Australian Government response to the Australian Industry Participation Working Group report on implementation of measures to extend Australian Industry Participation
April 2012
Introduction
On 6 October 2011, the Prime Minister, the Hon Julia Gillard MP, announced changes to Australian Industry Participation (AIP). The Australian Government announced that it will extend AIP requirements to large government grants over $20 million, further tighten the administration of the Enhanced Project By-law Scheme, and require the publication of AIP Plans and outcomes.
The Government also announced that it would consult with interested parties through a Working Group whose membership would include industry representatives, unions and Commonwealth agencies as well as state and territory government representatives.
The AIP Working Group provided its report to the Australian Government on the implementation of the measures to extend Australian Industry Participation in February 2012. The Australian Government has considered the AIP Working Group’s recommendations and the Australian Government’s response is outlined in the table attached.
Australian Government Response to the AIP Working Group Report
Recommendation / Australian Government Response /Publishing AIP Plans and outcomes
1. Companies should provide a breakdown of the key goods and services to be procured for the project, and the estimated percentage of Australian industry value added as a measure of Australian content. The Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) should produce a template, along the lines of the template in the Australian Petroleum Production and Exploration Association (APPEA) submission, as a basis for this reporting. For public reporting purposes, only an aggregate percentage of Australian industry value added should be published for each company or project. / Accept.
Australian Industry Participation (AIP)Plan guidance material and templates need to be prepared for the Enhanced Project Bylaw Scheme (EPBS), Commonwealth grants, Commonwealth procurement and payments to states and territories. This is expected to be completed by 1 July 2012. Recommendations 2–5 below are also expected to be implemented by 1July2012.
2. Where companies can identify specific items that will be procured for the project these should be published. Companies should provide an estimate of Australian versus overseas content to DIISRTE, but this should not be published where it is commercial-in-confidence. / Accept.
This will be implemented with the changes to AIPPlan templates and guidance material.
3. An executive summary of AIP Plans should be provided by companies in a standardised form for publication by DIISRTE. DIISRTE will work with the companies to ensure the executive summary is an accurate reflection of the AIP Plan. The summary of the AIP Plan for publication would need to exclude any commercially confidential information. / Accept.
This will be implemented with the changes to AIPPlan templates and guidance material.
Once the new measures commence, DIISRTE will work with companies to ensure the executive summary is an accurate reflection of the AIP Plan.
4. The executive summary of AIP Plans should include a summary of actions under each of the AIP Plan criteria, specifically incorporating:
· a description of the project;
· how the company or project will actively seek and utilise information on Australian industry capability and communicate opportunities to potential suppliers;
· details of expected areas of opportunities for Australian suppliers, including how the company/project will provide opportunities to Australian industry through all stages of a project and through all tiers of supply;
· an explanation of the process and criteria to assess potential suppliers (including any prequalification processes); and
· how the company will work with suppliers (and government programs where applicable) to encourage capability development and integration into global supply chains. / Accept.
This will be implemented with the changes to AIPPlan templates and guidance material.
5. The executive summary of AIP Plans should be published in a central location maintained by the government, preferably at www.aip.gov.au. Executive summaries should be allowed to be updated or modified by companies in consultation with DIISRTE. / Accept.
This will be implemented with the changes to AIPPlan templates and guidance material.
Executive summaries of AIP Plans will be published at www.aip.gov.au. Companies will be allowed to update or modify their AIPPlan summaries in consultation with DIISRTE.
Enhanced Project Bylaw Scheme
6. For major projects accessing the EPBS, evidence should be provided to demonstrate how AIP Plan commitments will cascade to tier 1 or Engineering, Procurement and Construction Management (EPCM) companies. Attention should also be focused on how projects translate the AIP Plan into the overall procurement strategy. / Accept.
This will be implemented as part of changes to EPBS Policy and Administrative Guidelines, AIPPlan templates and guidance material from 1July 2012 with a three month transition period.
7. Projects over $2 billion should incorporate information on prequalification requirements when publicly listing opportunities, rather than only listing tender information. / Accept.
This will be implemented as part of changes to EPBS Policy and Administrative Guidelines, AIPPlan templates and guidance material.
8. It is suggested that projects over $2 billion report to DIISRTE regularly (every 6 months) on:
· Activities taken for local industry engagement (i.e. steps taken to implement the AIP Plan).
