NSW Labor’s procurement reforms ‘cost neutral’

Joseph Brookes
Senior Reporter

Improving small business access to government tendering and significantly increasing the number of contracts going to the smaller suppliers would have a neutral impact on the state Budget, according to official election commitment costings revealed this week.

Outlined in a costing released on Monday, the finding is an examination of Labor’s Small Business Package for this month’s state election and comes after struggles to lift local procurement outcomes by the current government.

The small business package commits a Chris Minns government to increase the amount of government procurement coming from small businesses to 20 per cent by 2026, and to 30 per cent by 2030.


The Labor package also pledges to give preference to local small businesses in tender application reviews, reduce insurance hurdles, simplify pre-qualification, and increase the limit for agencies to directly negotiate with small businesses from $150,000 to $250,000.

The NSW Parliamentary Budget Office (PBO) found the package would be “cost neutral” with no direct impact on a budget already with a $12 billion deficit.

“Preferring local small businesses can increase government procurement costs by limiting competition. However, the PBO considers that lowering tender costs for small business procurement (through changed insurance requirements and other proposed changes), would result in this policy being cost-neutral,” the costings say.

“The PBO assumes there will be no budget impact over the forward estimates.”

The changes under a Minns government would apply to all small business tenderers but are a potential help for the local technology sector. Despite a government push, the state is yet to hit its target of spending 30 per cent of its annual technology procurement budget with local small to medium-sized enterprise.

It could also help broaden a $1 billion state government consultancy market that now sees just four international firms take a quarter of the spend, often through poor procurement practices.

Labor outlined its procurement reforms in an interview with InnovationAus.com this month, when shadow Finance and Industry minister Anoulack Chanthivong said a new government will expect change and demand the best results from public investments.

“The public sector should lead by example,” Mr Chanthivong said.

“Because this is about ensuring that our future economy is resilient, has national sovereignty and capability, and owns the intellectual properties and the innovation and the research that comes along with using the powers of the public purse.

“[It must be] the public purse for the public good.”

Labor has also pledged to redefine the longstanding ‘value for money’ consideration to capture retained economic benefits as part of its procurement reforms.

Overseeing the new approach would be a new Jobs First Commission, which would also provide support for businesses to bid for government tenders.

Do you know more? Contact James Riley via Email.

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