Today, we are going to really go through, in a bit of detail, the Mandate, the changes and what's happening in the future. Let's start with what is the Ethical Supply Mandate? Now, many of you will know what it is, but some may not. So it's basically, it's the compliance tool that enables government really to use ethical suppliers and it's right throughout the supply chain. It's also the system of how we manage when that doesn't occur, whether a non-compliance is, depending on the nature of that non-compliance, which we'll go through in detail, and we're also kind of hoping that it delivers behavioural change. That over time that what we see is, when suppliers become used to this and indeed buyers such as yourselves get used to putting the right components in the contracts that we'll actually start to see an improvement in compliance and in that ethical behaviour. For example, we'll see less underpayments, we'll see more commitment to apprentices and trainees, and that's really the purpose of it. I think it is worthwhile also saying at this point, what the Mandate is not. So it's not there to punish suppliers who have made an honest mistake. What it's also not is, and sometimes this does get confused, because in the past really three years there's been significant reform in the procurement policy. And a lot of those things get sort of all smashed together into one thing and people hear Mandate, and what they think is best practise principles or BPIC's which is the set of wages and conditions for the major projects of $100 million or more. And so they put it all together and think all the Mandate means extra cost or any number of other things. It really doesn't, the Mandate is literally the compliance tool. So why do we need a mandate? I just want to, at this point, I suppose just tell a bit of a personal story as a, I guess, a snapshot as to why we need a mandate. So my brother is a tradie, he works up at the Sunshine Coast, he's a painter. And for the past 25 or so years, he's been working for the same employer. That employer told him to set up an ABN, that he should consider himself a business, the employee would pay him a certain rate, and therefore from that point on, he would need to look after his own annual leave, sick leave, superannuation and the like. And the rate that he him was, I think the barely the award minimum perhaps slightly over. And so, my brother like many people, not too particularly sophisticated in industrial law thought, okay, that's fine, if that's what I've got to do, that's what I'll do. Now of course the reality is that over that period of time, for the first 10 years, he got no superannuation. He got no weekend pay, he got no overtime, he got no travel allowance, in fact, he wasn't often put up when he, one example, I think they sent him to Hamilton Island, they slept on the cement floor of the place that they were painting. After 10 years and a number of discussion with me, I said, you really, so anyway, he got superannuation, but none of the other things. So my brother with a couple of kids, if his kids were sick, he would have to take time off unpaid. He, anytime Christmas or holiday period, he would, anytime he took off, it was unpaid. Over the years, and just recently he started to talk to me about this. I said, you know, that's wage theft. Long story short, and I know some people have heard the story, I suggested to my brother that I go and talk to his employer and talk him through the facts. He wasn't going to let me do that. But he negotiated with him and got a settlement of nine and a half thousand dollars. My calculation was, he was probably owed about 200,000 over the 20 to 25 year period. That employer closed up shop and has now moved off somewhere else. Now, why do we need a mandate? Because the government does not want to, when it comes to town to build a school or a hospital at the Sunshine Coast where my brother works or indeed anywhere else in Queensland, where I know a number of people here would have friends or relatives who are tradies, because at the moment it's largely construction. We don't want to be giving government procurement money to suppliers who behave like that. And that's the nub of the government's policy. The government says there are regulators and the regulators will deal with that. Whether it's wage theft or workplace health and safety, they will deal with that. But we have our own test. This government is committed to its own tests to decide whether you, your behaviour is appropriate for us to be giving you money to, for our projects. And that is the nub of it. That's why there's a mandate. So it's not a regulatory system. It's a test of the behaviour of our suppliers. And you can see there wage theft is not uncommon. And indeed a lot of this came out of the parliamentary inquiry in 2017, I think, into wage theft that showed, I think it was something like 17.6% of the Queensland population was subject to it. Now that's a lot. And they think that that was probably underestimated, but that's almost one in five people. So if you think of people in that you would know of, you may have 50 to a hundred friends, well perhaps four or five of those are victims of wage theft. So that really was the impetus for it. Also government then sort of went beyond that. They said, well, we also want suppliers to commit to apprentices and trainees, and we want to commit to local jobs in where those regional projects and we want good work health safety practises. We don't want workers on Queensland jobs working for unsafe construction companies. So that's really the Genesis of it. So that's why we need one. So how did we get to where we are today? I've sort of given you the impetus for it. And, actually the original impetus came out of the closure of Queensland Nickel, where they initially developed pre the Mandate, the local benefits test. And that was to make sure that jobs went into that, into that particular economy. So that in 2018, the best practise principles, which are for those major projects of a $100 million or more came in place. The ethical supplier Mandate and threshold came in in August of 2019, and then the best practise industry conditions or the BPIC's as we call it officially came in in February, 2020 after some attempts at some other mechanisms to try to make clear what did best practise industrial relations mean. Result of all of that process, it was found that there were some improvements that needed to be made. So there was a significant consultation occurred in 2020. Solutions, and probably people on today's session were involved in that quite extensive consultation we had. We had it with suppliers, we had it with buyers. We had it with GOCs, statutory bodies agencies. Anyway, a range of solutions were developed and they were approved in 2020. There was consultation that occurred. And then they became in place from September of 2021. And so there's an updated ethical supply Mandate, which you will have access to. And now the next step is where, where we're currently at. So the government has considered the expansion of the Mandate, and there's two components to that. The first is the expansion to GOCs and statutory bodies in the current procurement categories of BCM and TIS. And the government's decision was that the statutory bodies that will apply from one February, that's also the target date for GOCs, but that's subject to a consultation process that needs to occur with shareholding ministers. So we're in that period between now and then. And really that's what today's session came out of. We made a commitment that we would do some preliminary training before that February one outcome. So this session will be delivered tomorrow, I think, to GOCs and statutory bodies. Yes, I've been told it is tomorrow. So I better turn up to work tomorrow. So, that's where it is. The other component of that decision was the expansion of the Mandate to the other procurement categories. So there are four other procurement categories and they are, if I don't forget them, medical, social services, ICT, and G, how could I forget that they're in the room next door to me, GGS general goods and services. So the Mandate currently doesn't apply to those forms of procurement. And what government decided was that we would do an investigation into how that should apply and we'd work through the nuances and how that might apply in those different, in those different categories. And that'll be considered in the second half of next year. So at the moment, we're still focused on BCM and TIS. So this is how the Mandate applies to you. It's from, for BCM, it's for contracts on or after the 1st of August, 2019 and for TIS it's the 1st of October, 2019. The, well I've sort of gone through that process there really it's potentially to GOCs from February one subject to consultation. It will go to statutory bodies in those two categories from February one, both in those two categories. And as I say, we'll consider the other categories next year, late next year. So it's important to realise that the 21 process applies to all relevant Mandate breaches. Some of the changes that came in from September one from the earlier version of it include the use of compelling evidence. Compelling evidence is basically in cases of wage theft, that agencies and our audit and investigation team can use compelling evidence to refer matters to the panel for consideration of demerits under the Mandate that is without