NZ procurement accused of 'disturbing mission creep'

26 April 2021

The New Zealand Taxpayers’ Union has urged the government to resist new calls for indigenous procurement policies because “procurement should be focused only on delivering value for taxpayers”.

The pressure group spoke out after supplier diversity company Amotai called for 5% of the value all government contracts to be awarded to businesses with at least 50% Māori or Pasifika ownership.

Currently NZ Government Procurement mandates that 5% of all government contracts must go to these businesses.

Taxpayers’ Union spokesman Louis Houlbrooke said: “Government procurement should be focused solely on delivering value for taxpayers. That means procuring the company that is best equipped to deliver a given service at a competitive price.

“The government is already undermining this principle with a 5% target for contracts awarded to businesses that can present themselves as Māori-owned or Pasifika-owned. Now the company that verifies these businesses wants the government to increase its spending target for these companies.”

Amotai general manager Ariana Paul told RNZ she believed government agencies were open to using a value target as opposed to the volume target currently used.

She said this approach had been used successfully overseas, leading to spending rising from the tens of millions to the hundreds of millions.

Paul said: “If you had $100 to spend, we would want you to spend at least a percentage of the $100 towards Māori and it has to be of significance so that it is actually making change.

“That’s why we feel that New Zealand can adopt at this stage, and we can accelerate to a value target really quickly because we’ve already seen that organisations are prepared to take on that target.”

Paul supported the country’s Productivity Commission, which recommended the government invest to help Māori or Pasifika-owned businesses improve capability to take on bigger contracts.

Houlbrooke said NZ public procurement was suffering from “disturbing mission creep” that would lead to less competitive tenders.

“That means either higher costs for taxpayers, lower-quality services, or both. It’s also incredibly unfair for those businesses – many of which employ Māori – that will miss out on contracts purely because they couldn’t tick the right diversity boxes,” he said.

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