NSW Government changes procurement rules to support local industry

The NSW Government has announced it will introduce a series of measures to support NSW jobs and businesses and encourage the development of local industries, removing barriers to local growth. The government says the changes will transform the way the government spends its procurement dollars on goods and services.

Minister for Domestic Manufacturing and Government Procurement Courtney Houssos will on Tuesday instruct the NSW Procurement Board to axe the previous state government’s prohibitions on local content rules. Those rules made it unlawful for NSW Government agencies to seek, or even consider, local employment and business growth opportunities at any stage of the procurement process.

NSW Government agencies can now consider local content and local development opportunities when suppliers bid for government contracts.

To ensure agencies embrace the policy reversal, Houssos has issued a new direction to the NSW Procurement Board called ‘If not, why not’. Under this direction, the NSW Procurement Board will mandate that NSW Government agencies engage with local NSW suppliers before going to tender for projects worth more than $7.5 million.

The new rules also mandate that if a contract worth more than $7.5 million is awarded to a supplier outside of NSW, agencies will need to undergo a ‘please explain’ process prior to the contract being awarded, outlining why a local supplier was not successful.

While upholding Australia’s free trade obligations that prevent discriminating against suppliers because of where they’re based or owned, this policy is aimed at refocusing agencies on supporting jobs and local production in NSW.

Purchasing the cheapest goods and services does not always equate to ‘value for money’ for the people of NSW. According to the government, a more robust approach to ‘value for money’ considers factors like supporting employment opportunities and developing regional economies.

The state government will also legislate to create the Jobs First Commission to oversee the implementation and enforcement of local content measures. It will help grow domestic industries and jobs for local workers.

This includes enacting key measures including:

• A local content policy which will implement an election commitment to apply a minimum 30% weighting to NSW Government tenders worth more than $7.5 million that captures local content, job creation, small business and ethical supply chains.
• A Future Skills Guarantee with workforce targets, including that 20% of the trades workforce on NSW Government construction or infrastructure contracts valued above $7.5 million are apprentices.
• An independent advisory board with representation from across industry, small business, unions and the public sector to provide ongoing engagement with, and advice on, government procurement policies as well as local development and industry growth strategies.
• Appointing a Job First Commissioner conferred with ‘name and shame’ and other compliance and enforcement powers. This will ensure all parties, including NSW agencies, adhere to the government’s procurement rules and standards, in particular the new tender weightings rules and local content and skills requirements.
   

The definition of ‘local content’ under the Jobs First Commission legislation will be any Australia or New Zealand-based enterprise.

“Businesses and workers in NSW have so much to offer — not just to government but to all consumers,” Houssos said. “These changes will support our local industries and give them new opportunities to secure a larger slice of the NSW Government’s $42 billion procurement spend.

“Our announcement today delivers the next step on an important election commitment we made to support local jobs and local businesses.

“The former government’s ideological zealotry harmed local industries, local businesses and local workers.”

“NSW has the most innovative and dynamic businesses in the nation. It makes sense for the NSW Government to invest in those companies,” said Minister for Industry and Trade Anoulack Chanthivong. “Our state has all the ingredients to be a manufacturing powerhouse, but we need to pull all of the levers available to realise that ambition. Government procurement is a powerful tool to boost industry growth.

“When boardrooms are making big investment decisions, they need to know that NSW has the skills and capabilities for manufacturing and these changes will send a powerful signal.”

“Not only will this decision supercharge our manufacturing base, it will also boost local skills development and drive innovation,” said Business NSW CEO Dan Hunter. “NSW has the biggest and most sophisticated private enterprise economy in the country, and this decision will go some way to ensuring we remain the best place to start and develop a business.

“NSW’s small and medium businesses have always been happy to compete with the big players when it comes to winning government contracts — they just need a level playing field.”

The revocation of the previous government’s anti-local content provisions will take effect within 45 days, while the ‘If not, why not’ direction will come into effect on 1 January 2025. Consultation on an exposure draft of legislation to establish the Jobs First Commission is targeted to be released by the end of the year.

Image credit: iStock.com/Steven Tritton