awaiting a decision of a regulator in this case, it'd be Fair Work Australia. And the reason for that was because a lot of decisions actually aren't made out of Fair Work Australia. There's a lot of settlements prior decision. So even though wage theft will have occurred, often the complainant will reach an out of court settlement and there'll be no further claims. And so there's never a regulated decision on many of these cases, but that doesn't mean to say that government doesn't want to be aware of it. So that's why we have our own system of dealing with that. One of the other changes was the previous version of the Mandate had a maximum of 10 demerit points and a sanction. And a sanction is the period that you are effectively struck off the government supply list, but a sanction can only apply once you got to 20 demerit points. So the maximum is 10, but you couldn't get a sanction to 20. That was a sort of an anomaly that we hadn't, I guess, picked up earlier. And an example would be therefore, you would have to commit industrial manslaughter twice before your two tens to get to your 20 before government would say, well, actually we were not going to do business with you. Well, that was clearly not the intention of the policy. So the introduction of a 20 point aggravated breach was introduced. Another option for agencies who are in control of those contracts is liquidated damages, where it can be negotiated upfront with the supplier prior to the signing of the contract an agreed value of a damage if a certain thing occurred such as an underpayment of wages. They are slightly more complex, and we recommend you getting legal advice in the preparation of those. The other change was obviously the decision to implement institute, a independent tripartite panel, which is yet to be established, but hopefully will be in coming months. And the proposed sanction process. Now what's important to note is, so the Mandate supplied from those dates in 2019, but then there are changes from 2021. So this component is important. So what the, and we've been asked this a lot. So which rules do I apply from now on? And it is actually quite simple. So the test is, our advice was, we could not change a penalty that applied to someone who signed a contract at a particular point in time, but it was completely open to the government to change the manner in which it came to those decisions. So the investigative process. So what that means is for all contracts, the ones pre-September, and the ones after September this year, compelling evidence can be used as an investigative tool and a test for whether you send that matter through. But what can't apply and the panel could not apply a 20 point breach for example. And technically this would be true even of industrial manslaughter. If a firm that signed a contract in the end of 2019 was, and often these things do take years to go through court, was found guilty of industrial manslaughter under our Mandate at the moment, because those penalties apply to the time they signed the contract. They could only get 10 points. After September one, any contract signed after that, then of course the higher penalty can apply. So to put it simply, yes, you can use compelling evidence, but you can only apply the breach or the panel can only apply the penalty, I should say, for the period that for the rules that applied at that point, and also for that matter, the types of offence, it has to be one of the offences that was applicable in that earlier version.
Compliance procurement guidance
Before engaging in a procurement activity, please ensure you have reviewed the key Queensland Government procurement policies, frameworks and other resources.
Guidance materials provide support to government buyers in applying the Ethical Supplier Mandate (Mandate) and Ethical Supplier Threshold (Threshold).
Standard operating procedures
- Ethical Supplier Mandate standard operating procedure
- Ethical Supplier Threshold standard operating procedure
- Mandate and Threshold appeals standard operating procedure
- Breach assessment checklist - Ethical Supplier Mandate
- Breach assessment checklist - Ethical Supplier Threshold
- Example breach register – Mandate and Threshold
- Alleged breach referral report - Ethical Supplier Mandate
- Alleged breach referral report - Ethical Supplier Threshold
- Progressing a non-compliant Ethical Supplier Threshold declaration report
- Example declaration - Ethical Supplier Threshold
- Show Cause Notice template – Mandate and Threshold
- Proposed Sanction Notice templates – Mandate and Threshold
- Outcome Notice templates – Mandate and Threshold
- Decision maker breach outcome report – Ethical Supplier Mandate
- Decision maker breach outcome report – Ethical Supplier Threshold
- Decision maker appeal outcome report – Mandate and Threshold
In December 2021, training sessions about the Ethical Supplier Mandate were delivered to the Building Construction and Maintenance and Transport Infrastructure and Services procurement categories. Clips from these sessions are available for training purposes.
Ethical Supplier Mandate 2021 – An introduction
Ethical Supplier Mandate 2021 – Applying the Mandate
There is an exception, as you know I'm not great with exceptions but, and that is low value procurement. And the reason for that is because we just want to, I guess, government decided to ease the process for that smaller level. And the threshold is defined by the agency or the GOC or the stat body. So from now on, by the way, in this presentation, when I say agency, take it as read, I mean, GOC, stat body, water authority, and all of that other long list of things. So that's what I mean when I say agency. And in fact, I think even in the definitions, that's what it says. So, so that's what I mean. So whatever that, the particular agency's low value threshold is, if it's less than $20,000, then that number applies. So if you've got a $10,000 low value threshold, then it's a $10,000 one. If you don't have one or yours is above 20,000, then 20,000 is deemed to be the level, regardless of what your particular agency's level is. And that just means that you don't need to do that ABN compliance check. You don't need to have the special terms in the contract, which we'll talk about shortly that relate to the mandate and that's pretty much it. Okay. So how, how do you apply the mandate? We're going to sort of go through the various phases now. So this is pre contract. So there are few things that we need agencies to do. Again, we don't believe they're particularly onerous. There are a few sort of tweaks to contracts, really, but it's worth knowing what they are. So it's important that, that the declarations in relation to the mandate, the threshold should already apply as I've said, but those declarations in relation to the mandate are included even in that tender documentation or invitation to offer. You will also need to do the ABN compliance checks. And what that is is the compliance branch has a supply check tool and when you check that, it will tell you if that if that particular supplier is barred, therefore, subject to a sanction. So you need to check that before you proceed. And then there are a couple of things in relation to contract clauses. There are some, what we are calling declaratory clauses in relation to, and it's basically saying, when I signed this, when I put this tender in, and then when I sign the contract, I commit to abiding by the ethical supply mandate. And there are some related things such as, you may have some of those liquidated damages clauses that are, that are not generic, that are specific to the particular supplier and project. And there's also the potential for, I meant to mention this earlier, the publication of sanctions. So the government also, and it's made this conscious decision to do this. It wants to use the publication of sanctions as a deterrent, basically to other suppliers committing similar bad behaviour. So remember a sanction is the highest level. That's once you've got to 20 points and you've got that suspension from the government supply chain for up to 12 months, it's only that we're talking about, we're not talking about the issuing of a two point demerit or 10 point demerit. It's the sanction at the back end. And what we want agencies to do is to put into the contract that if in the course of the work subject to the contract a sanction is applied that the government can publish that, that information. So again, that, that will be a matter for discussions with the supplier when you're, when you're doing that. It is also important, and, to use deeds poll where subcontractors, which is almost always, where subcontractors are involved and that's because the procuring agency doesn't generally have a direct relationship with a subcontractor, and so what we need to do is to require the managing contractor or the principal contractor, to get the, their subcontractors, to sign a deed poll. Their individual subcontract, to sign a deed poll each, and that basically, that commits them to abiding by the mandate and cooperating with any investigation and providing any material that's required for the purpose of that investigation. And again, we have, and you'll see little dots on various pages throughout this presentation, we have templates for, for pretty much all of these things that are available for you to use a template, deed poll template clauses, to go in your contracts. All that