· Contracts awarded in the last reporting period including information as to why Australian based bids were unsuccessful.
· Information on Australian industry capability gaps.
· A summary of forthcoming major contracts. / Accept.
This will be implemented as part of changes to EPBS Policy and Administrative Guidelines, AIPPlan templates and guidance material.
9. The Australian Government should seek to align with existing state and territory government processes wherever possible, including giving consideration to joint approvals where appropriate. / Accept.
This will be discussed with state and territory governments as part of discussions on the Australian Industry Participation National Framework Agreement.
10. A Functional Unit guide for the EPBS should be finalised as soon as possible, as it is seen as an important step in providing greater transparency and certainty for applicants on functional units and other eligible goods for EPBS. Consideration should be given by DIISRTE in renaming functional units to avoid confusion with the Australian Customs and Border Protection Service (Customs) definition. / Accept.
This will be finalised as soon as practicable.
Major Commonwealth Grants
11. Grant recipients should be required to submit a DIISRTE approved AIP Plan either prior to signing the funding agreement (as a condition of offer of the grant) or at the latest within 30days of signing a funding agreement. / Accept.
Some programs have already introduced requirements for Australian Industry Participation Plans in program guidelines (eg Clean Technology Investment Programs and Suburban Jobs Program).
Formal guidance material for grant agreements and grantees is expected to be in place by 1 July 2012.
The Department of Finance and Deregulation is updating the Commonwealth Grant Guidelines (CCGs) and will include reference to AIPPlan requirements in the Governance and Accountability section.
12. DIISRTE should conduct in-depth analysis of several AIP Plans per year, to verify opportunities provided to Australian suppliers and reporting of AIP Plan outcomes. / Accept.
13. DIISRTE should review the resources required to effectively administer AIP Plans for Commonwealth grants after 12 months. In particular, DIISRTE should examine whether there may be better value in adopting a more targeted approach in future. / Accept.
AIP Plans for Commonwealth funded major projects
14. State Local Industry Participation (LIP) policies, where they exist, should be applied to Commonwealth funded major projects managed by state or territory governments. This should make use of existing state and territory institutional arrangements. / Accept.
For effective implementation of this measure, cooperation of state and territory governments will be required (see recommendation 16).
15. Where a state or territory LIP policy does not exist or is not applied to a project, a Commonwealth AIP Plan will be applied. / Accept.
States and territories will be encouraged to apply their own LIP policies, where they exist, or else encourage an AIP Plan to be prepared by project prime contractors.
16. Effective implementation of the measures to require Industry Participation Plans for Commonwealth funded major projects will require close cooperation with states and territories. The renegotiation of the AIP National Framework Agreement may be the appropriate forum for this discussion. / Accept.
AIP Plans for major Commonwealth procurement
17. The Australian Government should give consideration to the Department of Defence nonmilitary purchases being covered by either the AIP policy or the Australian Industry Capability program. / Outside Working Group Terms of Reference.
Accept and refer to the Prime Minister’s Taskforce on Manufacturing for further consideration.
Reporting on Australian Industry Participation
18. An AIP Report Card should be published annually by the Industry Minister to summarise AIP developments and achievements across various AIP programs, and to better inform public debate. / Although outside the Working Groups terms of reference, the government accepts this recommendation and will publish an annual summary of AIP developments and achievements.
Other Issues
19. The AIP National Framework should be updated by Commonwealth, state and territory governments by the end of 2012 and reviewed every five years. / As foreshadowed in the Prime Minister’s announcement of 6 October 2011, the Department will be working with the states and territories on updating the AIP National Framework during 2012.
20. The Australian Government should give consideration to the requirement for AIP Plans for government procurement to include other forms of financial assistance such as loans by the Clean Energy Finance Corporation. / Outside Working Group Terms of Reference.
The Government notes that this potentially covers a broad range of financial arrangements.
The application of AIP Plans to the CEFC will be considered as part of the Government’s response to the Expert Review Panel’s report on the establishment of the CEFC.
For other forms of financial assistance, accept the recommendation and refer to the Prime Minister’s Taskforce on Manufacturing for further consideration.
21. The Australian Government should consider re-establishing the Working Group within 12months to review and report on progress on the implementation of the measures adopted by the Government. / Although outside Working Group Terms of Reference, the government accepts this recommendation to review progress in
2012–13.
Australian Government response to the AIP Working Group report 2