AI can help the government spend billions better. But humans have to be in charge – The Conversation

Report on Sustainable Public Procurement in New Zealand and the Role of Artificial Intelligence

Introduction: Aligning Public Expenditure with Sustainable Development Goals (SDGs)

The New Zealand government’s annual public procurement expenditure of approximately NZ$51.5 billion, representing 20% of the nation’s GDP, presents a significant opportunity to advance the Sustainable Development Goals (SDGs). Government Procurement Rules now mandate that public agencies leverage this purchasing power to generate broader social, economic, and environmental benefits, moving beyond simple cost-based assessments.

• SDG 8 (Decent Work and Economic Growth): Procurement decisions can stimulate local economies by creating employment and supporting local supply chains.
• SDG 10 (Reduced Inequalities): Strategic sourcing can create opportunities for underrepresented groups, including Māori and Pasifika businesses.
• SDG 12 (Responsible Consumption and Production): Prioritising sustainable suppliers and materials designed for reuse and recycling directly supports responsible production patterns.
• SDG 13 (Climate Action): Choices in procurement, such as investing in renewable energy infrastructure and low-emission vehicle fleets, are critical for reducing national carbon emissions.

Despite these objectives, many public procurement teams face challenges in implementation due to a lack of specialised tools, time, and expertise. Artificial Intelligence (AI) is emerging as a potential solution to bridge this gap.

The Application of AI to Enhance SDG-Aligned Procurement

AI offers the potential to automate complex tasks and analyse vast datasets, enabling procurement officials to make more informed decisions that align with sustainability targets. The integration of AI can support the entire procurement lifecycle.

Phases of AI Integration in the Procurement Cycle

1. Planning Phase: AI tools can analyse historical contract data to forecast demand and identify opportunities for more sustainable spending. This supports strategic alignment with SDG 12 and SDG 13 by identifying high-impact areas for emission reduction and resource efficiency.
2. Tendering Phase: During supplier selection, AI can automate the verification of sustainability certifications and flag suppliers with histories of environmental or labour violations. This enhances due diligence and upholds standards related to SDG 8 (fair labour) and SDG 16 (strong institutions).
3. Contract Management Phase: Post-award, AI systems can monitor supplier performance against contractual sustainability targets in real-time. This ensures accountability for commitments such as emission reductions or adherence to fair labour standards, reinforcing progress towards multiple SDGs.

Risks and Considerations for Responsible AI Implementation

While AI presents significant opportunities, its adoption requires robust human oversight to mitigate inherent risks that could undermine SDG principles. Government institutions must prioritise citizen rights, data privacy, and security in the deployment of AI technologies.

Key Challenges to SDG Alignment

• Algorithmic Bias: AI systems trained on skewed or incomplete data can perpetuate and amplify existing inequalities. This poses a direct threat to SDG 10 (Reduced Inequalities) by potentially favouring large, established suppliers over smaller, local, or minority-owned businesses. The Dutch child-benefits scandal serves as a stark warning of the devastating social consequences of biased algorithms.
• Lack of Transparency: Many AI models operate as “black boxes,” making their decision-making processes difficult to scrutinise. This lack of transparency is incompatible with SDG 16 (Peace, Justice and Strong Institutions), which requires accountability and fairness in public administration.
• Environmental Footprint: The significant energy consumption required to train large AI models presents a potential conflict with SDG 13 (Climate Action). The pursuit of AI-driven efficiencies must be balanced with the adoption of greener computing practices to avoid undermining environmental goals.

Conclusion: Augmenting Human Judgment for Sustainable Outcomes

Artificial Intelligence has the potential to transform public procurement into a more strategic, fair, and sustainable function. The primary goal of AI implementation should be to enhance, not replace, human judgment. When adopted responsibly and with careful oversight, AI can empower public buyers to make better-informed choices, effectively monitor sustainability performance, and ensure that public funds deliver tangible benefits for people, communities, and the planet, thereby accelerating progress towards the Sustainable Development Goals.

Sustainable Development Goals (SDGs) Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on New Zealand’s public procurement strategy and the potential use of AI addresses several Sustainable Development Goals (SDGs). The core theme of using government spending to achieve positive social, economic, and environmental outcomes connects directly to the 2030 Agenda for Sustainable Development.