material is there for you, but that is an important component because what we, what we don't want is for a complaint to be lodged for, or for my audit team to go out and do an audit or an, or help the agency with an investigation, and then go to the subcontractor, and they say, sorry, I'm not giving you the pay records for staff. Now, of course, the agency and the government as a whole is bound by privacy and all of that so there's no issue in that being, being shared, but we then wouldn't have the evidence that's required. And then, and you'll see this later for that very reason, it is also a breach to not cooperate with the investigation or to not the material. You can get a penalty for that as well. So it's important to tie up those things at the front end and that will make your life so much easier. We've been doing this work for two years now and we've uncovered all of these tricks as we go through but you are lucky in the sense that you've come at the back end cause all these lessons have been learned. So if you apply these standard templates, you'll find that when it comes time to dealing with a supplier who's, who has conducted unethical behaviour, it'll be much easier to deal with, there'll be a streamlined process. When it comes to contract management, the contract management, I suppose, this is just going to a little bit more detail about the point I made earlier, which is the mandate is not to replace contract management. So if a supplier is got to build a dam wall, for example, and they're supposed to build 50 metres high and two metres thick, and they build it, 45 metres high and one metre thick, well that's, they haven't met the specification. That's standard contract. That's not a matter for the mandate or if they were not on time, if they said it would be done by January one and they didn't finish till February the eighth, not a matter for the mandate, that, all those standard contract management things are still- we do not encroach into any of that area. It is still the complete reserve of the procuring agency. So we're going to deal now with identifying breaches. So how, how do you know that there's been a breach? And actually there's quite a number of sources of how that could be. It could be, as we say, your standard contract management. So while you're doing your normal contract management, some of the, I know, some of the agencies particular on the big projects have a superintendent, or they might have a different name for it, but effectively a procuring agency project manager, who, who will be on site regularly, they may notice some of these, these sorts of things and then may progress it from that point. It could be from your performance reporting. We, I've talked about the project manager. It could come from an audit. So the compliance team in, the audit team I should say, in the compliance branch is responsible for conducting proactive audits on the BPP projects. So that's the hundred million dollar or more projects or if it's declared, you probably know, but government has the right to declare projects that are less than a hundred million dollars. If it's an $85 million project, that's a really significant piece of work in a particular region. They may declare that as a best, that that should be a best principles project. So all of those declared or automatic BPP projects are audited by a team and they go, and they will check the contract, they'll review, they'll deal with the procuring agency so you'll hear from them, they'll keep you up to date with every step and they will go and examine the contract, find out what the industrial relations commitments are, do a sample audit of, of workers time sheets and payslips, they'll look at local benefits, they'll see what the contract says in terms of the commitments to local benefits, they'll check a sample of licence, addresses on licences in the induction to make sure that, that the right proportion of people are within that 125 kilometre radius of the project and so forth and so on. Training and apprentices, they'll check the TPAS records and whatever the other commitments are. So that they, they conduct those audits. And so that, they could uncover the breach through that process. Another very common source where these breaches are uncovered is a complaint from a third party. And that could either be a, a competitive supplier who is aware that their competitor up the road got the job and they only got the job because they committed to doing certain things, employing locals and whatever. And they know for a fact that they're not actually doing that and they've, you know, rather disgruntled that they, they would have done that, but they didn't get the job, or they didn't get the job because their pricing was a little bit high because they were actually going to deliver those commitments and old mate up the road has, has put in a lower price, got it, made the commitments, but not lived up to the commitment. So you could get a complaint and that could be the source of investigation, or indeed it could be from a union that says, well, we've got workers on that site and we know for a fact that they're not being paid the agreement rate or they're, they're not getting the morning allowance. So we've had cases of that. I've got a list of about 20 or so underpayments that we've uncovered in the past 12 months and they're generally are, is generally a particular cohort, it's generally a particular allowance that wasn't paid. And if it applies to one or two of the workers, it generally, it generally applies. So that's just looking at- so it could come from a complaint from a union as well, or it could be a regulator outcome. It could be brought to your attention, or it could be a media story that one of your suppliers has been found guilty of wage theft or convicted of industrial manslaughter or under the criminal, the new provisions in the Queensland criminal code in relation to wage theft or some other related regulated decision, that would also flow. And because, you know, they're final court decisions that is very easy evidence to, to obtain and, and that could be where, where it comes from. Or it could come from the advice of the DDG and that might be because they've got broader intelligence across the sector about the behaviour. So, so that's, how do we know someone may or may not have, or may have breached the mandate? There's all the different ways you can find out about it. Then we get to, how does it work from there? So there's a more detailed flow chart in the guidance material that is available and it, when you first see the one on the guidance material, it looks kind of complex and in a way, I guess it is a little, but for people who are using it, it is actually, it's actually quite a good flow chart. It will literally take you through the steps and if you answer yes or no to this bit, then it'll tell you where to go for the next, for the next stage. So it's worth having a good look at, but this is it in more simplified form. So we've just talked about identifying the behaviour and the various sources of that. Then obviously it comes the investigation. The investigation, unless it's an investigation that's happening as part of an audit process but investigation are conducted by the, the procuring agency. And again, with our support. And I'll talk all about that later, but primarily, the policy is written that the procuring agency has the responsibility for the investigation. Then there's a show. So you've gathered the evidence. Then you issue the supply with the show cause, and that's to say, okay, we've got, you know, evidence that you haven't paid workers, or we've done this or that, or whatever it is, please show cause. And for that's to them to provide country evidence or et cetera. Then you compile that material and it goes to the compliance branch and they'll conduct what we talk about, is sort of a quality assurance process and then they manage the extenuating circumstances process. An extenuating circumstance is slightly different to show cause. We thought about, you know, putting them all in one to try and streamline it cause it's a little bureaucratic but the advice was that there is a, there is a nuance between- one is show cause, which is, no I didn't do it, here's why. And the other is extenuating circumstance, which is, well, we did underpay people but the extenuating circumstance was, we were a small business. The person who does the payroll was away on maternity leave and wasn't there for the July 1 annual pay rise, the person filling in, wasn't aware of it, wasn't, wasn't so familiar with it, and so, yes for three months until the pay officer came back, people were underpaid, but it's an extenuating circumstance, we apologise. As soon as they came back, we found it, we've dealt with it, we've repaid it. So that might be an extenuating circumstance, as opposed to, we didn't do it, here's the evidence. Then that all goes through to the, to the panel for their consideration. Then, so it's important, this is an important component of it, and, and it particularly important I know, to, to GOCs and statutory bodies, that the panel is not the decision-maker. So the legal advice we've got is that the procuring agency, or, and I'm going to say it again, GOC or statutory body, you, that is the legal authority that has the contract and because these penalties really arise out of effectively breaches of contract, that a third party cannot impose the