Labor doubles SME target share of $70b in govt contracts

Joseph Brookes
Senior Reporter

The Commonwealth Procurement Rules have been changed to give small and medium sized businesses a bigger slice of the $70 billion the federal government spends annually on contracts and to force agencies to consider the climate impacts of bids.

The Albanese government on Friday doubled the previous commitment of non-corporate Commonwealth entities sourcing at least 10 per cent of their procurement by value to 20 per cent.

Federal government buyers will also now be required to approach multiple suppliers on a standing offer arrangement to encourage genuine competition in the panel arrangements.

Finance minister Katy Gallagher

The “climate change impact” of goods and services the government procures must also now be considered. Previous Commonwealth Procurement Rules (CPR) required agencies to consider the environmental sustainability but not necessarily climate change impacts.

The new government said the climate consideration goes hand in hand with its target of 43 per cent emissions reduction by 2030 and net zero by 2050, which Labor intends to legislate as soon as Parliament sits.

The other new addition to the CPRs is a requirement for buyers to consider multiple suppliers in panel arrangements.

“To maximise competition, officials should, where possible, approach multiple potential suppliers on a standing offer,” the new rules say.

The new CPRs came into effect Friday.

“This announcement is a clear demonstration that we won’t waste time when it comes to taking practical steps to support businesses to grow, create more jobs and ultimately help to boost the Australian economy,” Finance minister Katy Gallagher said.

The new CPRs are the first move in Labor’s “Buy Australia Plan” which it took to the election.

As part of the plan, a ‘Future Made-in-Australia’ office will be established within the Department of Finance backed by new laws to support key parts of the new CPRs.

Other initiatives under the plan include breaking down large infrastructure tenders to give SMEs better access, more opportunities for First Nations businesses, and new scrutiny of suppliers tax matters and employment conditions.

Labor also promised to clean up the reporting of tenders on the Austender website, where little detail is currently required and reporting errors often occur.

Ms Gallagher said Labor will have “more to say” on the Buy Australian Plan, but the CPRs represent the first step and were developed in time for the new financial year.

SMES continue to be considered Australian or New Zealand firm with fewer than 200 full-time equivalent employees.

Do you know more? Contact James Riley via Email.

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