the Australian Industry Participation policy impact evaluation report

Date published:
14 August 2024

Topics

Major projects and procurement

Publisher

Department of Industry, Science and Resources

To evaluate the Australian Industry Participation policy’s effectiveness, we made an impact evaluation report. The report listed 16 recommendations. We responded to the evaluation report with 5 agreed, 6 agreed in principle and 5 noted recommendations.

 

Background

The Australian Industry Participation (AIP) policy aims to ensure that Australian industry has full, fair and reasonable opportunity to compete for work as subcontractors in major private and public projects and to enhance industry capabilities. These concepts are defined as:

  • Full: Australian industry has the same opportunity afforded to global supply chain partners to participate in all aspects of an investment project (for example design, engineering, project management, professional services, and IT architecture). 
  • Fair: Australian industry is provided the same opportunity as global suppliers to compete on investment projects on an equal and transparent basis, including being given reasonable time in which to tender. 
  • Reasonable: tenders are free from non-market burdens that might rule out Australian industry and are structured in such a way as to provide Australian industries the opportunity to participate in projects.

The department is responsible for administering the AIP policy and associated requirements.

Under the Australian Jobs Act 2013 (the Jobs Act), eligible major projects comprise productive facilities with a capital expenditure of $500 million or more. Proponents of projects meeting the Jobs Act criteria are required to prepare an AIP Plan outlining how they will ensure that Australian businesses have full, fair and reasonable opportunity to bid for work on the project. Under their AIP Plan, a proponent must advertise all procurements of key goods and services valued $1 million and above on a publicly accessible website. Similar AIP Plan requirements are in place for eligible projects receiving Commonwealth funding or investment of $20 million or more, including procurements, grants, and loans or payments to States and Territories for large infrastructure projects. 

AIP policy gives effect to the principles outlined in the 2001 cross-jurisdictional AIP National Framework which supports a nationally consistent approach to maximising Australian industry participation. Most state and territory governments also apply their own local participation policies, which are separate from Commonwealth AIP policy. To reduce regulatory burden and duplication, if a major project has, or will have, a compliant state or territory local industry participation plan applied, an AIP Plan will not be required. 

Scope of the evaluation

The Acting AIP Authority agreed in June 2019 that an evaluation of AIP policy would be undertaken in 2022-23. In line with the Department of Industry, Science and Resources’ (DISR’s) Evaluation Strategy 2017-2021, the evaluation of AIP policy was identified as a Tier Two evaluation to be undertaken by DISR’s Evaluation Unit with support from Industry Participation and Major Projects Facilitation Branch (known as Australian Industry Participation Branch at the inception of the evaluation).

The Evaluation Unit conducted the evaluation of the AIP policy from October 2022 to April 2023, with oversight from a Senior Executive Service (SES) Band One Reference Group, including one external agency SES member. This evaluation process commenced in October 2022 with data collection, interviews and analysis occurring from late 2022 to early 2023.

The evaluation examined the extent to which this policy has achieved its intended outcomes, building on the insights gained through the 2018 Review of the Implementation of the Australian Jobs Act 2013. The evaluation identified areas of opportunity to improve AIP policy and ensure that it is attuned to the challenges industry and businesses face within the contemporary economic landscape.

The evaluation’s final scope did not look at alternative regulator models and did not include an assessment of the Industry Capability Network Limited (ICNL), which undertake national coordination of the State and Territory Industry Capability Network (ICN) and manage the national industry capability and project opportunities database (ICN Gateway). 

Response to recommendations

Our response to each recommendation from the evaluation report is given below.

Systematic barriers and AIP objectives

Recommendation 1

That DISR improve communication and promotion materials to clearly explain the scope of AIP requirements to stakeholders.

We agree with this recommendation.

DISR will continue to improve their public facing communications, including improving the AIP website and other communication and engagement activities to give further clarity on AIP requirements.

Systematic barriers and AIP objectives

Recommendation 2

That DISR work with state and territory jurisdictions to refresh the AIP National Framework. This could include deliberation on harmonisation of State and Territory approaches.

We agree with this recommendation.

DISR is committed to working with state and territory jurisdictions on options for an AIP National Framework refresh and a more joined up approach to AIP.

The AIP National Framework will continue to provide national guidance on Australian Industry Participation Policy while maintaining jurisdictions’ flexibility. 
 

AIP thresholds, scope, criteria and trigger dates

Recommendation 3

That DISR undertake further analysis of financial thresholds to assess the most appropriate levels to achieve the intended policy objectives.

We note this recommendation.

The evaluation noted that most suppliers, the primary beneficiaries of the Jobs Act, were satisfied with both the $500 million threshold and the $1 million minimum reporting threshold. 

Noting the mixed feedback received from other stakeholders on whether the thresholds should be raised or lowered, DISR will continue to monitor the project value and reporting thresholds. 
 

AIP thresholds, scope, criteria and trigger dates

Recommendation 4

That DISR should consider expanding the scope of the Jobs Act to include decommissioning and rehabilitation projects and consider other opportunities as appropriate.

We agree in principle to this recommendation.

DISR believes that inclusion of decommissioning and rehabilitation projects will be of benefit. As it will require reform to the Jobs Act legislation this recommendation is agreed in principle for when legislative reform is pursued in the future.

The Commonwealth AIP team is working with the DISR Decommissioning team to ensure that AIP principles are applied in any ongoing decommissioning work such as in the Northern Endeavour program. 
 

AIP thresholds, scope, criteria and trigger dates

Recommendation 5

That DISR consider how AIP policy could target sectors where there are currently lower levels of Australian industry participation and in alignment with government priorities.

