‘Economic lever’ has dual emissions reduction and business stimulus goal

By Melissa Coade

July 3, 2022

Katy Gallagher
Finance minister Katy Gallagher. (AAP Image/Mick Tsikas)

The finance minister has announced revisions to Commonwealth Procurement Rules (CPRs) to make more opportunities for the federal government to contract SMEs and drive down national emissions.

From July 1, the Australian government will source at least 20% of services from SMEs, as a measure to grow local businesses and employ more staff.

The CPR change doubles the previous target of 10% government procurement (by value) for SMEs.

A new value-for-money principle will inform how public servants determine procurement proposals, including a feature to prompt consideration of climate change impact.

In a joint statement, finance minister Katy Gallagher and small business minister Julie Collins said the new rules would encourage government entities to approach multiple supplies when procurement from a panel arrangement.

“Adopting this change improves competition, driving value for money outcomes and ensuring a better deal for the taxpayer.

“Value for money is the core rule of the CPRs. When assessing value for money officials must consider the relevant financial and non-financial costs and benefits of each proposal,” the ministers said.

Every year about $70 billion is spent by the government on procurement contracts. The changes follow an election commitment from Labor to drive more opportunities for SMEs on the campaign trail.

Senator Gallagher said the changes paved the way for local businesses to share in the way government spending on goods and services to support Australians. She flagged it was the first step in the government’s ‘Buy Australian Plan’, with more details about the program to be announced. 

“We won’t waste time when it comes to taking practical steps to support businesses to grow, create more jobs and ultimately help to boost the Australian economy,” the minister said. 

The revision to CPRs to integrate climate change impact in procurement decision-making outlines price is not a sole factor in assessing ‘value for money. Under the new rules, officials must show they have considered each submission against a list that contemplates quality, fitness for pursue, a supplier’s relevant experience and performance history, environmental sustainability of the goods and services, and whole-of-life costs.

The CPRs say this list is not exhaustive but commonwealth entities are encouraged to use a sustainable procurement guide published last year ‘where there is opportunity for sustainability or use of recycled content’. Environmental sustainability considerations should also think about energy efficiency, and environmental and climate change impact.

“This change goes hand in hand with our commitment to reduce Australia’s emissions by 43% by 2030 and provides an opportunity to showcase Australia’s abundance of talent, resources and innovation,” the statement said. 

Collins said the changes helped to level the playing field for smaller enterprises seeking government contracts.

“Small businesses shouldn’t be locked out from opportunities to gain government contracts just because they might not have the leverage of bigger businesses,” she said. 


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