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Using public procurement to promote better labour standards: a case study of the Victorian Government schools contract cleaning program

29 Mar 2007


The Federal Government’s Work Choices legislation has severely curtailed the capacity of State Governments to regulate labour practices directly by legislation. Of the possible State Government regulatory responses to Work Choices, it is the use of public procurement as a means for regulating labour standards in the private sector that has been canvassed most extensively. However, there is little consensus on how this might be done most effectively.

This report is a case study of the design and administration of the Victorian Government Schools Contract Cleaning Program, which regulates the procurement of cleaning services in over 1500 schools across Victoria. This program was established in 2005 to address complaints about widespread non-compliance with minimum labour standards applicable to contract cleaners in the industry, as well as problems with the quality of services being provided to many Schools.

The study found that the program is an innovative response to the challenge of using procurement to improve labour standards in a particular industry. Drawing on program documentation and interviews with representatives of government, trade unions, and employers in the industry, we found that the program has many characteristics consistent with a model of ‘responsive regulation’. If designed properly, responsive regulation maximises the effectiveness of a regulatory regime by involving stakeholders in standard-setting as well as in monitoring and enforcement of standards. Further, employing a ‘regulatory pyramid’ which allows regulators to negotiate compliance through provision of information and education while providing for punitive sanctions if necessary, enhances effective enforcement of regulatory goals.

The program achieves some of these ideals by establishing an accreditation process whereby contractors wishing to be considered for Victorian government schools cleaning contracts must apply to be members of a Panel of approved cleaning contractors. The application process is overseen by an assessment committee made up of a number of different stakeholders, including trade unions and a representative of cleaning contractors. Applicants must satisfy the committee of their compliance with iv a number of ‘Key Assessment Criteria’. These criteria include requirements with headings such as ‘Sound practices to promote Occupational Health and Safety’, ‘sound practices in human resource management’, and ‘compliance with relevant Industrial Awards/Instruments’.

Although the program is in its infancy, participants in the study were positive about the establishment of the program and its impact on labour standards in contract cleaning in government schools to date. The existence of an active trade union and a strong employers association, along with a well-resourced bureaucracy providing expert assistance and advice, has been important to the success of the program.

However, concerns were raised about the difficulty in oversight presented by the sheer number of contractors which have been afforded Panel Status, to date in excess of 800 firms. Some of these difficulties might be overcome by the establishment of a more formally tripartite monitoring process. Such a process would need to enhance the role of employees and their representatives or other independent monitors in the process of monitoring ongoing compliance by contractors with the labour standards set by the program. This would need to be done in a way which did not undermine the legitimacy of the program in the eyes of contractors.

While the Key Assessment Criteria which set labour standards are adequate given the early stage of this program, the study found that the criteria appear to be fairly static. Program processes do not provide for upward revision of labour standards to reflect improved industry conditions and/or changing community expectations regarding employment arrangements. While there are some areas where the design and administration of this program could be improved, the report concludes there is enormous potential to extend this model to other areas of government procurement. If State Governments in Australia are to respond to Work Choices in a way which addresses both minimum labour standards and employee ‘voice’ in the workplaces of government contractors, then the Victorian Government Schools Contract Cleaning Program provides an excellent starting point.

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