penalty. So the panel will make a recommendation. It will say, look on the evidence, this is of the moderate range. It relates to underpayments. It's 10 points, here's the evidence. And they make that recommendation to the CEO who is the decision maker. The CEO then makes that decision if, and this is where there's probably two humps or perhaps another hump in behind that one, or next to it, if it's just standard demerits that don't get the person, the supplier to 20 points, then that breach decision goes through to the supplier and then they have an appeal process. If however, that particular demerit from that matter gets them to 20 points, cumulative or straight to 20 points in one hit. Then there's the, the, the panel will also consider the imposition of a, of a sanction. And again, the DG, the, well in terms of agencies, the DG will oversee how in terms of GOCs or stat bodies, if they support that recommendation. If it relates to a sanction, they then have to issue an intention, I can't read that because my eyes- proposed sanction process. So that's an extra final step. So a letter goes to the supplier to say, unless you convince me otherwise, this is in layman's terms, unless you convince me otherwise, I'm going to impose the sanction. You're going to be put off the government supply chain for six months, you've got 14 or 21 days or 10 days, whatever it is, I forget now, to reply and respond to that. So there's a final, there's a final process in relation to sanctions. Then there's the final decision. And of course, as with all of these systems, there's an appeal process that, that operates for those purposes. So you'll see there, when we did a lot of the consultation, particularly with suppliers, they were concerned that, that the government would be hastily issuing penalties left, right, and centre. And so they wanted to make sure that the suppliers, and we dealt with a lot of the peak bodies, the master builders, AIG, CCIQ, et cetera, that their members would have plenty of opportunity to disprove because they didn't want frivolous, you know, them being penalised. Now that was never the intention. And in fact, in practise, the opposite's the case, if anything, we're probably finding procuring agencies less likely to, to want to progress matters rather than more likely. But regardless of any of that, we've made a commitment to ensure that there were lots of opportunities for procedural fairness for the suppliers and you can see that that's in that process. So we just talk about assessing noncompliance, so there's just a few key threshold questions. The front, did the compliance occur on a Queensland government contract? Sometimes we'll get complaints from organisations that aren't fully across it. And in fact, we had one just recently and it was, it was actually a council matter. It wasn't a Queensland government contract. So that would be obviously step one, was the contract in the appropriate date range? So if it was signed in June of 2019, it would be out of scope, because the mandate didn't apply until August of 2019. So that would be, that would be one. And in fact, to pick up, I think it was Bruce's, very good point about the applicable dates. That date will be February 1, 2022 for GOCs and stat body. So if there's a breach before then, then this doesn't, this does not apply. So it's really the beginning for you guys. It's really the beginning of the, of the process and there's going to be a lag time, so, because it's for contract signed after that date, so there's got to be a contract after the date, and then there's got to be work conduct and then there's got to be finding the breach. So I suspect you won't be dealing with anything in practical terms for eight or so months. And then the, then there's the critical question, which is, which is in the reserve of the procuring agency, and that is, was the non-compliance an honest mistake or oversight? That's an important question. So again, we can give advice on that and we can assist, and we can say, look, we've dealt with a lot of these, this looks like it's systemic because it's the same. They just don't pay overtime here. That's not a, that's not an error, they're big enough, you know, construction company. They know they've got to pay over time. They're a signatory to an agreement. It's a clause in the agreement. We might give that advice, but ultimately that decision about, should it progress on, on those matters is, is a matter for the, for the relevant agency to make that determination. And again, as you can see the nice little maroon tip circle there, again, we've got checklists to, to assist people with that. And yes, as that indicates, we are always ready to assist with, with advice. It's important to, to keep records of all of these things. And it helps build up your file on your intelligence on your suppliers because often you'll be dealing with the same suppliers. There's, there's a lot of, particularly the bigger firms, they are very good at government tendering because they're over sized to be able to do it cause as we all know, tender documents are quite onerous and resource sapping. And so sometimes it's only those larger organisations that are well-resourced that can sort of regularly do that government tendering. So it's important to have that sort of intelligence. And again, we've got a sample breach register. And there's one more component of the process, which is, it is possible, excuse me, for the deputy director general of procurement to refer a matter to the panel that the procuring agency hasn't. So that's kind of like a reserve power. And the reason for that is, is that if a complaint's been made and we could probably follow the example that I gave before, complaints get made about wage theft, that there, that of suppliers systemically not paying overtime. And the agency has a look at that, it's a medium sized company with a couple hundred workers. They've got HR systems, they've got, they've got databases that, that input, they seem to be paying everything else, the morning allowance, the shift allowance and the tool allowance and, but yet just don't pay over time. And there's, and they've got time records. So if the agency were to decide in that matter, oh no, that's an honest mistake because you know, the CEO sent a stat dec in saying all this was a mistake and decided not to progress. It could be that on a reconsideration of that, the deputy director general will say, no, we think there is a prima facie case, it'll go to the panel, they wont override it and say, it automatically gets a penalty. Can't do that. But it sends it through for the, for the panel to make that consideration. So it doesn't ensure there is a penalty, but it just says, oh, we think that that, that that decision is probably prima facie in the wrong, on the wrong side of the fence and that probably needs consideration, may well be that it's rejected, but let the experts deal with that.
Ethical Supplier Mandate 2021 – Understanding investigation factors
Some of the variables in the investigation, I guess, the point of the mandate is to ensure that it's proportionate. So we don't want to crack a nut with a sledgehammer, as they say. We want to make sure that if a supplier has genuinely, systemically, gone out of their way to underpay people and do the wrong thing, then we want an appropriately severe penalty. We don't want it to apply where it's at the lower end, and we want to reward self reporting and correction. And you'll often see this in some of the big cases that have got a lot of media attention. Often, some of these matters are found by the supplier themselves or the agency. They self-report themselves to Fair Work. They might be found to be in breach, but that they find it themselves, report it themselves, make reparations, so they pay all of the money's back and put in systems improvement. And that's kind of what we're looking for. Not only do we want to obviously penalise the bad behaviour, but we to actually want to improve behaviour. So that you might get, if you were to have conducted systemic underpayment and you refuse to fix it and you refuse to cooperate with the investigation. Well, you're pretty much more likely to be at the higher end of that. If however, you uncover that there has been a systemic thing, but you've got a couple of bad staff, you've dealt with the staff, you found it yourself, you repaid it, you reported it, well, you might get five points, not 20, or you might get 10, not 20, or you might get two, not 10, because those are ameliorating factors. When we come to collating the breaches. So, okay, so this deals with the possibility where there are multiple complaints and potential breaches on the one supplier, on the same project, over a period of time. Now, this is one of those ones where we've had to just sort of find the balance. And what we are trying to avoid is, and I'll give you a real example, that the people will know now is a realistic situation. A union may do a campaign on a particular work site. So they might think that there's a few, what they would call dodgy operators, on one of the big projects, and they're going to go in there, for the next two months, and they're going to crawl all over the place and do time and wages inspections, Work Health Safety inspections, check for the training and apprentices, and do all that. So they might go in and in the first week they might send in complaints about underpayment of wages. Then in the