Australian senators Xenophon and Madigan plan local sourcing bill

14 September 2015

Legislation to help local businesses benefit from government contracts is being drafted in Australia.

Independent senators Nick Xenophon and John Madigan are preparing a private senators' bill aimed at getting federal government to consider the benefit to local jobs when procuring goods and services, rather than making decisions based only on price.

The government is under pressure from unions to make a commitment to use Australian steel on government projects, after BlueScope announced that it would have to cut costs by AUS$200 million or close the blast furnace at its Port Kembla plant in Illawarra, New South Wales, with the loss of 5,000 direct and indirect jobs.

Independent senator for South Australia Nick Xenophon said he was drafting legislation, along with senator John Madigan, that would make it much easier for local participation in public procurement. The pair also want better accountability and reporting of the AUS$40 billion in annual purchasing.

"At the core of the legislation there will be a presumption that you should procure locally unless there is a good reason not to,” he said.

Under the bill, procurement decisions would have to adequately consider the broader economic benefits of sourcing locally including employment, tax and the 'whole-of-life' costs of projects.

Xenophon said it made no sense to give a contract to a foreign company when the economic benefits of buying locally would be worth more than the cost savings of the contract.

He added he wanted to see annual reporting and monitoring of procurement policies, and that there should be a “buy Australian” approach. Xenophon also said if procurement had taken into account local impact, the steel industry would not be in crisis.

The Australian Workers’ Union said it was calling on the government to do more to support the Port Kembla steelworks through policy changes and new legislation that “puts Australian steel making jobs first”. It also noted other countries were apply various defences to protect their steel industries, and called on the Australian government to do the same.

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