Dominello urges multinationals to ‘buddy-up’

James Riley
Editorial Director

NSW Customer Service minister Victor Dominello has urged multinational tech companies seeking access to the state’s extraordinary $2.1 billion Digital Restart Fund to “partner up” and help build local tech and digital capability.

Although NSW had not mandated local participation rates in government procurement, Mr Dominello said there was a clear expectation that big tech multinationals find ways to build partnerships with local SMEs and startups that resulted in capability uplift.

The NSW government unveiled a $1.6 billion Digital Restart Fund last year as both an economic stimulus measure to rebuild after the lockdowns and disruptions of 2020, and also a lever of industrial policy to build and strengthen local companies.

An additional $500 million was added to the fund last month, an unprecedented pool of money being directed at tech uplift.

“That’s a lot of grunt we have in the engine now that we didn’t have before,” Mr Dominello told InnovationAus during a wide-ranging interview on the Commercial Disco podcast – to be published via this site and Podbean on Friday.

Victor Dominello
Victor Dominello: Wants the tech giants to do more in building local capability

But Mr Dominello poured cold water on widespread push among local tech suppliers for governments to mandate a level of local participation in public sector tech procurement contracts as the best means of building sovereign capability in key tech supply chains.

He also dismissed the notion of imposing a ‘Retained Economic Benefit’ criteria to tech procurement decisions, confirming to InnovationAus that the advice from the federal Trade department that such a yardstick would breach Free Trade Agreements that the Commonwealth had signed with partners, including the United States.

By including a Retained Economic Benefit measure in procurement decisions – with criteria such as where the supplier is ultimately domiciled, where its intellectual property resides, where it pays taxes, and where it employs researchers – would potentially be tipped toward Australian companies.

Mr Dominello said that the rhetoric behind the creation of a ‘Made in Australia’ office was “fine”, but in practical terms it would not work. The Australian Information Industry Association last month called for the federal government to create a Made in Australia office as a way to encourage sourcing from local tech companies.

The NSW government formally adopted adopted local procurement targets recommended by its ICT/Digital Soveriegn Procurement Taskforce: a minimum 25 per cent of contract of contracts valued at $3 million or more must be directed to locals SMEs (via subcontracting arrangements) 30 per cent of NSW government total spend on ICT must be with SMEs.

These are not mandated targets, but remained the best way to build SME participation, Mr Dominello said. And there was a clear expectation that the multinational tech giants get on board.

The reality is that the state government – and other governments around Australia – needed to work with these highly innovative tech companies from the US and elsewhere, Mr Dominello said.

“But when they come here and they want to play in our patch, my message to them is that they need to partner-up,” he told InnovationAus. “You can come here and just be an island [without local partners], but that’s of no value to us.”

“That means you must buddy-up with SMEs in NSW in order to access part of that $2.1 billion [digital restart fund]. That’s the most important lever that we have.”

Mr Dominello said in the context of geopolitical strategic tensions and COVID tech supply chains issues, that big tech multinationals should see building local capability as being in their own self-interest – even invoking the key strength of the so-called Five Eyes intelligence sharing network if the US, Australia, New Zealand, Canada and the UK.

“You do not want Australia to be a passenger. As part of the Five Eyes, you want Australia to be a strong participant,” he said.

“It is absolutely great that the tech giants from the US in particular are doing so well and innovating and forging ahead. But truly, you need to make sure that you’re partnering up with us to make sure that we can build our capacity as well.’

“Because a strong Australia becomes a part of a strong network – and if we’re just a passenger, that puts a lot of weight on [them],” Mr Dominello said.

“They understand that, and that’s probably the biggest lever we’ve got; to make sure the big tech’s are helping us cultivate our local environment as well.”

Do you know more? Contact James Riley via Email.

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