second week, though, they might've referred matters to Work Health Safety. And then a week later, Work Health Safety issue a raft of notices. And then in the final week, they might do a check of all the apprentices and trainees and find that actually they haven't got 20, they've got 10, and they're supposed to have 20. Now we would want all of those to be considered as a block. What we don't want is to, and there's a couple of reasons for this, one, is so that at the back end, the panel can see a full context of behaviour, but at the front end, is to try to streamline it a bit for the agencies, because what we don't want is for you to do all this work on the one, send it all off, and then a week later, re-package up a whole other one and then send that off, and then... So we've had to, but by the same token, it can't go on forever. We can't leave it open for the life of the project because we get into the situation that we're trying to avoid, which is before all the mandate and all of the system came in, one of the big concerns was that you wouldn't uncover breaches until the end of the contract, you wouldn't uncover the fact that the supplier didn't have their 20 apprentices until the very end of the project, and then it's too late. Once the project's closed there's nothing you can do, that means 10 apprentices didn't get the opportunity to gain their apprenticeship, there's nothing the government can do about it. You can't penalise the person, it's done. Same with local benefits, for example. If they're supposed to put on 85% of local workers and they put on 85% ,and they only put on 50%, and you do your end of project audit, contract audit, at the end, and find that out, well it's too late then, you can't unpick that, you can't recreate those local jobs. So we can't allow it to just all bank up to the end of the project. So we've picked 20 days. And the reason for that is the process itself takes about that long, or probably longer, to be honest. By the time we get the first complaint in, you do an investigation, you give, I think it's a 21 day, someone at the back will nod their head or shake their head, 10 day, sorry. yes, you'll give them 10 days, 21 days must apply somewhere else, but anyway, 10 days notice to reply to it. And then by the time it comes back in, you'll assess that material and package it up. You will know if that starts on January one, by the time you do all that, it's going to be at least January 20. So you'll know in that 20 day period, if there are any more complaints that have come in, and then what you can do is you can just hold it until you get to the 20th of January, then compile them all up and send them up as one package. The flip side of that is it's like any rule, it's like 59 kilometres an hour is legal, 61 is illegal. You got to draw a line somewhere.. If however, 20th of January comes, you package it all up and send it up. And January 22 comes, another one comes in. Well, you're going to have to start, that'll create a new report. The supplier compliance history. So this is in relation to Work Health Safety, this component, this is actually very important to understand. So when the government changed the rules to compelling evidence, that did not apply to Work Health Safety. So the rule about needing a regulator decision still applies, in particular to Work Health Safety. Because certainly my staff and your staff, no doubt, are not experts in Work Health Safety. I could walk around a work site, and I wouldn't know whether that scaffolding is safe or not. That's not our job. We're not the experts in that area. So the earlier version of the mandate, which you probably haven't read, because you had no need to, but in an earlier version of it, we tried to codify what Work Health Safety breaches would be, and we had things like if you get up to five improvement notices, that's minor. If it's between five and 20, that's... But the advice, the very, very strong advice we got back from both unions and employers, by the way, was that that makes no sense in Work Health Safety. Because you can't compare suppliers and number, because that's a quantity question, not a quality question, or a severity question. And for example, Hutchies Builders, which would have, I don't know how many, but probably 1000 or more people working for them. If you were to look at their work health safety record, they might have 50 improvement notices. But Chris Perkins Plumbing in Toowoomba, in my hometown, by the way, where I employ 10 people, I might have 20. Well, even though 20 is less than 50, 20 is probably way more severe, because I've got 10 people or whatever I said, 20 people working for me, and Hutchies have got 1000, and they've only got 40. So what we decided to do was instead of us trying to weave our way through that and make those assessments, which we're just not professionally equipped to do. We spoke with Work Health Safety, and kudos to them, and I would want to give them a round of applause for agreeing to this, they have agreed that they will provide an assessment of what their various notices for that particular supplier, they will give us an assessment of the severity, and whether it fits into what they would call a minor, moderate, major, or aggravated category. And they have said that they will do that for not just my branch, but indeed for all the agencies and including yourselves. So there's an email address there, and when all this applies, there'll be further training and we'll go through this sometime in the future but you'll be able to get that assessment. So if you, because one of the things that those earlier contract causes that I spoke about was binding suppliers to provide a record of the regulator history. If you enact that and you see that they've got quite a history, you can get Work Health Safety to assess the severity of that as opposed to us. And then that will then guide the material that you put together, you effectively would put in the Work Heal Safety report. And that goes to the panel to consider. You don't need to second guess it, or really even go through it. So the next component is the types of evidence. So we've talked about compelling evidence and regulator ones. So examples of compelling evidence would be, where we can use compelling evidence, is the underpayment of wages, underpayment of superannuation, and certain examples of sham contracting. Because sham contracting is effectively, almost always related to wage theft, because you wouldn't bother going through a process of getting someone to set up a sham business relationship, unless you intended to pay them less than what you had to, otherwise, you'd just pay them the legal amount and be done with it, you wouldn't do that. So, however, we do understand that some of those areas are more complex employment law. And again, that would be a matter for the panel to say, well, on this case, we think it's pretty obvious that it's sham contracting. But in this case, it is a little bit more nuanced because this guy's semi-retired, he does have his own business, and he sometimes works on this job, and so it's a bit more complex. They may just await the regulator outcome, the fair work outcome as to whether that is a breach of the Fair Work Act. Examples of regulator or outcomes or evidence, would be the notices from Work Health Safety, notices from Fair Work Ombudsman, and the Queensland, the QBCC, in terms of security or payment breaches, which are all covered in the mandate.
Ethical Supplier Mandate 2021 – Types of Mandate non-compliances
So now we're just going to look at just the next level of detail, not the super fine detail, but give you some of the examples of the various types of breaches. And this table that you can see on screen is actually part of the material, the policy, and the guidance material that's available to you. And we've developed this to give guidance as to what sort of evidence can and should be used for the different types of breaches. And in a way, most of them are pretty obvious. There's a couple where there's a little bit of grey. So the first one is local benefits. So that's the commitment to employing local workers. Generally it's within that 125 kilometre radius of the project itself. So non-compliance would be, you didn't employ the 85% or the 60, or whatever the number was, committed to in the contract. That would be the breach. So you've got, you've brought in half of your workforce in a fly in, fly out arrangement, or just got them from wherever. That would be an example of that. The type of evidence, it's always compelling evidence, because there's no regulator. It's not a breach of our law and there's no regulator that determines that. So in that case, it'll always come through the agency or my branch's audits. And the sorts of things that they look at would be the personnel register, copies of licences, to look at postcodes and addresses, to make sure they're within the area. So it's that level of evidence that you would look at for local benefits. Apprentices and trainees, that is also compelling evidence. And that's in relation to the number of hours. Now, generally, on the big projects that is set by the value of the project, and that is supposed to be all loaded up and provided in the TPAS system. And so an audit of the TPAS system would be the compelling evidence or proof of training, whatever that might look like. You might need to talk to the trainees and say, "Did you actually go to