State by state ESG targets and procurement requirements in Australia

Linh Dao   |   October 13, 2022
esg requirements

With so many compliance topics that organisations need to keep track of, it can be even more overwhelming as requirements also differ by state.

In this post, we attempt to display various policies of note, including ESG-focused procurement targets across the states in Australia side-by-side.

Industrial Manslaughter

State

Effective date

Offence description

Fines for non-compliance

ACT

Introduced in 2004, amended in 2021

A person conducting a business or undertaking (PCBU) or an officer of a PCBU commits industrial manslaughter if they engage in conduct which breaches a health and safety duty and causes a person's death. The PCBU or officer must have been reckless or negligent about causing the death.

Maximum 20 years' imprisonment for an individual and $16.5 million for a company

VIC

2020

This applies to employers, self-employed people and ‘officers’ of the company or organisation and will also apply when an employer’s negligent conduct at a workplace causes the death of a non-employee.

Maximum 25 years' imprisonment for an individual and $18.17 million for a company

NSW

The bill passed the Legislative Council in 2021 and is currently before the Legislative Assembly

A PCBU or senior officer commits the offence if a person dies at the workplace or is injured at the workplace and later dies, and the PCBU or senior officer's conduct caused the death. The PCBU or senior officer must have engaged in the conduct without reasonable excuse and have been grossly negligent or reckless.

Maximum 25 years' imprisonment for an individual and $10,295,000 for a company

QLD

2017

It applies when a PCBU or senior officer to negligently cause the death of a worker, including where a worker is injured carrying out work and later dies.

Maximum 20 years' imprisonment for an individual and $10 million for a company

WA

2022

A duty holder (including officers of PCBUs in some situations) fails to comply with their health and safety duty and engages in conduct that causes the death of an individual, in the knowledge that the conduct was likely to result in death or serious harm, and in disregard of that likelihood.

Maximum 20 years' imprisonment and a fine of $5 million for an individual and $10 million for a company

NT

2020

A duty holder, a PCBU or an officer of a PCBU, intentionally engages in conduct that breaches their health and safety duty and causes the death of an individual to whom that duty was owed, and is reckless or negligent about the conduct breaching their safety duty

Maximum life imprisonment for an individual or $10,076,000

TAS

 

Not currently an offence

 


So far, the only prosecution in Australia for industrial manslaughter of a body corporate was that of Brisbane Auto Recyclers in June 2020. The company was fined $3 million, and its directors sentenced to 10 months’ imprisonment.

In March 2022, Jeffrey Owen, the owner of Owen’s Electric Rewinds, became the first individual charged, prosecuted, and convicted of industrial manslaughter in Queensland.

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Project / Retention Trust Account

State

Effective date

Applicable to

Description

Fines for non-compliance

ACT

N/A

N/A

N/A

N/A

VIC

N/A

N/A

N/A

N/A

NSW

2015

Projects valued over $20 million

Retention money held by head contractors must be held in a trust account with an authorised deposit taking institution.

Usually up to5% of the total contract value is held by the head contractor until the subcontractor has completed the job and fixed any defective work.

A head contractor must keep records in the form of a ledger, to be provided to the subcontractor at least once every 3 months, or as often as may be agreed in writing.

Fines of up to $22,000

QLD

First phase began in March 2021, final phase to start October 2023

All eligible building and construction contracts valued at $1 million or more (state/local government, hospital and health, private)

One project trust account to be established for each eligible contract

One retention trust account per contractor to hold all cash retentions for contracts under a project trust account project.

Those managing a retention trust account must attend retention trust training.

For each project trust account and retention trust account, a separate and individual account ledger must be kept. All trust records must be retained for at least 7 years.

•   fines of up to 200 penalty units

• one year’s imprisonment

• being reported to ASIC

• being reported to their professional accounting body for disciplinary action.

