NZ government promises public contract reform

15 March 2013

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17 March 2013 | Anna Reynolds

The New Zealand government has said it will change procurement rules to make it easier for domestic suppliers to win public contracts, after the Australian government announced a similar plan in February.

After NZ manufacturing firms complained government rules were locking them out of public sector contracts, economic development minister Steven Joyce has proposed changes which will include consulting with local businesses before tender documents are prepared, and the government taking into account the whole-life costs of a project.

In response to this, Wayne Buston, general secretary of the Rail and Maritime Transport Union (RMTU) - the NZ union for rail workers – said for the government’s proposals to be of any use, they needed to take the lead from other countries like Australia, where Industry Participation Plans set out in detail how local firms should be prioritised.

It comes following a move by the political party New Zealand First which is in the process of drafting a new procurement bill – Buy New Zealand – that will come into effect whenever public contracts go to tender.

The policy would make it compulsory for government departments and local councils to give preference to New Zealand firms over foreign competitors.

It will also include measures to ensure central and local governments use New Zealand-owned banks to handle finances on tenders.

Winston Peters leader of New Zealand First said: “An independent board would be set up to review government procurement decisions based on a set of economic criteria.

“Central government alone spends NZ$30 billion (£16 billion) a year on procurement. Too many of these contracts are going offshore. Our policy would put a stop to cheap foreign labour undercutting Kiwi workers.”

In August the New Zealand government announced its intention to join the World Trade Organization's Government Procurement Agreement, which will give companies greater access in bidding for foreign public contracts but also open up domestic deals to vendors from abroad. The accession process is expected to take two years.

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