Local supplier preference bill debated in New Zealand

16 July 2010

16 July 2010 | Anusha Bradley in Auckland

A bill that paves the way for local suppliers to be given preference when bidding for major public procurement contracts in New Zealand has fuelled debate among politicians, companies and unions.

Clare Curran, an opposition party Labour MP, has launched a members’ bill in parliament calling for an inquiry to examine the government’s procurement policies, compare them against those of other countries and establish whether preference can be given to local firms without breaching international trade obligations.

“Most of our trading partners have clauses giving preference to local companies in tendering for government contracts,” Curran said. “These policies recognise that value for money is about a broader economic benefit, not just about lowest price.”

Her bill was sparked by the reluctance of state-owned KiwiRail to order NZ$500 million (£232 million) of new trains from local firms, even though independent research showed it would create 1,275 new jobs.

Phil O’Reilly, chief executive of employers’ group Business New Zealand, has spoken out against local supplier preference on the grounds that companies didn’t want special treatment but simply a “fair go”.

He said the life cost of a contract should be considered, as local firms could often give much better value. “Procurement training policies for the state sector are now under way and this should help to change undesirable procurement behaviour by some government agencies,” he said.

The country’s unions are backing Curran’s Kiwi jobs bill, introduced on 14 July. They say it could help New Zealand companies and the economy.

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