WA

Feb 2023

Construction contracts over $1 million except:

• contracts for residential work between builders and homeowners

• small residential subcontracts (by regulation)

• contracts directly with government principals

Retention money held or withheld under a construction contract (above a certain threshold) will be held on trust for the benefit of the party who provided the money.

The retention money must be deposited into a retention money trust account established with a recognised financial institution.

Retention money will often represent a large proportion (if not all) of the profit on a project.

An individual will face a fine of $50,000 for non-compliance, whereas a body corporate faces a fine of $250,000.

SA

N/A

N/A

N/A

N/A

TAS

N/A

N/A

N/A

N/A


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Indigenous (Aboriginal) Procurement Policy

State

Effective date

Target

Reporting/Enforcement

ACT

Launched on 31 May 2019

 

Applies to projects over $5 million:

  • FY 2019-20: 1.0% of the financial year’s addressable spend
  • FY 2020-21: 1.5% of the financial year’s addressable spend
  • FY 2021-22: 2.0% of the financial year’s addressable spend

Government agencies are required to:

  • Monitor their performance against the target and include that as part of their annual report
  • Maintain and monitor a register of their use exemption

Underperforming entities may be required to deliver a plan to higher authorities explaining the reasons and outlining improvement.

VIC

April 2018

 

A general target of 1% of government procurement from SME to be from Aboriginal businesses, plus some recommended actions:

  • For individual procurement activities valued below $1 million (regional) or $3 million (metro or State-wide), seek opportunities to directly or indirectly procure from Aboriginal businesses
  • For individual procurement activities valued at or above $1 million (regional) or $3 million (metro or State-wide) up to $20 million, consider whether part of the procurement can be unbundled for delivery from Aboriginal businesses
  • For individual procurement activities valued at or above $20 million, set targets for supplier expenditure with Aboriginal businesses and ask suppliers to demonstrate how they will meet such targets

Government entities are required to:

·     report on their social procurement activities under the SPF in their own Annual Reports

·     contribute to an annual whole of Victorian Government report on aggregated SPF outcomes and benefits

To measure and report on these aims, suppliers can capture:

  • how many Victorian Aboriginal businesses they or their subcontractors engaged as part of a Victorian Government contract
  • the value of purchases they or their subcontractors made with Victorian Aboriginal businesses as part of a Victorian Government contract
  • total number of Victorian Aboriginal people they or their subcontractors employed on a Victorian Government contract
  • total number of hours Victorian Aboriginal people they or their subcontractors employ worked on a Victorian Government contract

NSW

1 January 2021

The Aboriginal Procurement Policy (APP) was merged with the Aboriginal Participation in Construction Policy.

  • At least 1% of total addressable spend by government towards Aboriginal businesses
  • 3% of total goods and services contracts awarded to Aboriginal businesses

For all contracts valued at $7.5 million or above, agencies must include minimum requirements for 1.5% Aboriginal participation by requiring one or a combination of the following:

  • at least 1.5% of the contract value to be subcontracted to Aboriginal businesses
  • at least 1.5% of the contract’s Australian based workforce (FTE) that directly contribute to the contract to be Aboriginal or Torres Strait Islander peoples
  • at least 1.5% of the contract value to be applied to the cost of education, training or capability building for Aboriginal staff or businesses directly contributing to the contract

Suppliers must:

  • allocate the minimum 1.5%, or a higher percentage as agreed with the contracting agency, of contract value to Aboriginal participation
  • submit an Aboriginal Participation Plan during the tender process that sets out how the supplier will meet the Aboriginal participation requirements of the contract
  • work with the contracting agency to successfully implement the Plan
  • report quarterly on progress toward the plan through reporting.buy.nsw portal.
  • support and cooperate with audits of Aboriginal Participation Plans and reporting
  • provide a final report when requirements and commitments in the Aboriginal Participation Plan have been met or when the contract is due to expire, including a final reconciliation against the Aboriginal participation requirements. This report may be submitted as the supplier’s last required quarterly report      
  • where participation requirements have not been met, the remaining balance is to be collected by the contracting agency and directed to the account held by Training Services NSW

QLD

1 September 2017

Target: 3% of the value of government procurement contracts to be awarded to Indigenous businesses by 2022.