We note this recommendation.

AIP policy does not discriminate between different sectors. 

Commonwealth AIP policy is examining how to better target AIP Plans to exclude sectors that are likely to already be delivered solely or to a large extent by Australian suppliers.

As a first step DISR will identify additional data requirements needed to inform further sectoral analysis. 
 

AIP thresholds, scope, criteria and trigger dates

Recommendation 6

That DISR consider consultation with stakeholders to explore whether adjustments can be made to the definition of trigger date in the Jobs Act to ensure that AIP Plans are submitted at an appropriate time.

We note this recommendation.

DISR considers the current definition of the trigger date appropriate.

The AIP Authority engages with each project proponent early in the life of the project to ensure the earliest trigger date is met. This ensures development of a robust and meaningful AIP Plan.

Proponents can request a later trigger event/date which the AIP Authority will consider and may approve. 

To further ensure that AIP Plans are submitted at an appropriate time, DISR is developing case study scenarios to help proponents understand their obligations. These case studies will be published on the AIP website.
 

Implementation of the Jobs Act

Recommendation 7

That DISR recommend that the Minister (for Industry and Science) considers appointing an AIP Authority and AIP Advisory Board in accordance with the Australian Jobs Act 2013.

We agree in principle to this recommendation.

DISR has provided the Minister with options to fully enable the provisions of the Jobs Act, including appointing an AIP Authority and AIP Advisory Board.
 

Implementation of the Jobs Act

Recommendation 8

That DISR centralise guidance for delegations regarding Commonwealth AIP requirements.

We agree to this recommendation.

Further training and delegation guidance is well progressed. 
 

Compliance and Governance

Recommendation 9

That DISR increase transparency about compliance monitoring activities and actions to increase supplier visibility and confidence in AIP processes. This could include publishing examples of compliance monitoring activities, examples of good practice compliance, and sharing compliance related data.

That DISR consider introducing an audit function and provide stakeholders with the opportunity to report suspected non-compliance.
 

We agree in principle to this recommendation.

DISR is increasing awareness of compliance reporting and has developed a new performance measure for reporting through the DISR Annual Report. Further information will be made available on the DISR website, including an option to report complaints.
 

Compliance and Governance

Recommendation 10

That DISR identify opportunities for further efficiencies in the reporting process. This should be supported by a deeper understanding of proponent experience of the reporting process.

We note this recommendation.

DISR will continue to look for opportunities to improve reporting process, reduce compliance burden and enhance reporting efficiencies including overall proponent experiences.
 

Compliance and Governance

Recommendation 11

That DISR develop a comprehensive governance framework for AIP requirements as they apply to Commonwealth funding. This should include roles and responsibilities, risk management, compliance program, stakeholder engagement activities, and a performance framework.

As part of developing a governance framework for Commonwealth AIP requirements, DISR could consider moving to a self-assessment model where agencies take responsibility for implementing AIP requirements. This should be done in close consultation with stakeholders.
 

We agree to this recommendation.

DISR is developing a governance framework for Commonwealth AIP and pursuing a self-assessment model.
 

Compliance and Governance

Recommendation 12

That DISR: 

  • work with the Department of Finance on the aims and objectives of Commonwealth AIP requirements, including consideration of introducing a compliance reporting mechanism (which exists for some other Procurement Connected Policies)
  • consider introducing a common data identifier to enable more efficient comparison of AusTender and AIP datasets to facilitate compliance monitoring, and
  • raise awareness of Commonwealth AIP among Commonwealth agencies, including through their procurement areas once Commonwealth AIP requirements are further clarified.
     

We agree in principle to this recommendation.

DISR, through the Buy Australian Plan, is working with Department of Finance to improve procurement processes including compliance and recourse. 

DISR is engaging with other Commonwealth agencies to raise awareness of AIP requirements and to establish protocols for collaboration.
 

Data collection, management and analysis

Recommendation 13

That DISR implement improved data collection and management to support analysis and inform future policy decision-making. This would allow DISR to better target education, information and compliance activities to particular sectors and locations. It would also support assessment of whether or not AIP policy is achieving its intended policy outcomes.

We agree in principle to this recommendation.

There are limitations of the current data collection capabilities of the Jobs Act and Commonwealth AIP systems to directly measure AIP’s impact on the broader economy. DISR will look at means of improving data collection systems to improve reporting and better target activities to the needs of Australian industry.
 

Data collection, management and analysis

Recommendation 14

That the AIP team work with DISR’s Analysis and Insights Division (AID) to finalise and implement a monitoring and evaluation framework as a priority to support the ongoing assessment of AIP outcomes.

We agree to this recommendation.

DISR is working with AID to implement a monitoring and evaluation framework.
 

Outcomes

Recommendation 15

That DISR increase communication and promotion to give greater emphasis on providing feedback and consider including activities such as industry forums, training packages for industry, as well as a community of practice within the APS. It could also include elements of positive promotion, such as best practice examples.

We agree in principle to this recommendation.

DISR will examine methods for increasing awareness and compliance, including the use of case studies to provide best practice examples to increase awareness of the processes and benefits of AIP policy.
 

Outcomes

Recommendation 16

That DISR encourage the use and awareness of Vendor Identification Agencies (VIA) by project proponents and suppliers in preparing and implementing AIP Plans.

We note this recommendation.

DISR does ask what VIAs the proponent has used, however DISR cannot mandate proponents to use VIAs.

More information

Read the Australian Industry Participation (AIP) policy impact evaluation report
Read about the work of the Australian Industry Participation Authority
Read the Australian Industry Participation National Framework