Updated 10.55 6th December 2016
Patrick Durrant | Sydney
A Government concession forced by SA Senator Nick Xenophon on Commonwealth procurement rules will give local industry an advantage in bidding for a share of the $60 billion of annual procurement.
The Government has been forced to concede its position on the rules in order to get its Australian Building and Construction Commission (ABCC) bill through the Senate before the cessation of Parliament on December 2.
“This is a big deal, this is a significant, massive change in procurement laws in this country and I absolutely commend the Government on going down this path,” Senator Xenophon said.
“This is a big deal, this is a significant, massive change in procurement laws in this country.”
Xenophon wielded considerable power in extracting the about face from the Government, and said he “almost felt like a Minister without the pay rise”.
Finance Minister Mathias Cormann revealed to the late night sitting in the Senate that the Government had agreed to “some improvements” to the rules. Successive governments have resisted changes to them, arguing that giving local business an advantage in bidding taxpayer-funded contracts would damage Australia's free-trade credentials.
Suppliers bidding for Government projects worth more than $4 million will now have to show they are sourcing locally produced materials, contributing to local employment and skills, and benefitting the wider economy. They would also need to satisfy the requirement that their offering conformed to local standards.
The sheer extent of the concession was perhaps best exemplified by the response given by Labor Senator and Shadow Industry Minister Kim Carr, who had spent many years trying to force similar amendments to the legislation.
“I congratulate the proponents of this measure, it’s unusual for me to do that; I acknowledge that this is a very significant change which the Labor Party supports.”
He was however somewhat disturbed by the “desperate measures” the Government had resorted to in order to “do over building workers”, a reference to the Government having secured Senator Xenophon’s support for its controversial ABCC legislation which it needs to pass by the end of the week.
Under the new rules Government officials would also need to consider whether bidders are ethical employers, and are in compliance with occupational health and safety and environmental standards.
Senator Cormann confirmed the rules would be brought into effect in March 2017.
ADM Comment: It is well known that the Government is in the process of strengthening the Australian Industry Capability (AIC) program which currently applies to all Defence materiel projects in excess of $20 million. ADM understands the changes in the procurement rules will mean that the AIC program will apply to projects in excess of $4 million from 1 March 2017 as well as to broader Defence procurements. From that date, value for money considerations as part of AIC will also include the economic benefit of the procurement to the Australian economy.