Who Does Government Procurement Really Serve?
Every time another procurement scandal dominates the headlines, politicians promise to “fix the system.” Yet somehow the solution always seems to involve more rules, more bureaucracy and more political control. It rarely involves asking whether government has wandered too far from the simple principles that made public procurement work in the first place.
More than a century ago, Lord Acton warned that “absolute power corrupts absolutely.” He wasn’t talking about procurement, but he could just as easily have been. History repeatedly shows that when power becomes concentrated, whether in governments, bureaucracies, corporations or unions, transparency suffers, accountability weakens and vested interests inevitably emerge.
The answer has never been to concentrate more power. It has always been to disperse it through competition, transparency and the rule of law.
Large corporations frequently welcome complexity because it becomes a competitive advantage. Every new compliance requirement protects established players from smaller, more agile competitors.
Recent reports concerning corruption and undue influence in government procurement should concern every Australian, regardless of political persuasion. Rather than asking how another layer of regulation might fix the problem, we should first ask a much simpler question. What is government procurement actually supposed to achieve? Government procurement should not be a political reward system. It is a fiduciary responsibility.
Every dollar spent building a road, bridge, railway, hospital, school or defence facility belongs to taxpayers, not politicians. Governments are merely custodians of that money. Their responsibility is straightforward: purchase the highest quality outcome from the most capable supplier for the best possible value while ensuring appropriate standards of safety, quality and delivery. Anything beyond that risks turning procurement into an instrument of politics rather than public service.
Unfortunately, Australia has quietly drifted away from those principles. The latest proposals to give greater priority to industrial relations arrangements in Commonwealth procurement continues a trend that has been developing for years. Governments are increasingly using procurement to pursue broader social and political objectives rather than simply securing the best outcome for taxpayers.
This is not really about one particular proposal; it is about something much bigger. Government procurement has quietly suffered from what might be called procurement creep.
It began with sensible requirements. Contractors needed to demonstrate financial capacity, technical competence, workplace safety systems and an ability to deliver projects successfully. Few would argue with those fundamentals. Over time, however, governments kept adding new objectives: environmental reporting, diversity targets, ESG disclosures, modern slavery declarations, indigenous participation, cybersecurity, industrial relations. Individually, each new requirement might sound reasonable but collectively they transform procurement from a commercial exercise into a political one.
The result is that governments increasingly evaluate businesses not just on their ability to build something well, but on their willingness to satisfy an ever-growing list of policy objectives that often have little to do with building anything at all. That should concern anyone who believes governments exist to spend taxpayers’ money wisely. It should also concern anyone who believes in free enterprise.
Every additional procurement requirement narrows the field of competitors. Every additional compliance hurdle discourages another business from participating. Fewer bidders rarely produce better prices. Reduced competition rarely improves innovation. The laws of economics haven’t been suspended simply because governments are writing the cheques. Ironically, the biggest losers are often the very businesses politicians claim to champion.
Large corporations frequently welcome complexity because it becomes a competitive advantage. Every new compliance requirement protects established players from smaller, more agile competitors. Large organisations simply hire another compliance manager, another lawyer or another industrial relations adviser. Small and medium-sized enterprises don’t have that luxury.
They have owners who already wear half a dozen hats. They quote work during the day, chase debtors at night, train apprentices, manage cash flow, comply with workplace legislation and somehow still find time to innovate. Every additional procurement hurdle may appear insignificant to a government department, but collectively they represent hundreds of hours that could have been spent improving products, investing in new equipment or creating jobs.
Every dollar spent building a road, bridge, railway, hospital, school or defence facility belongs to taxpayers, not politicians. Governments are merely custodians of that money.
Politicians regularly describe small business as the backbone of the Australian economy. They just keep forgetting to stop breaking its back. This is also one of the least discussed reasons for Australia’s productivity problem. Governments love holding productivity summits. They commission reviews, establish taskforces and release glossy discussion papers asking why productivity growth has stalled.
Perhaps they should begin by reading their own procurement policies.
 | A guest post by
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An excellent article, but I would take the reform one step further.
Procurement is fundamentally a fiduciary responsibility. Public servants exercising procurement powers should be held to standards of accountability much closer to those expected of company directors. Directors owe legal duties to act in the best interests of the organisation, exercise due care and diligence, avoid conflicts of interest, and can be held personally accountable for serious failures.
By contrast, much of the public service operates on a culture of process compliance rather than personal responsibility. Decisions are diffused through committees, policies and layers of approval so that when projects fail, costs blow out or procurement becomes politicised, accountability disappears into the bureaucracy.
That culture needs to change.
Procurement officers should be benchmarked against the level of responsibility they carry. If they are responsible for awarding contracts worth tens or hundreds of millions of taxpayer dollars, they should accept duties and accountability commensurate with that responsibility. That includes clear performance expectations, transparent decision-making, measurable outcomes and, where appropriate, personal consequences for negligence, misconduct or serious failures of due diligence.
This may seem foreign to traditional public service thinking, where personal accountability is often diluted by hierarchy and process. But there is no injustice in requiring greater accountability. Nobody is compelled to accept such a role. With significant authority must come commensurate responsibility.
Ultimately, procurement should have one mission: obtain the best outcome for taxpayers. Success should be measured by value, quality, timeliness and integrity—not by how many political or social objectives can be attached to a contract. Government should purchase infrastructure, goods and services, not attempt to reshape society through procurement policy.
Restoring genuine accountability would not only improve value for taxpayers; it would also help rebuild public trust in government procurement and reinforce the principle that public officials are custodians of taxpayers' money, not merely administrators of government processes.