that training on this day?" You might need to check records and things of that nature, but that's... that is largely done through an assessment of the TPAS records. Another areas, Aboriginal Torres Strait Islander business and engagement, and again, that's a compelling evidence one because there's not a regulator, that's not a breach of the law. And that would be, again, come through an investigation or an audit. And that's where the supplier has committed to engaging these three indigenous owned businesses. And again, you can check if they did. Look at the contracts, look at the sub contracts, have they engaged them for this value of work? Did the work happen, were they paid? Et cetera, et cetera. And that's not dissimilar to standard contract management, but, again, it would fit into the category of compelling evidence. Workplace Health Safety. So I've probably already gone through this. It's the reverse opposite of the ones we've just talked about. It is always regulator outcome. Now, I've had this discussion with some unions where they say "We've been on the work site and we know that's unsafe, you should stop it." That is something we cannot do. So we have to hold firm on that, that is a matter... Now, at the top level of the unions that is understood. I've explained to them, we are not going to take the place of the Work Health Safety regulator, that's understood. But sometimes, lower down the chain, they go, "You know, that's dodgy. why are they still on the job?" That's outside our purview. However, having said that, that does remind me of another important component, which we might think, in future, to include. 'cause it is a bit of a... it can be a bit of a misunderstanding. In general, now I'm speaking not just in Work Health Safety. The mandate is about applying penalties for consideration of future contracts. It is not about, if we find in that, on that job, even if... say it's a two year job, and after six months we find compelling evidence of wage theft, it goes to the panel, after eight months and demerits are issued, even if 20 points are issued, that relates to future contracts. That does not give the compliance, procurement compliance component of this process, any right to withdrawal that supplier from the job. That is not what it's about. It's about a record for future consideration. Now, it may very well be that your contracts have termination clauses, and as part of a contract management thing, you, the agency may decide that's a bridge too far, we're terminating the contract because you've got clauses that allow you to do that. That is entirely a matter for the organisation. And sometimes that's another debate I've had to have with unions, is that this system is actually about building a record for future consideration. It's not about terminating, it's not a trigger to a termination of a contract clause. That is still completely the reserve of the procuring agency. So, that is equally the case for Work Health Safety. And as I said, it's always a... it's always a regulator outcome. And probably we might just add on there, again for future, that that's the example evidence, but one of the key sources of the document will be the Work Health Safety assessment. When we get them to give us an assessment of what all of that means. What do all these notices and prohibitions and improvement, what's their assessment? And that's a key consideration for the panel in terms of what the demerit or sanction may be. When it comes to industrial relations, it ticks all the boxes. It can be compelling evidence for giving you the examples of underpayment of wages and superannuation. And the reason for that is why government chose to go down that path, I've already explained one of the reasons, which is often there's no regulator outcome. But also because it's a, generally, much more easy thing to assess. You've got a time sheet, you've got a pay slip, and you've got an industrial instrument, an award or an agreement that says, for these hours, they get paid this much. On weekends, you get paid this loading, et cetera, et cetera. You do the calculations and you can see off the payslip, if the time sheet has them regularly... And we've literally done a case like this in the last six months. All the time sheets had the workers starting at six o'clock in the morning, none of the payslips had the morning shift allowance. The agreement that they are employed under said, if you work anytime between five and stop at anytime between five and seven, I think it is, you get time and a half, or whatever it is, for the whole shift. So we know what the agreement says. We know at the time sheet says, and we know the payslip doesn't have it. So that's, it's pretty clear. And, of course, you still go through the process, as we did. We go back to the supplier to say, "Please prove us wrong, tell us why this is not right." In this instance, they couldn't. In fact, they worked with us to come up with the calculations and $57,000 was repaid to workers for those underpayments. Now, it didn't go to a panel because that was subject to a contract that was signed before September 1. So that's actually a good example, snapshot, to explain the different process. Had that happened now, we would've been able to use compelling evidence, and we would have been able to send them to the panel, and they could have got up to 10 demerit points. They couldn't have got 20 because the penalty didn't apply before, but it was after September 1, we could have applied compelling evidence. But it was in June, so we couldn't do that but we will in future. So that long list of underpayments that I spoke about earlier, from this point on, they're all going to go to the panel, unless it's deemed that that's a genuine oversight or accident. So, but compelling evidence is not the only one, obviously, where there are regulator outcomes. Now, sometimes that happens. Sometimes the unions will send in, "You do know that this supplier on this job, they just got orders against them for underpayments." Well, we're not necessarily privy to that. It's not a state regulator, we don't necessarily know that. But if that... if actual decisions are brought to us and we can verify that those decisions are right, and you can do that through the through the governments, the Fair Works website, then that's evidence. That's still a regulator outcome. So it's not like we don't care about regulator outcome, we do. That's the easiest one, where we've got a regulator outcome that makes it crystal clear. It's just that we don't need it in all circumstances. Security of payment. That one is also pretty straightforward. It's like the Work Health Safety one, there's a state regulator, and we will just defer to their decisions. So where they've got those decisions, then we require a regulator outcome and that'll be considered by the panel. There are other sorts of commitments that could be made, that could be around environmental matters. That could be around procurement from a social enterprise. Again, that's a compelling evidence matter because there's no particular regulator outcome. Then, if they haven't complied with their contractual commitment, then that's a matter to be considered. It does whoever, and if I just go off on a tangent, so, but please don't get as distracted as I am on this matter. It does raise the whole issue of, there's a lot of things that are included in the mandate, but actually there's a lot that are not. For example, fraud, or for example, that just made me think of it, breaches of the Environmental Protection Act. We would only be able to consider a penalty on a supplier it was a breach of a contractual commitment around environmental matters, not an actual breach. Now where the government in the future decides to go, "Hmm, we probably should consider fraud and breaches of the Environmental Protection Act." They may well do that, but at the moment, we are restricted to these sorts of things. So those things are driven by what's in the contract. Now this is the one I referred to earlier, which is where the contract or the deed poll bonds are supplied to cooperate with investigation to supply all relevant information that is reasonably requested and that they would commit to abide by the threshold or the mandate. If they refuse to cooperate and don't supply the evidence, they can get a penalty. And that penalty can be quite serious. And the reason for that, I guess is obvious, but it's a bit... I like to use the example of, it's a bit like the penalty for absconding from the scene of an accident. It can be just as, or more severe than the penalty for drink driving, because that's often what people do. They've driven over the limit, they've smashed into the telegraph pole, they get up, they run away because they don't want to lose their licence for DD, but they will get... so the police don't find him for two days, no DD, but they will charge him for leaving the scene of the accident. So it takes away the incentive to not cooperate so they can still easily get quite a severe penalty for non-cooperation. In fact, I think Bharat will nod his head or shake his head, that can go up to 20 points, yep. So the severity of that, so if it's just, you didn't respond in time, but you did respond, then it's at the lower level. If you didn't respond then it's many, but if you gave misleading, like, information that is provably wrong, you can get 20 demerit points for that level of non-cooperation.
