FOLLOWING massive job losses in the manufacturing sector over the past year, there have been renewed calls from industry and unions for government to adopt a ‘Buy Australian’ policy for all procurement decisions.
While Australia’s WTO commitments prevent the government from issuing a ‘Buy Australia’ edict, Industry Minister Senator Carr has said government agencies should support local jobs and businesses “wherever it reasonably can”.
In a speech delivered in April, Carr said Australian businesses, especially SMEs, should expect a fair-go when it came to government contracts.
He said there was an obligation on state and local governments to better target spending, and said international obligations were not as restrictive as commonly thought, with WTO rules allowing support for SMEs, including through government procurement and the Australian Industry Involvement Program operated by the Department of Defence.
“There is certainly nothing to stop us ensuring that everyone has access to government contracts – including Australian firms, and including SMEs,” Carr said.
“It is time to start focusing on what can be done while still meeting international obligations and still meeting commitments to open trade.”
While sentiments like these have been expressed in the past with little action, industry groups say they are encouraged by Carr’s comments.
James Sturgess and Paul Dowling from the South East Melbourne Manufacturers Alliance (SEMMA) told Manufacturers’ Monthly they believe the current economic climate is pushing Government to be more proactive about implementing existing policies designed to encourage more local industry participation.
“There is a need to change the way things are done, and I think Carr recognises this,” Sturgess said.
Even though there are existing policies in place to support local industry, such as the Australian Industry National Procurement Framework (AIP National Framework) established in 2001, Dowling and Sturgess say it is important that these are actually acted on and enforced.
“Government organisations, including Defence, need to ensure their processes are up to date and that they are working with industry to develop world class products and best practice manufacturing,” Dowling said.
“They need to be more transparent, less secretive and more focused on changing out-dated procurement and prototyping procedures,” Sturgess added.
Both men believe that the culture of government needs to change, there needs to be a stronger preference for locally built product and more emphasis on accessing capability already in Australia.
“More focus needs to be placed on looking at how to communicate with industry, the capability here already exists but it is a matter of finding it and engaging with it,” Sturgess said.
“Government agencies also need to have a more effective communication process for potential and existing bidders for Commonwealth contracts and this is where industry groups can help inform manufacturers about tenders available to industry.”
Engaging with Defence
It may sound relatively simple for local industry to work with government, but the Commonwealth has a reputation for being difficult to work with and is therefore largely avoided by many in industry, particularly SMEs.
Carr has acknowledged the need for government to examine its specification procedures in order to “rebalance a procurement system which in the eyes of many Australian firms is actually stacked against them”.
Issues such as outsourcing procurement to a single international prime vendor, being too “prescriptive” in statements of requirement and developing specifications that may disadvantage local suppliers, are all barriers for many SMEs.
Carr says government has started to address this by making it cheaper and easier for small firms to win Commonwealth business by standardising routine procurement documents.
The Defence White Paper 2009 released in May also acknowledges the need for the ADF and the DMO to develop a more ‘businesslike’ culture and be more accountable and transparent in their procurement processes.
However now that the White Paper has been released, industry sources say companies shouldn’t expect the floodgates to open when it comes to new project approvals.
Even though Defence has committed to around 60% of procurement being local, it remains unclear how much will actually be made in Australia. With the exception of the Government-owned ASC, all top-tier players in Australian defence-industry are overseas owned.
Craig Milne, President of the Australian Productivity Council (APC), says there needs to be more commitment from the Federal Government when it comes to Defence procurement.
“The government needs to decide where industry can have a place in Defence – i.e. in shipbuilding, submarines and armoured vehicles – and then have an unambiguous commitment to local manufacturing for whatever Defence kit we can make here.
“These things are not hard to fix but the Defence White Paper is looking to please everyone without saying much. What industry needs is an unequivocal commitment to local procurement.”
Working in tandem with the Defence White Paper is Industry’s Defence shopping list, The Defence Capability Plan (DCP) 2009 which was released last month.
More detailed than expected, the DCP outlined the amount the DMO will spend locally will increase from $4.5bn to $5.6bn over the next four years.
Though a significant concern for some companies is that the DCP’s traditional 10 year time-frame has been cut back to four.
Defending this change, the government says companies will benefit from this shorter timeframe by getting more “detail and transparency”, which will provide “a more reliable base for planning”.
The government also said the DCP will be updated online every six months in an effort to provide industry with the latest information on current projects and future acquisitions.
APC 1300 366 272, www.apcouncil.com.au.
SEMMA 03 9238 1565, www.semma.com.au.