David Elliot has been agitating for public sector procurement reforms that would make it easier for small Australian technology companies to sell to the federal government for 20 years.
As the founder of Canberra-based software engineering outfit Agile Digital, he has been pushing this barrow since the Howard era.
In that time, the most significant progress – and by far the most positive change – was made in the last year through the persistent advocacy of former Industry minister Ed Husic, with Finance minister Katy Gallagher.
These changes to the Commonwealth Procurement Rules (CPRs) come into effect from the middle of the year, including the introduction of a more sensible definition of what is an Australia business, which will enable much better visibility of where government is spending its money.
Up until now, any company with an ABN – and Australian Business Number – could be classified as an Australian business. This meant that the local subsidiary of multinational corporations could be defined as Australian.
This made tracking strategic procurement difficult. Making decisions about spending Australia taxpayers’ dollars in support of goals such as sovereign capability development or to maximise the retained economic benefits of that spending was virtually impossible.
So the reforms that were championed by Mr Husic and carried through by the Finance minister are a substantial, once-in-a-generation positive improvement to the CPRs that will benefit domestic capability development and Australian tech companies.
In this short interview with the Commercial Disco podcast, Mr Elliot says the improved metrics that the new definition of an Australian company should help to enable a clear plan of action around improving sovereign AI capability and securing data and software supply chains.
“For the last 10 or15 years, whenever you speak to government and say, ‘we have a problem in terms of sovereign capability and procuring from Australian businesses’, they will pull out a pie-chart and say, ‘See? We’re buying heaps from Australian businesses’,” he said.
“What they really mean is they are buying from entities that have an ABN. So the reporting has always been a [problem]. And Minister Gallagher saw that, and she wanted to get clean reports so that she would understand the truth of procurement.”
The definition that the government landed on puts in place a simple, three-part test. Where is the company headquartered, where does its intellectual property reside, and where are its controlling decisions made.
With the changes coming into effect from July 1, it at least means that in 12 months’ time, if the Finance minister asks for data about SME participation in federal tech procurement, the numbers will be make sense.
“When it comes into effect in six weeks, that will allow the Department of Finance to make reports that are meaningful to say, what is the procurement mix in federal government [of Australian tech companies].”
Mr Elliot is the current chair of the Australian Information Industry Association (AIIA) domestic capabilities policy advisory network.
While he does not speak on behalf of the AIIA, as the founder of a software company that creates IP, sells to government and is active in the industry group’s domestic capabilities policy discussions, he is very familiar with the issues.
He says Mr Husic should be acknowledged for his advocacy of Australian tech companies in relation to government procurement.
“Ed Husic came into that role well prepared. He was very active in his time in the backbench [prior to the 2022 election] in speaking with Australian companies,” Mr Elliot said.
“So he came with a clear agenda to lift the profile of Australian technology and the Australian industry, and he was obviously a big part of pushing for the Future Made in Australia initiative from the Albanese government.”
Shifting the CPRs is like pushing a very large, $80 billion rock uphill up hill – because its an $80 billion rock in which everyone has a vested interest that can push in different directions.
The substantial progress made in the last term of government was impressive, he says.
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