Speaking at the National Press Club on Wednesday, the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, revealed that just 26 per cent of the 80,000 contracts published on AusTender in 2018–19 were awarded to SMEs.
“That’s even though 94 per cent of those contracts were valued at under $1 million and well over half were worth less than $80,000. It is clear small businesses should get a larger slice of that pie,” Ms Carnell said.
But small businesses often don’t get a look-in, because the first step of the procurement process often requires the business to be on a panel.
“This can be an extraordinarily costly and onerous exercise and doesn’t even guarantee an opportunity to tender,” Ms Carnell said.
“The culture of risk-averse government departments handing contracts to big businesses needs to be a thing of the past.”
The best way to do this, she opined, is to establish an SME procurement panel to manage government contracts valued up to $10 million.
“In fact, if an Australian SME misses out on a contract, it should be up to the government department to explain why.”
Referencing the German Mittelstand — the small- to medium-sized business sector which accounts for over half of the country’s GDP and has long been hailed as a model for success — Ms Carnell argued that opening the world of government contracts to small business yields economic growth.
“One of the reasons for this is to grow small businesses and develop a strong middle-sized business sector in Australia, which is fundamental for growth. We should model this on the success of the German Mittelstand,” she said.
“Remember lowest cost does not always represent the best value for money. I would argue strongly that prioritising Australian SMEs will pay dividends to the entire economy.”
During her wide-ranging speech, Ms Carnell also called on the government to introduce a small-business viability voucher program to help small businesses access vital financial advice ahead of a predicted uptick of insolvencies.
“A tailored financial plan is critical for small businesses to survive, grow and employ,” Ms Carnell stressed.
“They know [small-business owners] when JobKeeper and other things go, they’re going to need a plan and they need to do that now.”
She explained that small-business owners are experiencing significant financial distress, and while they need the help of an adviser, many may not be able to afford one.