How many businesses spend hours and hours on tenders, but have little chance of winning them? Is Australian Manufacturing being treated fairly by our State and Federal Governments? Let’s look at what can happen in this process.
Firstly, have you ever wondered what Global Free Trade Agreements do? Under a free trade agreement, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.We are told Australia is a trading nation and, we need these types of agreements. But consider this; if you are an Australian manufacturer, what are your chances of winning a Federal government Tender?
Well, currently as far as I can see there is no local content mandate for Federal government contracts. You see, Australia is a party to global agreements that require non-discrimination of foreign companies in government tenders. This means that the only consideration is most likely monitory, and that will be the winning the bid.
However, some countries have lower labour rates or cost of living. Especially, if manufacturing is located in Asia, rather than that in Australia. If there is a Free Trade Agreement in place with this region, that reduces the chances of an Australian manufacturer being successful in that tender.
These Global agreements, allow overseas bidders to win government contracts on the non-discriminatory basis. Local procurement teams and companies do not seem to have enough knowledge or will, to consider some of these decisions during the tender process, thus greatly reducing the chance of Australian manufacturing winning tenders.
There are some exceptions to get around these policies, such as National Security, Indigenous Businesses, SMEs and business supporting disabilities. There is a call for Federal Government tenders to preference bidders that have sustainable local supply chains, that maximise the use of manufacturers in this country. The manufacturers who are committed to developing a manufacturing industry which can be sustained.
State Governments have room to support local business with tender thresholds, that only open to international competition above a contract value of $680,000AUD. This can vary from state to state. Compare that to the Commonwealth Government, which has a threshold of approximately $80,000AUD.
You could be forgiven for scratching you head and asking “What are our governments doing?”
Currently, projects like the Snowy River 2.0 scheme worth $5.1 billion, is being built with steel from Italy. How is that possible? So much for Australian steel manufacturing plants such as Whyalla and Port Kembla. I wonder how we manage to make things so complicated.
Is the Australian Manufacturing Industry being treated fairly by State and Federal governments? Surely, after what we have seen with international supply chains during the Covid pandemic, it is time to support the Manufacturing Industry in this country properly.
Let me know what you think.
If you are interested in learning more, a similar article appeared at InnovationAus.