• SDG 8: Decent Work and Economic Growth: The article emphasizes using procurement to create “local employment,” support “local supply chains,” and promote “fair labour standards,” which are central to fostering inclusive economic growth.
• SDG 9: Industry, Innovation, and Infrastructure: The discussion on procuring “bridges and hospitals” and “renewable-energy infrastructure,” as well as the extensive focus on leveraging Artificial Intelligence (AI) to innovate and improve procurement processes, aligns with this goal.
• SDG 10: Reduced Inequalities: The article highlights the goal of creating “opportunities for Māori and Pasifika businesses” and warns against AI’s potential for “algorithmic bias” that can “amplify inequalities,” directly addressing the need to reduce inequality within society.
• SDG 12: Responsible Consumption and Production: This is a primary focus of the article. The entire concept of sustainable public procurement—choosing “sustainable suppliers and materials,” reducing waste through products “designed for reuse and recycling,” and ensuring government spending is responsible—is the essence of SDG 12.
• SDG 13: Climate Action: The article explicitly mentions that procurement can “drive climate emissions” and that a key objective is “reducing carbon emissions,” for instance, by replacing “high-emission vehicles with low-emission fleets.”
• SDG 16: Peace, Justice, and Strong Institutions: The need for “transparency, fairness, and competition” in government spending is a recurring theme. The article discusses improving the integrity of institutions while ensuring they are accountable and protect citizens’ rights, which is fundamental to SDG 16.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the issues discussed, several specific SDG targets can be identified:

1. Target 8.3 (under SDG 8): Promote development-oriented policies that support decent job creation and the growth of micro-, small- and medium-sized enterprises.
   • Explanation: The article directly supports this target by mentioning that procurement rules aim to add social value by “creating local employment” and providing “opportunities for Māori and Pasifika businesses,” which are often small or medium-sized enterprises.
2. Target 9.1 (under SDG 9): Develop quality, reliable, sustainable and resilient infrastructure.
   • Explanation: The article states that governments rely on public procurement to “build bridges and hospitals” and purchase “renewable-energy infrastructure,” which are key components of sustainable and resilient infrastructure.
3. Target 10.2 (under SDG 10): Empower and promote the social and economic inclusion of all.
   • Explanation: This target is addressed through the specific mention of creating procurement “opportunities for Māori and Pasifika businesses,” aiming to foster their economic inclusion.
4. Target 12.7 (under SDG 12): Promote public procurement practices that are sustainable, in accordance with national policies and priorities.
   • Explanation: The entire article is centered on this target. It discusses New Zealand’s “Government Procurement Rules” that require public agencies to consider environmental and social benefits, such as “reducing carbon emissions” and choosing “products designed for reuse and recycling.”
5. Target 13.2 (under SDG 13): Integrate climate change measures into national policies, strategies and planning.
   • Explanation: The integration of sustainability and environmental considerations, specifically “reducing carbon emissions,” into the “Government Procurement Rules” is a direct example of integrating climate action into national policy.
6. Target 16.6 (under SDG 16): Develop effective, accountable and transparent institutions at all levels.
   • Explanation: The article stresses that “ensuring transparency, fairness and competition is essential” in public procurement. It also highlights the risk of non-transparent “black box” AI systems, reinforcing that in public procurement, “accountability is fundamental.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article implies several indicators that could be used to measure progress, even if they are not stated with official SDG indicator codes:

• For SDG 8:
  • Number of local jobs created through government contracts.
  • Value and percentage of procurement contracts awarded to small, local, Māori, and Pasifika businesses.
  • Number of suppliers verified for adhering to “fair labour standards.”
• For SDG 9:
  • Amount of public funds invested in sustainable infrastructure projects like “renewable-energy infrastructure.”
  • Adoption rate of AI systems within public procurement agencies to enhance efficiency and sustainability analysis.
• For SDG 10:
  • Proportion of total procurement value awarded to businesses owned by underrepresented groups (Māori and Pasifika).
  • Implementation of audits to check AI procurement tools for “algorithmic bias.”
• For SDG 12:
  • The total value (NZ$51.5 billion) and proportion of public procurement that includes sustainability criteria.
  • Percentage of procured products that are designed for “reuse and recycling.”
• For SDG 13:
  • Measured reduction in carbon emissions across government supply chains.
  • Number of “high-emission vehicles” replaced with “low-emission fleets” in the government’s portfolio.
• For SDG 16:
  • Level of public access to procurement data and decisions to ensure transparency.
  • Number of “irregularities” in contracts detected and resolved, as exemplified by the “Alice” AI system in Brazil.

4. Summary Table of SDGs, Targets, and Indicators

Source: au.news.yahoo.com