Govt procurement: AIIA warns on creeping protectionism

James Riley
Monday, 14 September 2009 16:00

IT Policy - Government Tech Policy

New Rudd Government measures to give Australian companies a better chance at winning large government contracts may just add a layer of cost and complexity to the bids, the Australian Information Industry Association has warned.

And worse, the changes to the so-called Enhanced Project By-law Scheme and Tariff Concession System could represent creeping protectionism, AIIA chief executive Ian Birks said.

Industry Minister Kim Carr and Home Affairs Minister Brendan O’Conner are jointly seeking comments on tighter guidelines for the two schemes that would require suppliers for major projects to lodge an Australian Industry Participation Plan (AIPP) with their bids.

The AIPP aimed to make Aussie firms were considered for work to supply material or sub-contracting services before bidders sourced offshore suppliers. Broadly, the participation plans outlines that the bidder has tried to source locally, but been unable to find a local provider.

The changes were flagged at the ALP conference in Sydney two months ago. And while Finance Minister Lindsay Tanner ruled out any return to protectionist policies in Commonwealth procurement, the AIIA isn’t entirely convinced.

"Protectionism is always a concern, and while we don’t believe these changes will have big implications for (the ICT) sector, as a general statement we would say this may not be a positive direction for Australia," Birks told iTWire.

"The concern is that in requiring the levels of detail that they are expecting in the (Australian Industry Participation Plan) that they may be introducing a new layer of red tape, and a layer of cost," he said.

Through discussions with the department, the AIIA now says it is “comfortable” with the measures – having been reassured that the wording of the AIPP could be lifted from one bid to another if it covered the same supplier niche.

“We don’t think this is entirely positive, but in reality, the way it has been implemented, we are fairly comfortable with the fairly light-handed approach they have taken to implementation.”

The Enhanced Project By law Scheme and Tariff Concession System allow large suppliers to apply for tariff concessions and other special treatment when project managers source materials from overseas that they are unable to find locally.

Senator Carr said the tighter guidlelines aimed to “encourage greater interaction between major project proponents and Australian businesses.” The AIPP meant bidders on large procurement projects would need to outline how they have attempted to source product locally – and to effectively prove that they the product they need for the project is not produced locally.

The scheme would give Australian companies and workers a better chance of winning contracts or participating in large projects. In the absence of the ‘local content’ rules that applied to Government procurement in the eighties, the changes aim to force major suppliers to look local.

While the tightened scheme is thought to have been drawn up in with the steel industry in mind, it is a horizontal program and applies to all industry sectors.