Ethical Supplier Mandate 2021 – Outcomes of the investigation and breach processes
So the investigation process. This is like, I guess, like everything we have limited resources, and so you have to effectively take a sort of a triage approach to it. Excuse me. It's really going to depend on a case by case basis, effectively based on the examples I've just given you. So we won't be able to, let me give you an example. So an employer and we've had a few of these, an employer declaring that something is the case is not evidence. So whilst we say, depending on the complexity of it, if there are complaints about underpayment of wages, the procuring agency going to the employer, so we've got complaints that you're underpaying your people and they come back. So now we've done a full check, everyone is being paid in accordance with the instrument, that is actually not evidence. That is someone declaring something to be so. So you will still need, and that's why you might not need to see every worker if there's a 100. But what we do is we take an intelligence led approach. So if there's a complaint about a particular type of underpayment, we'll entailer our request, so it's not everybody, but we'll tailor our request to cover that type of classification. And sometimes you do that for a number of reasons, one is because you simply can't assess everybody at that particular point in time, but also sometimes you need to cover the identity of the complainer. And sometimes the person will require that or the union representing them will sometimes require, they might say look, these three people, but please don't say who they are because the member of the work is worried the boss might give them the next job. So what we would do in that circumstance, if the complaint was about the carpenters or the plumbers or the electricians or a particular type of underpayment, if the common theme was the morning shift, then what we would do is we would require, and what we would do is say if we had the names of the three and it was Adams, Benson and Johnson were the three, we would say to the supplier, we want to see, and we'd say it's a random selection of workers whose names start with A, B, J, K, P, Y. So we'd cover it so that it's not just the three and then, but we're also not asking for the whole 100. And then we'll know, we'll get Adams and Benson and Johnson's material, and then we'll probably find, we'll then be able to assess those three in particular, but we'll also be able to assess if that was also more broadly experienced amongst other people of the same classification or same category. So it's just about how you tailor your gathering of the evidence. One of the key parts here is that it is actually the procuring agency or the contract owner is responsible for the conduct of that investigation. So you end up at the panel really from two pathways, one is an audit, if it's a BPP project from the audit team in the compliance branch, and the other is if a complaint is lodged. If the complaint is lodged, then our team will coordinate, assist and help the relevant procuring agency, if it's transport and main roads, or if it's educational or health or whatever through that process and give all the advice like we're doing now, as much as we can, but primarily it's the agency that leads that investigation. Again, particularly in the early stages, we are going to be very helpful and we're slowly building up our capacity to be able to give more support to agencies. But primarily from an investigation point of view, that's led by the agency. The audits are all done by the compliance branch. So the show cause process is just, basically, it's a show cause notice, and again, in the material, you'll see there are templates, not only is the process outlined in all this documentation, but there are template letters for you to use. So it's kind of a, once you sort of get used to it, go to section C, pull out the template or copy and paste the template and change the names and off you go. And that is to go to contractors or subcontractors, and then you need to make that decision. So this is where it gets interesting. And again, it's often on advice from our group. And that's some of the examples I've given you today so far where we've given advice about, for example, when I said before an employer declaring the people have been paid, we've given advice back to, that's actually all the sham contracting on, we've given advice back, that's not evidence. What you now need to do is, and we'll give very, hopefully very helpful guidance about, ask them these things, ask for these records, we'll help you look at it. So that's the sort of process that we undertake, but ultimately you do have the responsibility to make that sort of initial determination about, is this a genuine mistake or is it actually serious? And so we give advice on that, but we carefully word our advice to say, you could take this view, or you could take that view, that's your decision. So we don't decide. Now ultimately I suppose in the big picture when our full team is fully embedded and we've run all the training, which I'll talk about shortly, in 12 months time, we probably will want to do an audit just to make sure that agencies aren't actually just giving everything, passing everything through. But through this process, we will be aware of those decisions because we have to know the outcome of complaints. And so we'll keep an eye on that. But ultimately it's the procuring agency decision about whether it's not capable of being progressed or capable of being progressed and to go through to the, ultimately through us and then through to the panel. When that matter, when you then after the show cause period, that comes through to us, our branch will have a look at any other relevant details. We'll do a quality assurance check on that. And what I mean by that is just, we want to ensure that the standard of evidence, I guess, or case file is of a high quality and that it's consistent. So when we put the matters through to the panel, we do a check and that's why we got all these templates and everything that you'll have access to, but we want to make sure that the quality is consistent. So if our team look at it and go, well, this is not, you've missed this bit, or you need more information on this. We will come back and give you that feedback so that when we present something to the panel, it's done, the panel then gets to consider not a haphazard standard of evidence, but a consistent standard and a consistent template presented in the same way. And that just clears the deck for them to focus on the merit of the matter, not trying to wade through various standards of documents. So we'll do that quality assurance and come back to you and assist if any more further work is required. And then we'll put that through for escalation to the panel. Then we have the extenuating circumstances process. That's after we've done our quality assurance. And that's when we go back to the agency with their extenuating circumstances before we provide that to the panel. And the role of a panel is to consider things fairly, or they use their industry expertise to make recommendations in relation to those matters. Now, the outcome of all of that is there could be demerits issued, oh, well, actually there's an extra one in here which is no outcome or no case to answer. That's quite possible. They could look at it and go, no, no, no, no, no, this is clearly a genuine error. It's a mistake, it's not intentional systemic wage theft and dismiss the matter. So no outcome is one possibility. If there is a belief of that it is a breach, then the recommendation of demerits, the issuing of a sanction, and that also applies to contract extension. So when a sanction is issued, there's a list of things that it applies to, and one of those is new contracts and the other is rollover of existing contracts, but we also look for systems improvement. So what we want to see is, and sometimes one of the possibilities, which is not there either is the, what's the term we use, is the suspended penalty. So a demerit could be suspended pending some improvement or some other evidence that comes through. At the final end when the sanction is done, if that contract clause allows for the publication of the sanction, which we encourage those clauses to go in all of the contracts, and if that's signed, then if it's a sanction again, the sanction is the highest of it, that's the expulsion, that's after 20 points and only in those circumstance, not demerits, but if that happens and that's in the clause then, and I can tell you that the minister may be interested in putting out a media release to highlight how seriously the government takes these matters or the relevant GOC or whatever may choose to do that, depending on how egregious the matter is. But again, that's got to be in the contract. The appeals process. So as you'd expect, the supplier can appeal against the application of the penalties or the sanction. And that's particularly in relation to that the process was not followed or that the decision-maker failed to take into account the show cause or the extenuating circumstances is not about as generally is the case with appeals, is not about re-prosecuting the merit. It's not about saying, oh, well, we didn't really underpay them, and we've got all the records that show you. It's not about reconvening, that it's about, is the penalty harsh or unjust? Was the process not undertaken properly? And the decision maker, this is the answer to an earlier question is technically, is the legal entity itself, the GOC or the step body, and therefore through the person of the chief executive. And then once that appeal is done, that's it, that's the end of the matter. No, do not pass go, do not collect $200. What my branch is doing is I've referred to it a number of times throughout the presentation, but there is quite a suite of materials and resources, including the standing operating procedures. Obviously the policy itself, we've got checklists, we've got examples of a breach register, we've got referral reports, show cause notice templates, proposed sanction templates, outcome templates, breach reports, et cetera. And as well you can contact us and we can give you advice which we'll do. And our branch is increasing, not to the extent where we can take all of this over. We never going to be that big, but we will have some increased resources to be able to walk people through that process a bit more, particularly in the investigation side of it because we have a complaints team that deal with investigations. We may consider and we'll wait till we get to this point, we might consider embedding a couple of people in, if there's a GOC that's got a major one, we might say, ah, we're going to send our person into your office for a week or two weeks to work with you to help you work that through to build that up, or we're quite open really to suggestions about how we can do that. But one of the key things we are going to do is, I'm investing in a, or the branch is investing, the government is investing in the development of a two day training programme, which will go down to this level of what do you actually do when you conduct an investigation? What does it look like to do a time and wages inspection? It'll be that level. And we'll go to the QGPC, the Queensland Government Procurement Committee to seek to have that as a sort of a mandatory training component. And we'll talk to the various bodies about at what level that people should attend. And that should really give resource, and that'll be a resource that can also be shared. We're going to have joint copyright ownership of it. And we're in the process of developing that. Now it won't be operating probably till June to be honest, but I'm hoping that that is a really good quality thing. It's not just going to be someone like me standing up talking at you as I have done today, it'll be qualified trainers with interactive, there'll be some online, there'll be a video content infographics, and there'll be a really professional training programme. And so we're hoping that that will be able to deal with a lot of the capacity issues that we know your organisations are facing. And we kind of hope that, we've put all those things together, that what we're going to see is a gradual improvement in compliance that I won't be standing up in two years time saying I've got a long list of underpayments. I think we'll get a bell curve. I think because of the new rules about compelling evidence, I think we'll see more. But then I think as penalties start to come and suppliers realise the government's actually taking this seriously and it's resourced, then I think they're going to tail off because they're broadly the same bunch of people, they want to keep getting government work, cause it's well-paid work and it's consistent, and you know you're going to get paid. The government always pays. So they're not going to want to continue bad behaviour. And I think we'll see a tapering of, that's kind of the vision and the idea is that we improve ethical behaviour so that the people are working on those big marquee government jobs, but just generally across government, that they're well-paid, they can go home to their families safe and they can feel proud that they worked on an ethical government project.
