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A major government announcement at startup industry event SOUTHSTART today has been described as fundamentally changing procurement opportunities "for every SME in this country", due to a new definition that alters the meaning of what constitutes a genuinely "Australian" business.
Federal Minister for Industry and Science, Ed Husic, revealed the government would "improve the threshold for smaller and medium enterprises to get access and to actually be accounted for procurement contracts".
He said the change followed years of listening to feedback from business leaders that an improved definition was needed so local companies could get access to government contracts and prove what they could do.
Husic noted it was common for claims to be made regarding Australian procurement, only to find that firms that win tenders are in fact "an overseas firm that has an Australian presence that isn’t really making the investment, and are probably a sales and marketing outpost".
"We’re going to break that down and open up more opportunity for early-stage firms to get access to that, and that is going to happen today," he said at the event at Serafino Wines in South Australia's McLaren Vale.
In a joint press release with Minister for Finance Katy Gallagher, Husic said the official "Australian business" definition was being released for the first time, along with updated guidance on considering broader economic benefits through government tender processes.
The government claims that defining an Australian business for the purposes of procurement will ensure greater transparency, provide better insight into who is winning Commonwealth tenders, and assist in making businesses more competitive in tendering.
Identification as an Australian business will depend on:
- Having 50 per cent or more Australian ownership, or being principally traded on an Australian equities market, and
- Having Australian tax residency, and
- Having its principal place of business in Australia.
In addition, the government is also issuing “Broader economic benefits in ICT sector procurement” planning and engagement guidance to assist ICT businesses navigating commonwealth procurement, acknowledging the importance that the ICT sector plays in procurement – making up approximately 15 per cent of Commonwealth procurement commitments.
"When we say we want Australian companies to have a chance to provide goods and services to government, we want genuine, true-blue Australian businesses to do so. This new definition helps give confidence that this is the case – and helps make the job easier for government officials too," Husic said.
"Government is a big potential customer for lots of businesses, especially in our world-class tech sector. These changes help smaller Australian businesses have a fair crack, providing genuine competition against big multinational firms for government contracts."
Minister Gallagher said procurement was one of the most important economic levers government has, helping to grow the economy, support small and medium businesses, and benefit Australian workers and consumers.
"Being able to easily identify Australian businesses in tender processes will help make them more competitive, and guide future initiatives to better support them," she said.
“I’m proud that our government is taking bold and novel steps to support local suppliers, who contribute so much to our economy and workforce.”
In a panel discussion shortly after the announcement at SOUTHSTART, Cicada Innovations CEO Sally-Ann Williams embraced the festival vibes and said the announcement made her want to do a happy dance.
"Fundamentally, if we get that as an ingredient, that changes procurement opportunities for every SME in this country that is Australian owned 51 per cent," she said.
"And it also starts to weight things in our favour and to actually kind of say we care about what we make here, and we're going to back it by buying it; not just investing in it, not just supporting the early stages."
Williams highlighted how supportive initiatives in other leading economies were instrumental to the development of deep technology, particularly the Small Business Innovation Research (SBIR) program in the USA.
"I do think there's a myth that we buy into that the market solves everything everywhere else for these deep tech companies, which just isn't true," she said.
"We like the myth of the self-made man or the self-made woman, and that they've toughed it out. I'm not wanting to downplay that there isn't a hard yards to that, but there is a lot more scaffolded support. And then we sit here and go, 'well, there's something wrong with us'."
"If you look at Qualcomm, if you look at some of the billion-dollar tech companies in the US, they all were benefits from the the procurement programs and practices that America has through the SBIR program," she says, adding such companies as Tesla and SpaceX benefited from the program.
Williams also highlighted how in Germany there are procurement programs that will fund deep tech companies at the early-stage, and also procure from them.
"By the time the product comes to market, Germany's validated it and go 'we freakin' love this', and they can sell it to everybody else around the world. So they actually then set up sites around the world for manufacturing at scale, but they retain the valuable asset which is the R&D headquarter piece of the puzzle," she said.
"Historically, where you see us having done this really well in Australia is with CSL and companies like that, but that was government backed, it was government born."
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