This applies to all Queensland budget sector agencies. It does not apply to Queensland Government owned corporations or the Queensland statutory bodies.

Each government agency will report on:

  • Progress against the value of contracts with Indigenous businesses, the total value of contracts for all businesses, and the main categories where Indigenous businesses are successfully tendering
  • Progress against identified performance measures
  • Progress against increasing the capacity and capability of the Indigenous businesses (where it constitutes part of the agency's core business)

WA

Introduced on 1 July 2018

Agency contracting targets

  • FY 2021-22: 3% of the number of awarded contracts
  • FY 2022-23: 3.5% of the number of awarded contracts
  • FY 2023-24: 4% of the number of awarded contracts

Aboriginal participation requirements for suppliers

  • All contracts valued at $5M+ in the following industries: construction and maintenance, community and social services, education and training, public administration and finance
  • Aboriginal business subcontracting target:
    • FY 2021-22: 3% of total contract value
    • FY 2022-23: 3.5% of total contract value
    • FY 2023-24: 4% of total contract value
  • Aboriginal employment target requires suppliers to engage a minimum number of Aboriginal persons in each year of contract delivery
    • Perth metropolitan area, South West, Great Southern, Peel, Wheatbelt and all state-wide contracts: 2% of the total number of the contract workforce
    • Gascoyne, Mid West and Goldfield-Esperance: 5% of the total number of the contract workforce
    • Pilbara and Kimberley: 10% of the total number of the contract workforce

The Department of Finance is responsible for:

  • Administering the Policy and guidelines
  • Providing advice to State agencies in achieving targets set by the Policy
  • Providing advice to industry on meeting Aboriginal participation requirements
  • Providing advice to the Aboriginal business sector on working with government
  • Monitoring the achievement of targets
  • Reporting the achievement of targets to the Minister
  • Reporting the achievement of targets on WA.gov.au annually

A State agency is responsible for:

  • Complying with the Policy
  • Complying with reporting contracts with registered Aboriginal businesses on the Tenders WA website
  • Ensuring Aboriginal participation requirements are included in applicable contracts

Suppliers are responsible for:

  • Meeting Aboriginal participation requirements as set out in individual contracts
  • Reporting information on Aboriginal business subcontracting and Aboriginal employment

NT

From 1 July 2022

 

Applies to contracts over $15,000:

FY 2022-23:

  • 5% of the total number of NT Government contracts awarded to Aboriginal Business Enterprises (ABEs)
  • 5% of the annual total NT Government contract value awarded to ABEs

Government agencies are required to report annually against the Aboriginal Procurement Policy targets in:

  • Annual reports
  • Closing the Gap
  • Everyone Together - Aboriginal Affairs Strategy

 

SA

Part of the Industry Participation Policy effective from July 2021

Contracts above $220,000:

Government agencies may apply an Industry Participation plan and increase the industry participation weighting above the minimum 15%.

 


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Local Content (Industry Participation)

State

Relevant policy name

Requirements

Reporting/Compliance

ACT

Canberra Region Local Industry Participation Policy (LIPP)

•    Contract value between $25,000 and $200,000: min. 3 written quotes where 1 must be sought from a local business and 1 from an SME.

•    Contract value > $200,000 and under $5M: an Economic Contribution Test (ECT) must be submitted, which weighs 10% in the evaluation process

•    Contract value $5M or more: a local IP Plan is required, which weighs 10% in the evaluation process

Both the ECT and IP Plan require details around how the bidder intends to contribute to the local economy through supply chain or local subcontractors.

