Department of Health Procurement Practices

Ms BURNET question to the MINISTER for HEALTH, MENTAL HEALTH and WELLBEING, Mrs ARCHER

[11.37 a.m.]

Yesterday's report from the Auditor-General raised significant concerns about procurement practices in the Department of Health. Over the past three years, Health awarded 508 contracts worth over $40 million, each kept just under the $100,000 threshold, below which competitive procurement, Tasmanian content weighting and Procurement Review Committee requirements don't apply. The audit also found a repeated failure to consider internal sourcing before engaging external contractors. The conclusion, that the department frequently shortens contract terms specifically to stay under $100,000, avoiding probity and valueformoney scrutiny, is damning. Do you condone the department deliberately structuring contracts to dodge these requirements, including Tasmanian content, and will you table a full list of the recipients of 500 contracts, their value and start date?

ANSWER

I acknowledge the Auditor-General's report, and the issues raised within it, in regards to contract hire, and specifically in relation to the Bluegum Digital Health Transformation project. This issue was well canvassed at Estimates, and as the Secretary said at the time, the arrangement for consultants under the technology services list and the Tasmanian Technology Contract Conditions are not well suited to ICT contractors. To be clear: our preference is to directly employ staff, and there have been recruitment campaigns run in recent years, including in October 2024, where a recruitment campaign targeted the conversion of more than 40 contractor positions to salaried employment as part of a longterm, sustainable workforce model.

Unfortunately, the response from the market was limited, reflecting the well documented shortages of experienced digital health and ICT professionals. This has meant contractor resources continued to be required to ensure the program could maintain delivery momentum and access critical specialist capability. It's also important to note that the scale, specialist requirements and pace of delivery associated with implementing a statewide digital health transformation has meant, and continues to mean, that we need highly specialised ICT resources that are not readily available through the local labour market. As a result, I'm advised that the department's reliance on specialist ICT contract labour for this program is significantly greater than that typically required for standard agency ICT projects.

In relation to contract hire specifically, the secretary's advice is that the department has used open market procurement in consultation with Crown Law to ensure transparency and effective delivery. The policy settings do not allow an ICT labour hire panel, so contractors must be engaged through individual procurements. This has resulted in a higher number of smaller contracts tied to specific roles or timeframes.

I understand the department initially raised concerns around these limitations with Treasury and Crown Law in 2021, which have continued, especially in the last 12 months as Bluegum has progressed. Pleasingly, I'm advised that as of 15 July 2026, in consultation with and supported by the Department of Treasury and Finance, new arrangements for the procurement of ICT labour hire have been implemented to ensure full compliance with the Treasurer's instructions and strengthen procurement governance.

More broadly, we remain committed to continuing to deliver the digital health transformation process. Further, significant investment to date for this project will grow as we deliver the electronic medical record in coming years, so it's clear that there's additional ministerial oversight needed. Accordingly, following discussions with the department and with the Treasurer, I can advise the house that I've written to the Treasurer to set up monthly reporting on the progress and financial performance of the program, including monthly meetings chaired by the secretary -

The SPEAKER - The honourable minister's time has expired.

Supplementary Question

Ms BURNET - I thank the minister for this answer about something I didn't specifically ask. It's good to hear about the problems with Bluegum, but minister, compliance with established procurement requirements is not optional. It's fundamental to accountability, transparency and demonstrating value for money. According to the report, 32 parties were awarded between two and ten contracts, and16 parties were awarded more than 10 contracts. The public should know who these companies are. Will you table those records? That's more general; not just for the ICT contract.

Mrs ARCHER - Thanks for the supplementary question. The answer to your question:the full list was tabled in the Legislative Council on Tuesday.