Ethical Supplier Mandate 2021 – Questions and answers
[Woman] This question's from Bruce. And he was wondering, what is your easy explanation of the difference between the threshold and the mandate? He understands that the threshold is minimum and mandate is best practice, is that true? And would you mind expanding on that?
Yes, basically, Bruce, that's right. The only thing I'd add to it is the mandate's really the system of penalties. The threshold is the minimum legal standard in relation to wages and industrial relations that all suppliers have to meet. So you're right, threshold is the legal minimum. The mandate does deal with best practice or practice above that, but the mandate is also the way we describe it. It's the system of penalties. So in a sense, even a breach of the threshold gets dealt with through the mandate. So I felt like that was not short, but the short answer is you are right, just add that the mandate is the system of penalties.
[Woman] A question from Tracy who's asked as the mandate only applies to BCM and TIS is it the same for the threshold?
No, no. The threshold applies to all procurement, across all government budget sector agencies, GOC's and Statutory bodies, but all forms of procurement. And the reason is if you think it through, that's pretty straightforward because it's effectively the legal minimum, to do otherwise would mean you'd be breaking the law and so the government said, look, we're just going to put it into place. And the threshold is it's really a test and it's a self declaration process. So when people put in their tender, they have to declare that they haven't breached the threshold. And if there's ever any evidence that they have, then they can be, you know, put through the panel and have a sanction for them for that. So I hope that answers that question.
[Woman] Thank you very much. And we do have a second question from Chris. Should the new penalties only apply from when the mandate is applied to GOC's i.e. contracts entered into after first of Feb 2022?
Yes, that will also be true because the mandate can't apply until government decides that it applies. So it's a good question, Chris, because I was thinking that when I was looking at the presentation before there is effectively going to be three dates, and there'll be the date that it applies to Statutory bodies and GOC's from that point on. So, yes, that's correct.
[Woman] We do have a question from Maurice. He's asking if we do apply liquidated damages, can we still issue demerit points or is it just one or the other?
It's an excellent question. Thank you. No it's both. The liquidated damage is a contractual matter that is really solely the preserve of the procuring agency as a sort of an additional penalty. And the reason why it came in just by way of background is because some of the feedback received was that actually financial penalty is going to be particularly for one-off or very irregular supplies to government that actually a financial penalty is the wrong word because it's not actually technically a penalty, but a disincentive, a financial disincentive is going to be a stronger tool than a certain number of demerit points. So, yes, and let's use an example say of a wage theft. Say, a certain amount was agreed in the contract for liquidated damage, whatever that dollar amount would be. And you need to get advice on how you formulate that. And that's in the contract as liquidated damage for cases of underpayment of wages, then you the procuring agency can manage that through the contract, but the panel would still consider it in terms of demerits because that sort of behaviour still needs to be on the record that they actually committed it. The withholding of the money is just a tool to try and get them to pay the workers what they were owed. So short answer to the question, both.
[Woman] Jodie has asked, there's two questions here, but you might want to package your answer. So I'll give you them both. She's asked in regards to the diagram of the flow chart and the process, who makes the breach decision, and also who completes the proposed sanction process, is it the procuring agency, or is it us as the compliance branch?
So the decision maker is always the CEO of the GOC or Statutory body and in government agencies, it's the DG, it's the contract owner. And I think that answers the second part of the question as well. So that's who finalises the sanction process. The panel recommendations are simply recommendations, they'll recommend a number of demerits, they'll recommend if they've got to 20, an appropriate sanction period, but the CEO is the decision maker. They are the one that issue the determination.
[Woman] So just to confirm, it would be the decision maker who would also conduct the proposed sanction process and make the decision?
[Woman] Thank you. I have a question here from Jody. She's asking how many contractors are currently under suspension after accumulation of more than 20 points?
Very short answer to that, Jody, zero. And the reason for that is a sort of referred to before, a lot of the breaches are in relation to underpayments and we required a regulator outcome before September 1, there was no regulator outcome, for any of those matters. I think that will change in the next 12 months, I'm fairly confident that it will now that the rules have changed. I think it's a combination of that, which I think is a key component. And I think there has been a reluctance for agencies to pass matters forward, I think that's true. I think that's improving and it is improving as we get out and have more engagement with agencies and indeed GOC's and Statuatory bodies. So I think that will change or well, I'm confident that it will. Cause I don't think for a minute that the mere changing of the rule, which to be honest, most suppliers, even though we've communicated with them, don't get me wrong. We've explained all this and send it out to all the peak bodies and all the people who've come to our consultation. The changes have been well communicated, but if you're a supplier, you know, in Cairns you probably not up to date with the latest update to the ethical supply mandate. So I don't think that the mere change of the rule will stop the behaviour, because I think people, you know, those underpayments, there's a financial incentive why people underpay people. So I think we will get penalties, but the short answer at the moment is zero.
[Woman] Richie has asked, does the mandate apply to federal government funded projects?
Only if there's state government money in it. So the Townsville Stadium for example, was jointly funded by the federal government and the state government, and it applied. That's also the case with most of the TIS work. So the transport infrastructure, which is basically the highways, most of that work is jointly funded and it applies. So if there's Queensland money in it, it applies is the rule of thumb.
[Woman] We have a question from Donna who has asked, who can we talk to with specific questions in relation to how it would work for our statutory body? We are a jointly owned a stat body between New South Wales and Queensland.
Yes. You probably need to send us an email with the details to that email address, and we'll be able to help you if you can just give us the details. I think what you'll find is that the test, it's actually a good question. I'm going to probably need to get more advice on that too. The test is normally whose money is it, but if it's joint, then I think it would still apply, but let's have a look at it, but good question.
Compliance Matters – QGP Compliance Branch eNews
- 01/2021 – Who is the Queensland Government Procurement Compliance Branch?
- 02/2021 – A big year done and more to come
If you have any questions about these guidance materials, you can contact the Ethical Supply team.