For contract value $5 or more, reporting on Local IP Plan outcomes will be a contractual obligation for successful respondents throughout the duration of their contract. Failure of contractors to comply, in part or in whole, with the LIPP and the commitments in their Local IP Plans will be a factor that will be taken into account in the award of future contracts by the ACT Government. Provision of Local IP Plan reports will be a condition for final payment on contracts.

VIC

The Local Jobs First Policy is comprised of the Victorian Industry Participation Policy (VIPP) and the Major Projects Skills Guarantee (MPSG)

The responsible Minister must set local content and other requirements for Strategic Projects at no less than:

  • 90% for a construction project
  • 80% for a services project or a maintenance project
  • 80% for the maintenance or operations phase of a Strategic Project.

Two minimum weightings to be applied in evaluating tenders for all Local Jobs First projects:

  • 10% for industry development
  • 10% for job outcomes. For MPSG-applicable projects, the 10% weighting will include commitments to providing opportunities for apprentices, trainees and cadets.

The Major Projects Skills Guarantee (MPSG) applies to projects that are construction projects with a budget of $20 million or more. The MPSG may apply to both Standard and Strategic projects.

All tenders, proposals or other submissions for a Local Jobs First project must submit a Local Industry Development Plan (LIDP) to the Industry Capability Network (ICN).

Contractors are responsible for ongoing monitoring of the application of Local Industry Development Plan commitments by themselves and their supply chain.

Evidence must be retained appropriately to demonstrate compliance with Local Jobs First.

The delivery agency, DJPR and the Local Jobs First Commissioner may request information during and after a project to evaluate Local Jobs First compliance.

Post contract verification starts on practical completion of the project when works have been completed.

 

NSW

Small and Medium Enterprise and Regional Procurement Policy

 

Procurements over $3 million must have a local participation plan.

For Construction projects between $10 - $100 million:

  • 20% of the trades workforce on the project to be apprentices, with the target included in tender documentation, contracts, and quarterly reporting requirements

For major construction projects over $100 million:

  • 20% of the total labour force to be learning workers
  • double the number of women in trade-related work (up from the NSW average of 1% to 2%)
  • 8% of total project workforce to be aged less than 25 years

Suppliers to provide quarterly reports to Training Services NSW in the Department of Education against agreed targets.

QLD

Queensland Charter for Local Content

 

  • Applicable projects:·      Procurements with a total QLD Government contribution of greater than $5 million (ex. GST), or greater than $2.5 million (ex. GST) in regional QLD, excluding ICT products and services
  • Any Public Private Partnerships (PPP) for projects and capital asset acquisitions with a QLD Government capital value contribution of $5 million (ex. GST) or greater
  • Determined strategically significant by the procuring government agency
  • Standing offer arrangements where expenditure is projected to exceed $5 million (ex. GST) over the life of the arrangement
  • QLD Government grants greater than $2.5 million (ex. GST)
  • Large infrastructure projects where funding over $20 million is provided by the Australian Government through the QLD Government

While there are no specific targets, government agencies are required to demonstrate local content opportunities via various mechanisms, e.g. Forward Procurement Plans, Statement of Intent, Project Outcome Report.

An annual review of local content in government procurement will be undertaken by the department.

Local content reporting requirements are placed in contracts. In addressing the Statement of Intent (SOI), tenderers should outline how they will ensure reporting requirements will be passed on to subcontractors.

WA

Buy Local Policy – WA Industry Participation Strategy (WAIPS) – Priority Start policy

A participation plan is required for projects:

  • Goods and services – Metropolitan and Regional contracts
    • Core Participation Plan - $1 million - $5 million (Metro); $500,000 - $5 million (Regional)
    • Full Participation Plan – Above $5 million
  • Housing and works – Regional contracts
    • Core Participation Plan - $500,000 - $5 million
    • Full Participation Plan – Above $5 million
  • Housing works – Metropolitan contracts  
    • Core Participation Plan - $3 million - $10 million
    • Full Participation Plan – Above $10 million

Plans are weighted at either 10% or 20% of the qualitative evaluation for both the core and full participation plans.

