Talking Point: Unsolicited proposals lack the scrutiny that competition brings

Greg Barns warns about the potential for undue political influence on decision-makers.

UNSOLICITED bids or proposals are the flavour of the year around Australia at the moment and Tasmania is no exception.

Investors and companies can pitch, on a confidential basis, projects to government. Government assesses the project against criteria and decides whether or not to proceed. If it does, there is no competitive tender process.

In Victoria and NSW unsolicited proposals have been used particularly in the transport infrastructure space.

In the Tasmanian context, the ALP is seeking to make political capital out of the fact the Hodgman Government is seemingly enamoured of unsolicited proposals and that its well paid, well-resourced and pompously named Co-ordinator General office in Launceston ought to be encouraging such approaches to infrastructure projects and sales of public buildings.

The ALP says the unsolicited proposals process lacks transparency and the Government is secretly selling properties such as the Treasury Building in Hobart under this process.

In other words, the emerging unsolicited bids or proposals process is a political plaything already. You know how it goes – one side says it is nirvana, the other says it is the devil incarnate. The reality is that the unsolicited bids or proposals process is inferior to transparent tender processes.

A difficulty with unsolicited proposals is the group pitching the idea of a new road, hospital or tourism project to government can do so in a way that uses political influence.

Tender processes can also fall victim to political bias but at least there is a document trail which reveals distortions of good public policy.

The former Liberal government in Victoria last year ran into hot water when it was revealed the corporate entity behind an unsolicited proposal for a major rail upgrade which the government approved had as one of its key advisers former Kennett government Treasurer, and more recently federal Liberal Party president, Alan Stockdale. Mr Stockdale’s role raised eyebrows even among Liberal and business types in Melbourne. Peter O’Brien, a Liberal member and former chamber of commerce head in Victoria, told The Age on May 29 last year the unsolicited proposals process was open to compromise, including through the role of well-connected lobbyists.

Influence brought to bear on the NSW government to approve an unsolicited proposal from James Packer for a casino in Sydney is another case in point.

There is also the issue that proponents can intellectually brow beat bureaucrats. All the intellectual property and knowledge associated with the unsolicited proposal resides with the bidder. The Auditor-General in Victoria has recently issued a report noting that the process that Victoria’s Treasury is meant to apply to unsolicited proposals has been inconsistently applied in respect of two major transport projects. As David Baxter from IP3, a US think tank, puts it; “Hard-pressed government officials who often have limited institutional capacity to review the merits of the unsolicited proposal are often easily beguiled by these arguments and follow the path of sole-sourcing these projects.” He could have been talking about Tasmania.

The most problematic feature of unsolicited proposals is the process is anti-competitive. The idea is to avoid a tender process. No wonder private players love it.

Transparent tender processes are superior to unsolicited bids or proposals. Competitive bidding for government projects forces those tendering to be innovative, show robust economics and, if the tender process is designed well, propose how services can be delivered more equitably and efficiently. The taxpayer is entitled to know a new project using public buildings will deliver value for money.

A competitive tender process is more likely to result in such an outcome than a secretive unsolicited bid process where proponents can flatter decision-makers and butter up vain politicians.

What of the claim by proponents of unsolicited bids or proposals that they bring unique, new approaches to government? This is just hype. How does the taxpayer know the proposal, shrouded in secrecy, is so extraordinary the government decides it could not possibly do any better by injecting the chill winds of competition into the picture?

Unsolicited bids are a fad. They have not thus far delivered major benefits to Australian communities. They are susceptible to political influence and lobbying.

If an idea is so brilliant, those proposing it should not be afraid to pitch it against all-comers in a transparent tender process. There should be no secrets when dealing with public assets and spending taxpayer funds.

Lawyer Greg Barns was an adviser to NSW Liberal premier Nick Greiner and the Howard government. Disendorsed as the Liberal candidate for Denison in 2002, he joined the Democrats. In 2013, he was Wikileaks Party adviser.