MOTIONS - Commonwealth Procurement Policy
Thursday, 27 March 2014
I only have a limited amount of time available to me, but I do recognise that government procurement is an attractive option as a solution to shoring up local manufacturers. I understand that. Australian manufacturers would love to have something like the Buy American Act, just as Australian farmers would like our own version of the American farm bill. But we know that the role of government is both to protect the taxpayer dollar and to support local business by decreasing regulation, encouraging competition and allowing capital to flow.
I do not want to pre-empt the Senate Finance and Public Administration References Committee inquiry that is currently underway, but one of the issues that was raised with the committee was the proposition of value for money and how we define it. Like trying to come to terms with the vague concept of national interest, it is difficult to define. But it does need to include a whole-of-life examination of the product being bought.
Senator Lundy, in her contribution, commented on the issue of how best to support SMEs and the role of direct sourcing policies in doing so. The inquiry heard evidence that the ANAO has issues with how some of our departments and agencies are using the direct sourcing policy and applying the notion of value for money. The ANAO's concern is that departments and agencies are not looking at their purchases in a holistic manner but going straight for the lowest cost supplier. I think the inquiry is going to flesh out that issue further.
It is an important inquiry in the context of a manufacturing sector which is facing serious challenges to its viability and sustainability, especially in a world that is becoming more and more protectionist. A recent British announcement about procurement is a case in point. They are going to be encouraging British schools to buy local products. I support local products and produce being sold in our schools and indeed our hospitals, but if that British announcement is any example, this is not just an issue that Australia is looking at but one being looked at by countries right around the world.
We are being forced to look at the processes and standards that we apply to goods produced on Australian soil—and those that we apply to goods that are imported. From the submissions to the inquiry, one of the strongest themes has been about making the tender process fairer for Australian companies. The submission from Australian Paper, located in beautiful Gippsland in my home state of Victoria, made a good point that the environmental laws under which Australian companies operate are onerous. I know that the member for Gippsland, Darren Chester, has tabled a petition with over 4,000 signatures to that effect in the other place. Exposing Australian businesses to international competition should be encouraged. It keeps us nimble and flexible. For the immediately foreseeable future, those are exactly the characteristics required to be successful. Australian companies can and do compete on price alone, but we should be doing everything we can to make that easier.
The submission from the Council of Textile and Fashion Industries made quite an impact on me. Local companies have to sign up with Ethical Clothing Australia before they can tender for a government contract. Their overseas competitors, however, do not. So our local companies are effectively being unfairly discriminated against as a result of our procurement processes and policy. Thanks to the coalition's repeal day yesterday, that unnecessary and unfair regulation has been removed. I will be writing to the parliamentary secretary, Josh Frydenberg, to congratulate him on that effort.
The Australian government is committed to supporting our local defence industry. In this regard, Defence expect to spend $5.4 billion on equipment acquisition and support in Australia this financial year. This equates to around 60 per cent of DMO's military equipment acquisition and support expenditure this year. I have a lot more to say about the international arena and what other countries are doing to support their local manufacturing industries and service industries, but I will save that for another time.