Australian government should prefer local products to foreign imports

CIPS 6 January 2014

The Australian government has been accused of preferring to buy cheaper, imported products over domestically produced goods.

The criticism has come from trade bodies, including the Council of Textile and Fashion Industries of Australia (TFIA) in submissions to a government inquiry into the nation’s procurement procedures.

The TFIA said although the Australian Defence Force has specified it will source combat clothing from Australia, business investments could “easily undermined by a decision made on a cheaper import”.

“Right now there is a risk that we spend a lot of money developing capability in Australia and then it loses out to a price and quality inferior item from overseas,” the submission added. It pointed to the Berry Amendment in the US which the government, to use local providers for most defence purchases no matter the perceived cost.

TFIA also said there is a “severe regulatory process” Australian companies have to go through to show they trade ethically before they can become a government supplier. But this is not a requirement for international vendors.

Australian Paper, which owns the Reflex brand, added the government buys 55 per cent of its copy paper requirements from Europe and Asia. “That’s 1.2 imported reams of copy paper for every Australian-made ream,” the company’s submission said.

The Australian Manufacturing Workers’ Union accused the government of making decisions “with a short-term and limited focus on cost minimisation with respect to individual contracts, rather than true value for money and national interest considerations”.

The Australian Council of Trade Unions called for contracts to small and medium local suppliers, where applicable, to be “maximised to support the growth and capacity of these businesses”.

It added: “Contracts should only be awarded totally offshore in circumstances where it is evidenced that the goods cannot be sourced locally. Where components of the goods are thus available locally, preference should be given to those contractors who maximise the use of local providers.”

The Department of Finance said 93 per cent of its services are provided by Australian suppliers, worth $60.2 billion (£36.6 billion), over the last three financial years. It added that 60 per cent of its goods came from Australian suppliers, totalling $28.7 billion (£17.5 billion).

Its submission also said the government’s procurement policy framework is “non-discriminatory in nature”. “Achieving value for money is the core principle of the Commonwealth Procurement Rules and the cost of the goods and services to be procured is not the sole determining factor in assessing value for money,” it added.

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