Projects of $25 million or more deemed strategic will require a participation plan with additional local commitments.

For contracts below these thresholds the WA Government’s procurement policies and the WA Buy Local Policy 2022 will apply.

---

State Government agencies issuing building, construction and maintenance contract and the head contractor and subcontractors used for the contracts are in scope of the Priority Start policy.

  • Applies to contracts with a total value of over $5 million (inc. GST)
  • Separate target training rates for general construction – 11.5%, and civil construction – 5%

For contracts greater than 12 months, suppliers are required to provide:

  • Annual reporting on local industry participation on each anniversary of your contract award date, or at intervals otherwise agreed.
  • A Final Plan Implementation Report is due within 2 months of practical completion of the contract.

For contracts less than 12 months, suppliers only need to provide the procuring agency with a Final Plan Implementation Report within 2 months of practical completion of the contract.

If the reported outcomes vary significantly from the commitments in the contract, suppliers may be required to provide an explanation. If no valid reason can be identified, the procuring agency may determine that this represents breach of contract.

The Minister for State Development, Jobs and Trade may request audits to make sure that successful suppliers have met their local participation obligations.

---

For the duration of the contract, head contractors must meet the target training rate and submit a Priority Start report for each 12-month reporting period and at the end of the contract.

For audit purposes, head contractors are required to keep supporting information used to calculate the following for a minimum of two years from contract completion.

Non-compliance will be treated as a breach of contract.

Similar reporting requirements apply to subcontractors as well.

SA

South Australian Industry Participation Policy (IPP)

 

All procurements:

  • Opportunities for SA small and start-up businesses to provide a quote or tender with at least 1 local business invited
  • At least 1 quote or tender from a business based in SA or in the region for any procurement above $55,000

Procurements over and equal to $550,000:

  • Mandatory standard Industry Participation (IP) plans are required
  • Minimum weighting of 15% is applied as a component of the overall evaluation criteria
  • A minimum of 20% industry participation weighting must form part of the overall evaluation where the purchase of structural/reinforcing steel and fabrication of structural steelwork is involved

Procurements of $50 million and over:

  • Tailored IP Plans are mandatory
  • Minimum weighting of 15% is applied as a component of the overall evaluation criteria
  • A minimum of 20% industry participation weighting must form part of the overall evaluation where the purchase of structural/reinforcing steel and fabrication of structural steelwork is involved
  • A Statement of Intent will form Stage 1 of the Industry Participation process and the information provided will be used to benchmark a Tailored Industry Participation Plan submitted at Stage 2

Direct Negotiation

  • All IPP requirements apply to direct negotiations above $550,000

Panel Contracts

  • IPP applies to all panel contracts
  • A Tailored IPP process is a mandatory requirement
  • A Statement of Intent will form Stage 1 of the Tailored IP process and the information provided will be used to benchmark a Tailored IP Plan submitted at Stage 2
  • A Tailored IP Plan is required for any secondary procurement over and equal to $550,000 and IPP weightings will apply
  • A minimum weighting of 15% is applied as a component of the overall evaluation criteria to the competitive secondary procurements from the panel

Grants to the Private Sector equal to or above $2,500,000

  • Tailored IP Plans are a mandatory requirement
  • A minimum weighting of 15% is applied as a component of the overall evaluation criteria if it is a competitive process
  • Not for Profit grants are excluded from this requirement

Private Projects receiving Significant Monetary Support or Value-in-kind equal to or above $2,500,000

  • Tailored IP plans are a mandatory requirement

Tenderers are required to submit IPP Plan report to Office of the Industry Advocate and the responsible government agency in line with contract conditions.

NT

Buy Local Plan and Territory Benefit Policy

Agencies must allocate a minimum weighting of 30% to the local content test criteria.

