At least he’s married

It’s good to see that former NSW Auditor General Tony Harris is still on the case with respect to so-called ‘public-private partnerships’. Tony has been working this beat along with John Quiggin and myself and a few others for a dozen or more years now, pointing out the stupidities and unaccountabilites.

Just in case you happen to be labouring under the misapprehension that the Sydney tunnel contract fiasco is unusual, let me recount one of my favourite government contract stories.

The year was 1995. The place was Adelaide. The minister and soon-to-be premier was John Olsen. The company was United Water, a French-British consortium invented for the purposes of tendering for the city’s water and sewerage works – a $1.5 billion 15.5 year deal and reportedly the largest outsourcing contract going in the world that year (not counting info tech stuff).

Business Review Weekly broke the story back in January 1996. Olsen had announced that United Water had won the contract the previous October, culminating 6 months of negotiations estimated to cost a cool $7 million. A succession of leaks and inquiries then found that United Water’s bid had been lodged and accepted four hours past the “non-negotiable” deadline. By this time, the other on-time bids had all been opened and distributed, including to six unauthorised people; the probity auditor from Deloittes had already gone home for the day; the public servant in charge of the process had gone out to dinner; and of course the tape in the video camera set up to record the movement in the room containing the documents had run out.

In sum, the contracting process unfolded into such a travesty of democracy, probity and public policy that the Liberal government was brought to the edge of reversing the outcome after announcing the winner, but prior to formalising its final approval. Alas, the deal went ahead, as the Solicitor-General found that United Water would have had a better chance of suing the government if the contract was not executed than the other bidders would have had if it was so executed. In effect, the hapless government was ‘blackmailed’ into the deal.

There’s more and still worse to this story, and there are many more where that one came from. But I prefer to finish with a happy ending. John Olsen is now Australia’s Consul-General to Los Angeles, where the Australian government advertises that he has “vast experience in conducting successful negotiations with international corporations. He is highly credentialled to continue Australia’s push for export growth. He is married.”