Announcement date
24/04/2024
Link to announcement
Delivering a future remade in Australia | Ministers (dcceew.gov.au)
Problem being addressed
The current 'linear' economy model does not consistently price environmental impacts, so these impacts may not be considered in decisions on production and consumption, leading to environmental degradation. As a major purchaser of goods and services, the Australian Government’s procurement decisions can contribute to these negative environmental impacts.
Proposal
The Australian Government already recognises the importance of sustainability in public procurement and has included sustainability provisions in the Commonwealth Procurement Rules (CPRs). In 2022, the government made an election commitment to strengthen the environmental sustainability provisions of the CPRs to drive demand for recycled content.
The Environmentally Sustainable Procurement (ESP) Policy is being proposed in response to an election commitment, therefore, only two options were considered in the Impact Analysis. These are:
- Option 1: The status quo
- The status quo relies on the existing provisions in the CPRs to embed environmental sustainability in Australian Government procurements through value for money assessment. Under the status quo, DCCEEW will continue to provide the resources and advocacy to support increased environmentally sustainable public procurement. These activities will, in future, also include a supplier education program.
- Option 2: An Environmentally Sustainable Procurement Policy (ESP Policy) as a Procurement Connected Policy (PCP).
- PCPs are specific whole-of-government policies of the Commonwealth for which procurement has been identified as a means of delivering government policy objectives. Entity staff must consider PCPs during a procurement process. The proposed ESP Policy, as a PCP, will require government agencies undertaking an in-scope procurement activity to require tenders to submit a Supplier Environmental Sustainability Plan (SESP) with their tender submission, consider the SESP in the tender evaluation, collect data from suppliers on the relevant sustainability metrics during the contract delivery and monitor the supplier’s performance in relation to the SESP.
Assessed Impact Analysis outcome
The Office of Impact Analysis’ (OIA) assessment is that the quality of the analysis in the IA is ‘Good Practice’.
Assessment comments
The analysis applies a 'breakeven' approach to identify the best option though a partial cost-benefit analysis. To be considered ‘Exemplary’, the IA would have included a more detailed description of the various stakeholder cohorts as part of the problem definition and also provided information on the lessons from international experiences in the delivery of comparable policies. The IA would also have been improved through the inclusion of a clearer rationale for the treatment of financial transfers and more detailed results - and associated interpretation - of sensitivity analysis.
Regulatory burden
The Department of Climate Change, Energy, the Environment and Water estimates these measures will result in an increase in regulatory costs of $1.2 million per year, averaged over ten years.