For all tier 1 and 2 procurements conducted through a simplified quotation process, rather than through a public tender process, agencies need to invite at least one quote from a Territory enterprise.

A Territory Benefit Plan (TBP) will be a requirement for:

  • Private sector projects awarded NT Major Project Status that are required to have a Territory Benefit Plan under the NT Major Project Status Policy Framework
  • Private sector projects where the NT Government provides support valued at or greater than $500 000
  • Projects where a Territory Benefit Plan is specified as a condition of a NT Government agreement

The Buy Local Industry Advocate is an independent link between local business and the NT Government:

  • provide an independent advocacy function
  • focus on promoting the Buy Local principles to both industry and government
  • provide an audit and assurance role with respect to government procurement (the value for Territory assurance program)
  • monitor the effectiveness of the Buy Local Plan, including monitoring for unintended consequences.

TBPs must detail the methods that will be used to communicate key commitments made in, and report on the outcomes achieved by, the Territory Benefit Plan to identified stakeholders (including the public, local industry and NT Government).

TAS

Buy Local Policy

For roads and bridges works procurement processes valued at $500 000 or more; and all other procurement processes valued at $250 000 or more:

  • A formal pre-procurement local impact assessment must be prepared to ensure Tasmanian suppliers are given every opportunity to participate.

For all competitive procurement processes valued at $100 000 or more:

  • At least two submissions must be sought from Tasmanian businesses where Tasmanian capability exists
  • The evaluation criteria must include a specific Economic and Social Benefits criterion with the weighting to be applied to the criterion to be at least 25%

A Tasmanian Industry Participation Plan (TIPP) is required for:

  • Procurement contracts valued at more than $5 million
  • Panel arrangements where the total panel value is estimated to be more than $5 million
  • Private sector projects valued at over $5 million that receive support, including in-kind support, valued at or greater than $500 000 from the Government

TIPPs must be approved by the Accountable Authority before the contract, funding agreement or grant deed is finalised and before the supplier, project proponent or grantee enters into sub-contracting or procurement arrangements in relation to the project.

All Tasmanian Industry Participation Plans (or an executive summary of the Plan) developed between agencies and successful suppliers will be published on the Purchasing website.

 

 


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Small and Medium Enterprises (SMEs)

State

Relevant policy name

Targets/Requirements

Reporting/Compliance

ACT

N/A

Bundled with the Local Industry Participation policy.

N/A

VIC

N/A

No specific target but in the required Industry Participation Plan, suppliers need to include the number of SMEs to be engaged as part of the contract.

N/A

NSW

SME and Regional Procurement Policy

and

Small Business Shorter Payment Terms Policy

NSW Government agencies must first consider purchasing from an SME, for procurements up to $3 million.

For contracts valued at $3 million or more:

  • 10% allocated to SME participation; and
  • 10% allocated to support for the NSW Government’s economic, ethical, environmental and social priorities.

Large businesses with NSW Government contracts valued at $7.5 million or above will be required to pay small business subcontractors within 20 business days.

Large businesses have to report on:

the number of small business subcontractors they’re required to pay within 20 business days

the total value of those subcontracts.

Large businesses must report twice per financial year.

QLD

Queensland Procurement Policy

Sourcing at least 25% of procurement by value from QLD SMEs, increasing to 30% by June 2022.

The target is set at an aggregate level across all Queensland Government procurement categories. Each agency is accountable for contributing to meeting the aggregate target, and complying with reporting requirements.

WA

N/A

Bundled with the Local Industry Participation policy.

N/A

SA

N/A

Refer to the above section on Industry Participation.

N/A

NT

N/A

N/A

N/A

TAS

N/A

N/A

N/A


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Linh Dao
As Felix's Marketing Manager, Linh is always immersing herself in the world of procurement and technology. With the aim of telling a meaningful story around the value Felix can bring, Linh draws inspiration and insights from the multi-disciplinary team making procurement better, one process at a time.
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