The NSW Government has announced protectionist measures in its budget that give preference to Australian businesses tendering for state government contracts. Although being heralded in the budget, these measures have existed in procurement policy for some time, and had been one of the sticking points for the introduction of the Australian USA free trade agreement at the beginning of 2005.
NSW Treasurer Eric Roozendaal says “The NSW Government spends around $4 billion each year. It’s appropriate that we tip the balance in favour of local businesses.”
Roozendaal insists the measures aim to support local jobs which will spark a “flow on effect right through the economy.”
Australian companies with up to 500 workers will also receive a 20 per cent discount when bidding against overseas firms. An additional concession of five to six per cent on top of that initial 20 per cent will be allocated to firms in rural and regional areas.
Mr Roozendaal insists about 500 000 small and medium sized businesses could benefit from this preferential policy.
According to Intermedium’s data, there are approximately 1,600 Australian companies, who fit the definition of small to medium enterprises that supply ICT goods and services to Federal Government. Just how this announcement will benefit those from NSW is not immediately apparent, given panel contracts arrangements which preclude non-panel members for bidding for government ICT contracts.
This initiative could further weaken the State Budget’s bottom line as this indicates that the NSW Government would be willing to pay a premium for a proportion of the $4 billion worth of goods and services it purchases every year.
NSW Premier Nathan Rees and Roozendaal insist that this policy is not a ban on imports but rather an application of the NSW Government using their spending strength to aid the local economy through this tough economic time.
In an interview with Sky News Australia Foreign Minister Stephen Smith says any local government procurement policy will have to fall within the guidelines of Australia’s FTA’s and obligations to the WTO. Smith says that “Australia very strongly believes that the way to get through difficult economic times is by promoting access to each other’s markets, not by retreating to protectionism.”