Page 2417 - Week 07 - Wednesday, 2 August 2017
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At 6 pm, in accordance with standing order 34, the debate was interrupted. The motion for the adjournment of the Assembly having been put and negatived, the debate was resumed.
MR COE: Icon Water have confirmed that there is no written evidence of this concept within the contracts. However, it appears to be the driving motivation for why these agreements came about. Let me reiterate that. Icon Water and ActewAGL have some form of gentleman’s agreement to look after each other but it is not actually written down anywhere. And that is the driving force for this contract. In estimates on 20 June the managing director admitted that, if the agreements had not been made, ActewAGL would have been laying off a substantial number of people. When pressed, the managing director agreed that Icon Water does not have a mandate to protect the jobs of ActewAGL but then further purported that the agreements were in the best interests of price and the Icon Water customer.
I would submit that the claim that these agreements represented the best value and best interests of Icon Water’s customers is not able to be evidenced by the due diligence you would expect in a contract of this magnitude. If there is no evidence of market testing there can be no claim that these agreements represent the best interests and best value for Icon Water. In fact, the union that covers Icon Water’s engineering and technical staff, Professional Services Australia, has publicly criticised the deal. In a recent Canberra Times article, Professional Services Australia identified that Icon Water cut a quarter of its staff after saving positions at ActewAGL.
By virtue of the services ActewAGL provided at the time, there is an entrenched, vested conflict of interest, both for ActewAGL and Icon Water respectively. To avoid this conflict, Icon Water should have, at the very least, independently market-tested before any agreement was struck. Instead, Icon Water accepted that an objective of the agreements was to preserve positions within ActewAGL, to the possible detriment of Icon Water. Icon Water does not have a mandate to look after ActewAGL. Icon Water has a mandate to serve the people of Canberra and to serve the ACT government.
The question remains: why was a contract of this scale not put out to tender when, according to Icon Water’s own procurement policy, contracts valued above $30,000 require a minimum of two written quotes? Icon Water has said that the value of both contracts was $24.2 million per year at the time of signing in 2012 but has stated the annual cost will escalate by CPI broadly over the duration of the agreements. The cost of these contracts has increased to an additional $3 million annually since its commencement, we believe.
Icon Water has advised that the value of the customer services and community support agreement is approximately $7 million, while the corporate services agreement is now in the vicinity of $20 million. Only two territory directorates paid near that amount for shared services. However, if we examine a comparably sized body, in 2015-16 the Environment, Planning and Sustainable Development
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