The federal opposition has outlined plans to help SMEs win more work through government tenders, in a bid to open up more of the $50 billion in expenditure going to local businesses.
In a statement dated 21 January, Labor said that if it wins power in the federal election (likely to be held in May), it would put pressure on government departments to pursue SME contracts over those put forward by multinationals, which it claimed “don’t care about locals and don’t pay tax in Australia”.
It said that federal government departments and agencies collectively spend around $50 billion each year on goods and services — on top of its multibillion-dollar spend on infrastructure, energy and resources — and that because of this sizeable volume, “how the government spends that money, how it contracts and who it contracts matters”.
Under a Shorten government, departments and agencies would need to “properly consider the economic benefit that local businesses provide”, while projects over $10 million in value would require bidders to document support for local jobs.
Government agencies would also need to consider plans to support Australian businesses as part of the tender process itself, not once the contract has already been awarded.
Other aspects of the proposal include requiring successful tenders to nominate a dedicated SME liaison person to engage directly with local SMEs about subcontracting opportunities, and to undertake labour market testing for new employees required for the tender “to ensure temporary work visa holders are not undercutting local wages”.
Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, said that the move “is great news for the small business sector”.
“Small businesses tell us every day they don’t want handouts, they want work. A commitment by the Labor Party to ensure that SMEs get their fair share of work is a step in the right direction,” she said.
“The dilemma is all sides of politics have committed to this, but it hasn’t happened. The challenge for Labor is to have a target of real work for SMEs, not just paperclips and catering.”
Ms Carnell said that regular audits of government contracts are needed “to ensure large companies and multinationals have delivered on their promise to engage small business” and that they also don’t screw over SMEs in their supply chain through poor payment terms.
Meanwhile, Jenny Lambert, CEO of the Australian Chamber of Commerce and Industry, welcomed a separate announcement by Labor that it would keep the small business portfolio in cabinet if it wins power.
“The business community last year appreciated the Coalition’s move to put small business back into cabinet in the most recent reshuffle. Now we know that both parties are thinking about the importance of running a small business lens over all policy that is relevant to small business,” she said.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.